Background

Recent changes have emerged in the UK in relation to anti corruption law, more commonly known as The Bribery Act 2010 (the Act).

The Act was passed in April 2010 and is due to come into force on 1st July 2011.

The Act introduces 4 new criminal offences which are:-

• Bribing another (active bribery) – to offer, promise or give a financial or otherwise advantage to another where they intend the advantage to bring about the improper performance by another person of a relevant function or activity or to reward such improper performance
• Being bribed (passive bribery) - to offer, promise or give a financial or otherwise advantage to another where they know or believe that acceptance of the advantage offered, promised or given in itself constitutes the improper performance of a relevant function or activity
• Bribing a foreign public official to obtain or retain business
• A strict liability offence for commercial organisations where they fail to prevent bribery by those acting on their behalf 

Employers should note that the Act extends the crime of bribery to cover all private sector transactions, as previously bribery offences were confined to public officials and agents. The offences contained within the Act carry criminal penalties for both individuals and organisations, including a maximum prison sentence of 10 years and/or an unlimited fine.

What is a bribe

A bribe within the Act is defined as “a financial or other advantage offered, promised or given to induce a person to perform a relevant function or activity improperly or to reward them for doing so”.

It is a broad ranging description which can include gifts, hospitality and entertainment, political or charitable donations, sponsorship and publicity. Liability can still be attached to a bribe if it is offered or promised as it does not have to actually be given or received. Additionally, an employer does not need to actually receive any advantage from the offer or payment of a bribe.

Offering/receiving a bribe

Employers will be liable if they fail to prevent improper performance; being performance where there is a breach of expectation that a person will act in good faith/impartially/with a position of trust. There have been concerns over how this will affect hospitality and the guidance therefore assists. To show bribery had taken place, it must be shown the hospitality was intended to bring about improper performance. This would be judged on what a reasonable person would think. The guidance suggests therefore that say taking clients to a rugby match at Twickenham would be unlikely to be seen as an offence.

Bribing an official

A person will be guilty of this offence if they intend to influence the official in the official’s capacity as a foreign public official, unless the official is permitted or required by a local applicable written law to be influenced by the advantage given. For example local planning laws requires a company conducting business in a jurisdiction to invest in the local economy. In relation to hospitality, generally the more lavish the hospitality and greater expenditure, the more likely it will be considered an intention to influence the official to grant the business.

Failure to prevent bribery

The Act introduces a new offence where a relevant commercial organisation can be guilty of an offence if a person associated with it (employee, agent, subsidiaries, potentially even contractors and suppliers who perform services) bribes another person intending to obtain or retain business or a business advantage.

There is a defence for employers known as the “adequate procedures” defence which employers can rely on if they can show that they have in place adequate procedures designed to prevent those associated with it from undertaking such conduct i.e. bribery. Employers can therefore amend their disciplinary policies to include an anti corruption and bribery policy, making it clear that any breach of such policy may amount to gross misconduct. Employers could also choose to make specific contractual requirements ensuring employees and other workers comply with any such policies and procedures, however, this may not necessarily be required in the motor industry as it may be more appropriate for employers who carry on business in high risk sectors/countries, including using overseas representatives or independent consultants.

Key Issues for Employers

Employers will need to bear in mind the extent of additional background checks and vetting during the recruitment process which might include bankruptcy checks, criminal record checks and additional references. Training on anti corruption and bribery policies should also be included in any induction procedures with all workers, not just employees. Proper standards should be established/set for hospitality and other such expenditure.

It is recommended that employers audit their expenses processes regularly to ensure there is evidence as to how and why money is spent for each expense claim submitted. It is recommended that employers do not consider giving money in advance.

As the description of a bribe includes gifts and hospitality, employers should set out a policy giving clear instructions on both the giving and receiving of gifts. Employers could choose to prohibit workers from accepting any business gift or allow acceptance of a gift if certain requirements are met such as making appropriate records, gaining prior approval, etc.

Given the motor industry often provides bonus and commission schemes for employees, employers should review those schemes to ensure that they do not unintentionally encourage employees to ignore bribery and corruption risks. The current guidance in relation to the Act does suggest that employers consider modifying sales incentive arrangements to provide credit where employees refuse orders where bribery is suspected but there is criticism that this may be unrealistic.

Should an employee wish to raise their concerns about suspicions of bribery, there should be a whistle blowing policy made available to all workers to whom the anti corruption and bribery policy applies. They can therefore choose to raise any concern in line with such policy. If such a disclosure is made then employers need to thoroughly investigate in accordance with their own procedures. Employers should take care that no worker involved in any investigations suffers any detriment or repercussion as a result. Employers should also consider who should carry out the investigation and whether it is appropriate to suspend any worker or take any additional steps in relation to confidentiality whilst the investigation is being held.

When policies are drafted, employers should take care that they do not discriminate such as racial stereotyping of certain nationalities.

Policies should set out the general approach to prevent and reduce the risks of bribery, include a statement of the organisation’s commitment to prevent bribery and give an overview of the strategy being implemented. The procedures will vary dependent on size of the organisation and the level of risk associated with it, established by a risk assessment.

Guidance

The guidance has been drafted to assist with the procedure to be adopted by commercial organisations and contains six principles which should be taken into account when drafting policies and procedures:

Principle 1 – Proportionate procedures
Principle 2 - Top-level commitment
Principle 3 – Risk Assessment
Principle 4 - Due diligence
Principle 5 – Communication including training
Principle 6 – Monitoring and review

A copy of the guidance can be downloaded from the Ministry of Justice:
http://www.justice.gov.uk/guidance/docs/bribery-act-2010-guidance.pdf