Adequate Procedures, Facilitation payments - Written by on Monday, November 8, 2010 6:00 - 0 Comments

Our submission on the Adequate Procedures consultation under the Bribery Act

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We have just submitted our online response to the Ministry of Justice online consultation on guidance about commercial organisations preventing bribery (section 9 of the Bribery Act 2010).

The deadline is 5pm today so if you would like to add your own views we suggest that you submit your comments on-line using the Ministry of Justice portal set up for this purpose. Comment now, or forever hold your peace…

Interested in what we said!  Below we have published the Questions posed by the Ministry of Justice and our comments. We saved the best until last so you’ll need to read it all.

Our top three concerns

  1. Some guidelines for corporate hospitality
  2. Some solutions to the facilitation prohibition
  3. Clarity around the responsibility for enforcement (and in particular the position and stance of the Crown Prosecution Service)

Our submission in full…

We would welcome responses to the following questions set out the consultation paper. Please return the completed form by 8 November 2010 via email toBribery.Act@justice.gsi.gov.uk. Thank you.

Question 1. Are there principles other than those set out in the draft guidance that are relevant and important to the formulation of bribery prevention in commercial organisations?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?

Our Comments:

Principle 2. We recommend that in addition to top level commitment the importance of ensuring that this commitment is shared by middle management and those “at the coal face” is also emphasised. It is middle management who will ultimately be the standard bearers for the anti corruption policy within an organisation and ensuring that it is fully and properly implemented throughout the organisation from the top to the bottom.

Question 2. Are there any procedures other than those set out in the draft guidance that are relevant and important to a wide range of commercial organisations?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?

Our comments:

We suggest that organisations be reminded to review their own internal systems and controls with a view to preventing their employees and representatives being susceptible to bribery.

For example ensuring that material procurement decisions are not the responsibility of low paid employee(s), requiring a number of senior level employees to sign off on such decisions and that there is adequate supervision and control within organisations to minimise the risk of bribery of “rogue employees”.

All organisations should have clear reporting channels so as to ensure concerns are passed through the various layers of management to the Board. It is vital that the channel is well defined and results in a report to the CEO and Board so that they might act.

Question 3. 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?

Our comments:

The illustrative scenarios are currently Annex B and not formally part of the guidance.

We recommend the illustrative scenarios formally be part of the guidance when finally issued.

We recommend examples of a day to day more mundane nature be added. We note for example that the examples given (while helpful) reflect the extreme position (for example: flying a delegation in corporate hospitality and free IT services in facilitation payments respectively).

We recommend that in addition to simply highlighting the principles which should be considered in each example the example actually be worked. At present the scenarios simply contain a list of issues which should be considered but do not finish the job in then applying them to the problem posed. In other words that the answer, to the problem posed by the MoJ be given in the guidance so that organisations reviewing and using the guidance can understand it better.

Question 4. 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?

Our comments:

It should be emphasised that the procedures invoked by organisations must be proportionate. For example it is not suggested as we understand it that the systems and controls in place at Siemens be introduced within SME’s! An illustrative scenario would be useful in this context.

Question 5. 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?

Our comments:

See comments to 3 above.

If you have any further comments on the form or content of the draft guidance, please enter them here.

We have three additional areas:
1. Corporate hospitality
2. Facilitation payments
3. The borderlines for the responsibility for enforcement of the new law.

In relation to 1. and 2 we note that there has been lengthy discussion in the media and elsewhere in connection with corporate hospitality and facilitation payments. Dealing with corporate hospitality first.

1. Corporate hospitality

We strongly advocate specific “principles” and/or questions which organisations should ask themselves when considering corporate hospitality in specific circumstances given that there are no lower or upper limits before such hospitality may be perceived as lavish. While we note the comments of the Serious Fraud Office (SFO) and the Ministry of Justice (MoJ) (broadly that organisations should use common sense) common sense also dictates that corporate hospitality acceptable in one setting may be considered lavish in another. By way of example, depending on the level of employee (what is good for say the CEO is not appropriate for a clerk who is in charge of selecting and/or ordering from, for example the meat supplier to a restaurant).

2. Facilitation payments

We are aware of the numerous statements made by the SFO and MoJ in relation to this issue perhaps the most contentious of all of those raised by the enforcement of the anti bribery legislation. The clear implication of the various statements made is that the practice of payment of facilitation payments (which is already illegal under English law) is to be strictly enforced unless such a payment results from a failure of an organisations internal systems and controls which the organisation then remedies.

More worked examples around this issue are needed.

Further acknowledgment of the difficulties faced by businesses including those who do not have the commercial weight of a massive conglomerate and to some extent those in the Fast Moving Consumer Goods (FMCG) industry needs to be given with some potential solutions.
What, for example, is a supplier of dairy products to do when confronted with a request for a bribe from a customs official in a corrupt country when the stark commercial choice faced is to pay it or watch valuable products go out of date?

In addition clarity is needed over the organisation which will be responsible for enforcing the law in this regard.

For example we note that the minimum threshold for investigation by the SFO is £1 million. Against this financial threshold it appears to us therefore that the Crown Prosecution Service (CPS) would most likely be charged with responsibility for enforcing violations relating to facilitation payments.

However, in stark contrast to the SFO the CPS has been silent as to the stance it takes on this issue.

3.The borderlines for enforcement among the SFO and the CPS.

Details around this are needed urgently. It can be seen from above that they are extremely important since comfort, from say the SFO, is of little ultimate comfort if the CPS and the police adopt a different view if they are to have responsibility for enforcement too.

The SFO has through its Director and Counsel been extremely pro-active in getting the message across that it wishes to engage in dialogue with corporates striving to implement ethical policies who may discover a problem. The message has consistently been that the SFO will work with the corporate and take a reasonable stance in relation to enforcement.
The attitude of the CPS is an unknown. For reasons that are by no means obvious the Director of Public Prosecutions (DPP) has said little as to the approach of the CPS. This is very unhelpful and needs to be addressed as it serves to undermine the efforts of the SFO and dilutes the approach of seeking to engage and assist responsible corporates attempting to put in place ethical compliance programmes.”

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