[ Update: Bribery Act ]
address the parent/subsidiary or joint venture partner diffi culty caused by the new offence of failing to prevent bribery. What the Consultation Paper does do is to provide details of
Six Principles for Bribery Prevention. Although these may be subject to change, anyone concerned about the impact of the Act would be well advised to consider what the government’s current position is. Steps need to be taken now to ensure that you are properly prepared. The six principles are:
(i) Risk assessment This is the key part of the guidance. Items 2-6 are in actuality part of the risk assessment process. This process is stated to mean that organisations should ‘regularly’ and ‘comprehensively’ assess the nature and risks relating to bribery to which they are exposed. What does this mean? The key is perhaps to understand your own business profi le and the associated risks. For example, the construction industry is deemed a high-risk area, particularly where public procurement and the need to obtain licences and permits are involved. It is also the case that transactions involving political or charitable contributions can be an area where corruption is an issue. Equally, what about where a company operates? How
transparent is the government? It is possible to fi nd out where there are perceived high levels of corruption, and therefore risks, from league tables and indexes published by organisations such as Transparency International at
www.transparency.org.uk. You also need to consider the type of work your company does. If you enter into partnerships or joint ventures, how well do you know those partners? What about suppliers? Where do they operate? So having carried out your risk assessment, what do you do next to ensure that you have ‘adequate procedures’ in place to act as a defence? This is, at least in part, answered by the fi nal fi ve principles which deal with the development and maintenance of effective anti-bribery policies.
(ii) Top-level commitment This is a fairly simple process, namely the establishment of a culture across the entire organisation which makes it clear that bribery is never acceptable. The fi rst step is the establishment of a code of conduct, the second is of course ensuring that it is enforced. See
www.justice.gov.uk/ consultations/
briberyactconsultation.htm
(iii) Due diligence The guidance describes ‘due diligence’ as ensuring that you know and understand the extent of your business relationships. What are the risks that a particular business opportunity might raise? What are the locations of the business opportunity and potential business partners? Do your partners have their own anti-bribery codes of conduct? Does your joint venture agreement address anti-corruption procedures?
(iv) Clear, practical and accessible policies and procedures The guidance recommends that the policy documentation could include guidance on political and charitable contributions, gifts, promotional expenses and hospitality, and on what to do if faced with blackmail or bribery. The policy should also
include commitment to the Public Interest Disclosure Act 1998, which gives protection to whistle-blowers. The question of gifts is always a tricky one. Here, the
Appendix to the guidance says that ‘reasonable and proportionate hospitality and promotional expenditure which seeks to improve the image of a commercial organisation, better to present products or services, or establish cordial relationships, is recognised as an established and important part of doing business’. To amount to a bribe, such hospitality must be intended to induce a person to perform a function improperly. It is interesting here that these policies are stated to take account of ‘all employees, and all people and entities over which the commercial organisation has control’. This is as close as the guidance gets to answering the question as to when a person can be said to be ‘performing services on behalf of’ an organisation when it comes to mounting a prosecution for a Section 7 breach.
(v) Effective implementation The guidance specifi cally, and unsurprisingly, says that it is not enough to leave the procedures on the shelf. The implementation of the strategy needs to be brought to life. This means that thought must be given to communicating policies (both internally and externally, for example as part of the tender process), setting up training and putting in place proper reporting structures.
(vi) Monitoring and review Here, the guidance draws attention to the need to ensure effective fi nancial monitoring and auditing. Following the money, and being able to spot unexpected variations, is not just sound accounting practice, it may expose corruption. However, to ensure that proper ‘adequate procedures’ are put in place, milestones need to be set up and a formal process put in to place to review what has happened and see what lessons can be learnt for the future, particularly if there is a change in the nature of your company’s business which might be said to introduce new risks.
Conclusions As can be seen, the guidance does not provide any detailed mandatory assistance, or get-out-of-jail-free card, in establishing what procedures need to be in place to provide a defence in the event of a section 7 prosecution. The guidance is set at a high level, dealing in principles, not details. In particular, it is silent on the key question as to when a person can be said to be ‘performing services on behalf of the organisation’. It provides no guidance on whether, or at least in what circumstances, a parent of a joint venture partner might fi nd itself liable for the actions of others. The only help can be found in Principle 4, which refers to the concept of ‘control’. There is also reference in Principle 5 to the provision of support to external business partners, even to the extent of sharing in training. This guidance may well be tightened up. As we have
seen, the government is currently considering the extent to which the guidance needs to be revised. However, what is important is that any company that has any dealing with the UK takes steps now to ensure that, at the least, it has an anti-corruption policy in place – and that it is one which is monitored, implemented, revised and reviewed.
March 2011 ECA Today 53 About the author
Jeremy Glover Jeremy Glover is a partner at Fenwick Elliott, the largest specialist construction law fi rm in the UK. This article was taken from Fenwick Elliott’s latest Annual Review. Further articles can be found at
www.fenwickelliott.com/ annual-review. See www.
justice.gov.uk/consultations/ briberyactconsultation.htm
Potential penalties range from unlimited fi nes for companies to 10 years’ imprisonment and unlimited fi nes for individuals
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