It has been a year since the much-heralded Bribery Act came into force, making it a criminal offence to offer, give or receive a bribe, and introducing a corporate offence of failure to prevent bribery. The Act has a wide international reach and is very broad in scope, going much further, for example, than its well-known US equivalent, the Foreign Corrupt Practices Act. It is also as much an issue for HR as it is the legal department.
Some might argue the Act has so far proved a rather damp squib. Despite predictions to the contrary, we have not yet seen a raft of high-profile cases and convictions. In fact, so far there has only been one conviction - of a court clerk who had his sentence cut on appeal. In addition, the budget of the Serious Fraud Office (SFO) has been slashed, reducing its investigative and prosecuting capability.
However, organisations should not be complacent. In the case of the court clerk, the fact remains that a four-year prison sentence is a substantial penalty, reflecting what the Court of Appeal emphasised was a serious case of corruption and misconduct in a public office. Also, the SFO investigates and prosecutes the most serious and complex cases, and such cases take time. Since the Bribery Act came into force, the SFO has continued to pursue cases and has secured convictions under previous laws. Moreover, its new director is keen to make his mark. It is just a matter of time therefore before the SFO brings a major corporate corruption case, and in the meantime the Government is proposing to introduce US-style deferred prosecution agreements. These would provide a much clearer legal basis for the regulators to negotiate financial settlements with corporates in bribery and corruption cases.
Employers must ensure adequate procedures are in place
In relation to the Bribery Act, HR teams should understand that problems can arise when not only employees, but also agents, consultants and the like are engaged in bribery, in combination with a corporate failure to take all reasonable steps to prevent the bribery. The onus is firmly on employers to maintain adequate procedures designed to prevent bribery by those who perform services for or on behalf of them. If they do not, the organisation faces potentially unlimited fines, while the individuals at fault risk imprisonment for up to 10 years.
HR teams have a key role in ensuring adequate anti-bribery and corruption (ABC) procedures are in place. This partly involves looking at HR policies and procedures, as well as contractual documents such as employment contracts, service and consultancy agreements, which are the responsibility of HR. It is not just the obvious documents that need to be considered, such as the ABC, whistleblowing, disciplinary, gifts, hospitality and expenses policies. Other documents may be relevant too: for example, commission and discretionary bonus schemes can inadvertently encourage employees to ignore or give insufficient attention to bribery and corruption risks.
Equal opportunities and discrimination issues can arise in practice if members of certain nationalities or racial groups appear to have been stereotyped and targeted within an employer's ABC programme. HR should be ready to show that regional variations within the ABC programme are based on consideration of hard evidence of particular risk in certain parts of the world, resulting in the need to subject workers in such areas to particular controls and scrutiny.
Further, one of the key aspects of a successful ABC programme is ongoing training. This will often form part of an employer's general training programme, under the supervision of the HR department.
Other HR issues that can arise in relation to bribery and corruption include:
- There may be a need for detailed vetting of certain recruits, particularly where the company operates in higher risk sectors and/or countries.
- The risks for employers can be particularly high in relation to sales and marketing agents, consultants and the like, who previously operated with minimal management or HR supervision. Historically, employers have tended to assume they are not legally responsible for such individuals; under the Bribery Act that is not the case.
- The thorough and independent investigation of any concerns, whether or not they are raised through the whistleblowing policy, is critical. The investigation will inevitably involve interviewing, and possibly disciplining, employees and other workers, with the involvement of the HR department. Employee monitoring and other data protection issues should be considered carefully, particularly where the case has an international dimension.
In conclusion, HR managers should continue to beware. The Bribery Act has teeth and extra-territorial powers, and the risks for organisations and individuals are very real. HR departments have an important risk-management role to play and should take note - the next scalp may be just around the corner.
Andreas White is an employment partner at law firm Kingsley Napley LLP