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The UK Bribery Act in a nutshell

“Parts of the Act dealing with hospitality will need particular clarification”

while grey areas abound in its provisions, its creators have at least been clear about one thing – defending yourself is a matter of showing you have ‘adequate procedures’ in place to prevent bribery.

“Corruption is like a disease,” says Charlie Monteith, an SFO policy adviser who was involved in the drafting of the Act. “You have to look at the symptoms. This Act is designed to push corporate liability, and some companies will now have more to fear. But it provides an open defence: self-regulating is the key to not getting prosecuted.” The draft guidance suggests there are several steps a business needs to take for such a defence: to conduct risk assessment and due diligence; lead from the top; set clear policies for staff and third parties, covering things like gifts and hospitality; train staff in compliance; and monitor and evaluate how it’s going. “Companies will need a policy around

this,” says Philip Chapman, Associate Director at compliance consultant, Complyport. “But it’s just putting into a statute what’s already relatively standard. Adequate procedures are related to the size of the company, so smaller firms will incur fairly low costs. Larger companies will need more procedures, but they’ll have them in place anyway. It’s not monstrously unwieldy.”

Yet the burden of creating, implementing and monitoring a policy is hardly a simple task, especially when third parties are concerned, and it all adds to the pile of red

tape that many companies are strangled by already. Every time a business operates in a new country, it will have to assess the likelihood of bribery, and to check that none of its apparently standard practices cannot be misconstrued as having improper intent. “It’s another layer of compliance,” says

Hiren Patel. “Businesses struggling in the current climate will now have another log book to complete, maintain and audit, so management can monitor and verify what is reasonable in the conduct of their business. Who decides when it’s reasonable to order the posh brandy to celebrate the closing of a high-profile transaction? Who knows? Come April 2011, your compliance manager will become the most important part of your team when you’re generating new business.” Whether the Act turns out to be as Draconian as these fears suggest, it will no doubt have an impact, serving as a genuine wake-up call to any companies to get their policies up to scratch.

The message from the UK government is that it will be checking pockets. It has, after all, been burned before. “Companies should take notice,” says Edward Mackereth, a Partner at Ogier. “It will be interesting to see how much of an example the UK government makes of the first people caught under the Act. I wouldn’t want to be in their shoes.” n

DAVE WALLER is a freelance business journalist

16 December 2010/January 2011

COVERAGE l Bribery in the UK and abroad. It applies to UK companies, as well as to any company that does business with the UK. It also applies to UK nationals, even when they’re not resident in the UK, and to foreign nationals acting as representatives of a UK company. l A person or entity can be prosecuted in the UK for bribery if any part of the offence takes place in the UK; if it’s abroad but the person or entity is British or ordinarily resident there; or involves a body incorporated under UK law.

DEFINITION l ‘Bribery’ covers the promise or giving of any advantage designed to induce or reward the improper performance of a public function or business activity.

OFFENCES l Offering or giving bribes; requesting, receiving or agreeing to receive bribes; and bribing a foreign public official. l The Act’s corporate offence punishes the failure to prevent bribery. If someone gives a bribe when acting on your behalf – as an employee, subsidiary or third party – your company is liable. That’s even if you knew nothing of it, and the bribe took place overseas. l Corporate hospitality will go under the microscope. ‘Reasonable’ acts won’t be punished, but it’s a grey area.

PENALTIES l Up to 10 years in jail and unlimited fines for an individual. l Unlimited fines for a corporate entity.

DEFENCE l Proving you have ‘adequate procedures’ in place to prevent bribery.

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