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Bribery Act: Why you should be nervous

26 January 2011

Food and drink sector businesses need to take care not to fall foul of new legislation which is designed to crack down on corruption, says Sarah Whibley of Vertex Law

The Bribery Act 2010 is due to come into force in April and raises the prospect of unlimited fines and imprisonment for business people in breach of the new regulations.

Bribery, the exchange of advantage, be it financial or otherwise, has long been a global problem, and not just in countries with weak governments. According to Transparency International, a global organisation dedicated to fighting corruption, it’s an issue that has implications for anyone doing business with such key emerging economies as India and China.

The Bribery Act 2010 is the UK's message that corruption will not be tolerated, closing current loopholes and introducing new measures. As to whether the Act applies to you, ask yourself the following questions:

Have you entertained a client recently? Have you received generous hospitality from a supplier? Are you familiar with the work methods of employees and agents who facilitate contracts on behalf of the company?

Unless on a mission with the secret services, we’re all capable of falling foul of the offences under the Bribery Act 2010, without defence, and in some cases ignorant of the fact we’re guilty of any criminal wrong-doing.

The answer is to think about your motivation. Are you doing something with the intent to induce or reward improper conduct? Have you been induced or rewarded for doing something you know to be wrong? If so, the chances are you’ll find yourself liable for an offence of bribery.

What are the essential facts you need to know?

The Bribery Act 2010 consolidates previous law, providing for general offences of bribing another person and being bribed. It will be possible for an individual or a business to commit these offences, and in the latter case, both the business and directors or managers might be liable for prosecution. A new offence of bribing a foreign public official is created by the new legislation.

Most alarming is the second new offence of failure by a commercial organisation to prevent a bribe being paid to obtain or retain business. Companies will have the heavy burden placed upon them of proving they’ve implemented adequate procedures to prevent bribery occurring within or outside of the UK.

An individual convicted of a bribery offence could face a jail sentence of up to 10 years or a fine, possibly both. A commercial organisation could expect a fine, potentially unlimited.

What should you do now?

The following questions might be coming to mind. Where does promotional expenditure become unreasonable or excessive that it could be interpreted as a bribe? How does a company with overseas operations protect itself from employees or agents making or receiving 'facilitation' payments? As a boss of a company which turns a blind eye to bribery, could you be liable for prosecution under the Bribery Act 2010?

With questions such as these in mind, start to think about where your risk exposure lies and how you can counter the liability. For example, you might want to consider your financial control and monitoring procedures, introducing anti-bribery clauses in employment, agent, third party and supplier contracts and specific policies on promotional expenditure.

As a commercial organisation, your only protection against conviction of the offence of failing to prevent bribery is the defence of adequate procedures. The Government has said it will produce guidance on this but at the time of writing nothing has been published and when something does appear it might only amount to general principles.

So, if you want to reduce your chances of getting into some very hot water, start your risk assessment and preparations for an anti-bribery policy now. A good starting point is the checklist and guidance on good practice procedures for corporate anti-bribery programmes published by Transparency International UK (www.transparency.org.uk).

Sarah Whibley is head of the food and drink sector team at Vertex Law LLP and can be contacted at sarah.whibley@vertexlaw.co.uk or on 01732 224000.


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