As from April 2011, Employers will be liable to criminal prosecution for the actions of employees involved in bribery, irrespective of whether they were aware of it, unless they can show that they had in place adequate measures to prevent bribery.
This is a short article aimed at small to medium sized
businesses who are unlikely to have the benefit of in house legal
advisors but who need to be aware of the provisions of the Bribery
Act 2010, which comes into force next April.
1. Introduction
The Bribery Act differs from most forms of legislation because
it can render a business liable to prosecution as a consequence of
the behaviour of it's employees – even if the
Directors had no knowledge of such behaviour!
The Act creates what is known as a 'reverse burden of proof
' in that it is a criminal offence for a commercial
organisation to fail to prevent bribery (by it's employees)
unless the organisation can demonstrate that it had adequate
bribery prevention procedures in place.
Ordinarily we have a presumption of innocence. Under the Bribery
Act there is a case for saying that the opposite applies. It need
not matter whether the company had actual knowledge of the actions
of employees involved in bribery. The emphasis is upon whether the
company had adequate measures in place to prevent bribery.
2. Main provisions
There are four types of offence that can be committed;
i. offering, promising or giving a bribe
ii. requesting, agreeing to receive or accepting a
bribe
iii. bribing a foreign public official
iv. failure by a commercial organisation to prevent a bribe being
paid for or on it's behalf.
3. Sentences
Upon conviction in the Crown Court any offence committed under
the Act is punishable by an unlimited fine and/or up to 10 years
imprisonment.
What's more the court can impose Confiscation and Civil
Recovery orders under the Proceeds of Crime Act 2002. Confiscation
is a highly controversial area. Take the following scenario.
A bribe of £10,000 is paid by a senior member of a sales
team. The business then secures say £1,000,000 worth of
business, with profits of say £100,000. Upon conviction in
the Crown Court the company could be liable for a confiscation
order in the sum of £1,000,000 even though the company had no
actual knowledge of the actions of the bribing sales
representative!
This is because under The Bribery Act, the company will be guilty
unless adequate safeguards were in place and once convicted
confiscation is turnover based as opposed to profit
based.
Another worrying consequence of a conviction is the risk that it
may preclude a company from tendering for public contracts.
4. Safeguarding your business
It is a defence for a business to prove that it had in place
procedures designed to prevent bribery. Lord Bach hit the nail on
the head when he stated on behalf of the Ministry of Justice,
'it would be wrong to leave organisations open to a heavy fine
if a rogue element bribes on behalf of the organisation when those
who manage it can show that they have put in place procedures
designed to prevent bribery'.
The key issue therefore is having in place adequate procedures to
prevent bribery.
The good news is that help is at hand. The Government is to produce
Guidance on the measures businesses can put in place to prevent
bribery. On 14th September 2010 the Ministry of Justice
issued a Consultation on the subject. The Consultation runs for
eight weeks until 8th November 2010.
The final Guidance will be available from 1st April 2011 when the
Act comes into force. However the consultation contains draft
guidance which contains 'Six Principles for Bribery
Prevention' namely,
i. Risk Assessment
ii. Top Level Commitment
iii. Due Diligence
iv. Clear Policies and Procedures
v Effective Implementation
vi Monitoring and Review
It is not proposed to go into more detail in relation to the Six
Principles at this stage, this will be done in a future article.
What is clear is that many businesses that may have been completely
unaware of the legislation will now need to start to think about
gearing up for next April.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.