On the 1st July 2011 a new Act was introduced in the UK with the intention of putting a stop to corporate bribery. It outlines three new offences:
offering or receiving a bribe
bribery of foreign public officials
failure to prevent a bribe being paid on an organisations behalf
This is big news for all sorts of businesses, who often take customers to events in order to network and improve relationships. A statement by Kenneth Clarke (Lord Chancellor and Secretary of State for Justice) clarified that corporate hospitality is a normal part of business, and won’t be punished under the new act, but disproportionate hospitality will be.
However the line between corporate hospitality and bribery is unclear, and crossing that line could lead to an unlimited fine or custodial sentence. To protect businesses that come up against a bribery charge, a new defence has been introduced which is only available if there is proof that “adequate procedures” are in place.
But what constitutes “adequate procedures”?
There are six key principles to follow when creating anti-bribery procedures:
- Proportionate procedures – procedures should be proportionate to the bribery risks the business faces and to the nature, scale and complexity of its activities.
- Top level commitment – top leadership must commit to a zero tolerance towards bribery and corruption.
- Risk Assessment – the nature and extent of the organisations exposure to risks should be assessed, and action should be taken which is proportionate to that risk.
- Due Diligence – the company should have anti-bribery agreements, and feel confident that all business relationships (employees, clients, suppliers etc)are transparent and ethical.
- Communication – bribery prevention policies and procedures should be embedded and understood throughout the organisation, including training.
- Monitoring and Review – periodic reviews and reports for top level management should be considered in order to keep on top of any changes to risks.
How can you implement these procedures within your business?
Create a clear bribery policy which covers the giving and receiving of gifts, and how to distinguish between routine and disproportionate hospitality. This policy should be easily accessible, given to all members of staff and overseen by a manager or director in order to answer any questions employees may have.
Hold regular training programmes to reiterate the zero tolerance approach the business has towards bribery. This should include updates and reminders on the law, and the sentence that a conviction could bring.
Monitor employees’ costs and keep financial records in order to track hospitality and gifts.
What happens if my business is investigated for bribery – am I covered?
This new act could have an impact on existing Directors & Officers Liability insurance policies. A D&O policy will generally fund the costs that an investigation and a court case may bring, unless it is admitted that there was an intention to commit the crime or a director or manager is convicted. However D&O policies do vary, so you should contact an experienced broker to review and discuss your policy wordings and what would happen in the event of a Bribery Act charge.