Adequate Procedures - Written by Barry & Richard on Tuesday, October 12, 2010 3:32 - 2 Comments
Adequate procedures, guidance & the road map to compliance with the Bribery Act
Those who have been following our briefings will know that in April 2011 the new UK Bribery Act will enter into force. The new law has been referred to as the most draconian anti-bribery law in the world.
What are the new UK anti-bribery laws?
If your business has connections with the UK you probably need to comply with broad new UK anti-corruption laws coming into force 1 April 2011.
Bribing, receiving a bribe, bribing a foreign public official and importantly failing to prevent bribery are offences wherever they take place worldwide.
This time its personal
In addition to liability for organisations liability is personal for directors and officers. In the words of the SFO liability is brought straight into the boardroom.
Long arm jurisdiction
Whether you know about it or not on top of your own obligations you will be criminally responsible for bribery by business partners worldwide if your business was intended to benefit, or benefits, directly or indirectly. The UK’s Serious Fraud Office has identified their new long arm jurisdiction and the new failure to prevent bribery offence as the most important features of the new law. Politicians and prosecution authorities have signaled a tough new enforcement approach.
Two nations divided by a common language
The new law is not the same as the FCPA. Commercial bribery is covered and there is no exception for facilitation payments and/or corporate hospitality. Even if you are subject to the FCPA it is likely that your existing policies will need updating. If you’re not, you may need to get a policy.
What happens if you get it wrong?
You risk prison. Your business risks unlimited fines, blacklisting from EU contracts and forfeiture of proceeds of illegal deals.
The good news
There is a defence. If businesses put in place adequate procedures they will not be guilty of failing to prevent bribery.
Under the new law the UK government is required to publish guidance about the procedures commercial organizations must put in place to prevent persons associated with them from bribing. This guidance is expected to be published early in the new year. We shall be running a webinar on it.
The guidance is split into four key parts.
- Summary of the law (which we’ve condensed above)
- Six key principles for ensuring bribery prevention
- Five questions about the guidance (plus general request for comments)
- Illustrations set against the backdrop of the six key principles.
The six principles
1. Risk Assessment
Know and keep up to date with the bribery risks you face in your sector and market;
2. Top level commitment
Establish a culture across the organisation in which bribery is unacceptable. If your business is small or medium sized this may not require much sophistication but the theme is making the message clear, unambiguous and regularly made to all staff and business partners;
3. Due diligence
Know who you do business with; knowing why, when and to whom you are releasing funds and seeking reciprocal anti-bribery agreements; and be in a position to feel confident that business relationships are transparent and ethical;
4. Clear, Practical and Accessible Policies and Procedures
Ensure that you have them and that they apply to everyone you employ and business partners under your effective control and covering all relevant risks such as political and charitable contributions, gifts and hospitality, promotional expenses, and responding to demands for facilitation demands or when an allegation of bribery comes to light;
5. Effective implementation
Go beyond ‘paper compliance’ to embed anti-bribery in your organisation’s internal controls, recruitment and remuneration policies, operations, communications and training on practical business issues; and
6. Monitoring and review
Ensure that you have audit and financial controls that are sensitive to bribery and are transparent. Consider how regularly you need to review your policies and procedures, and whether external verification would help.
The five questions
- Are there principles other than those set out in the draft guidance that are relevant and important to the formulation of bribery prevention in commercial organisations? If so what are they and why do you think they are important?
- Are there any procedures other than those set out in the draft guidance that are relevant and important to a wide range of commercial organisations? If so what are they and why do you think they are important?
- Are there any ways in which the format of the draft guidance could be improved in order to be of more assistance to commercial organisations in determining how to apply the guidance to their particular circumstances?
- Are there any principles or procedures that are particularly relevant and important to small and medium sized enterprises that are not covered by the draft guidance and which should be? If so what are they and why do you think they are they important?
- In what ways, if any, could the principles in the draft guidance be improved in order to provide more assistance to small and medium sized enterprises in preventing bribery on their behalf?
There is also a request for any other comments.
We shall be participating in the consultation process and answering the specific questions posed. Would you like to contribute to our submission?
We are also considering running a round table event for compliance professionals and in-house counsel as part of that process.
If you are interested in participating in a round table and/or commenting on the draft guidance please let us know. We shall provide details of our round table session and include your questions and/or comments in our submission.