Legal opinion: Bribery Act 2010

The new implementation date for the Bribery Act 2010 has been announced as 1 July 2011.

Background

The Act, which was created with the intention of updating old (and much-criticised) laws on bribery, is aimed primarily at tackling commercial bribery and ensuring that corporations have robust anti-corruption procedures in place. Originally, it was meant to come into force in April 2011, but this was delayed following negative responses from a number of key business figures and bodies such as The Law Society. One individual who publicly contested the Act was John Cridland, director-general of the CBI, who branded the legislation as “not fit for purpose” due to the fact that it lacked clarity and had the potential to harm British companies. The draft guidance, published in September 2010, was also severely criticised as being vague and the Ministry of Justice confirmed that it would revisit the guidance to make it “practical and comprehensive”.

The new offences

The offences under the Act are:

• offering a bribe;
  
• accepting a bribe;
  
• bribing foreign officials; and
  
• failure of a commercial organisation to prevent a bribe.

The recognised area of tension in the Act was the corporate offence of failure of a commercial organisation to prevent bribery. This offence is new and was considered controversial as it means that companies that are unable to demonstrate that they have implemented “adequate procedures” to prevent corrupt practices within their ranks or by third parties on their behalf, could be exposed to unlimited fines as well as seven to 10 years’ imprisonment for individuals. The draft guidance from the Ministry of Justice was seriously lacking in that it provided companies with little guidance as to how the defence of having adequate procedures to prevent bribery could be made out.

Bribery-prevention guidance published

The long-awaited final guidance about procedures that relevant commercial organisations can put into place to prevent persons associated with them from bribing, published by the Ministry of Justice, may assuage some of the concerns. It is formulated around six principles:

1. Proportionate procedures – an organisation’s bribery prevention procedures should be proportionate to the risks it faces. To some extent, the risk that a company faces will depend on its size. A small business might be able to rely more heavily on oral briefings to communicate anti-bribery policies, whereas a larger company would need to rely on extensive written communication.
   
2. Top-level commitment – the board and top-level management of an organisation must be committed to prevention of bribery.
   
3. Risk assessment – a risk assessment must be carried out periodically and documented.
   
4. Due diligence – this should be performed, taking a proportionate and risk-based approach, in respect of persons who perform services on behalf of the organisation in order to mitigate the risk of bribery.
   
5. Communication and training – anti-bribery policies should be communicated and understood throughout the organisation and training provided that is proportionate to the risks that the organisation faces.
   
6. Monitoring and review – procedures should be monitored and reviewed with a view to making improvements where necessary.

The Government has also confirmed that the Act is not intended to include genuine corporate hospitality and that cases would be brought only where either the Director of Public Prosecutions or the Director of the Serious Fraud Office is satisfied that a prosecution is in the public interest. Justice Secretary, Kenneth Clarke, also said he “did not expect a large number of prosecutions and certainly not for trivial cases”.

Notwithstanding this, the Act is untested and its practical effect remains uncertain, so companies do still need to be prepared and start taking steps to ensure that anti-bribery policies are implemented and taken seriously in the organisation. In particular, implementing and maintaining the right processes and culture (ie encouraging the right behaviour) will be crucial. If they haven’t done so already, all companies should review their risk profile and anti-bribery programmes as soon as possible and certainly ahead of the implementation date of 1 July 2011.

Rima Mehay, associate, Rosenblatt solicitors