The new Bribery Act 2010 - Major change or best business practice?

In this article we discuss the impact on companies of the Bribery Act and outlines what steps companies need to take to prepare for the new law.

The Bribery Act 2010 will become law in April of this year. The new law aims to introduce tougher penalties for individuals and companies involved in corruption.

Some commentators believe that the law will require businesses to undergo a major change in the way in which they operate. This is true for those companies that do not already have effective systems in place to try to prevent corruption. However, for those companies that already have best practice anti-corruption policies and procedures, the law will not trigger any major change. Instead it will serve as a useful legal deterrent and help to reinforce the company's existing practices.

What is the objective of the new Act?

The objective of the Act is to tackle the serious issue of major corporate corruption by UK companies. It does not aim to prosecute every individual that makes a minor 'grease' payment to a corrupt foreign customs official. Therefore, a common sense approach is required; if a reasonable person in the UK would consider an individual or company's actions to be corruption to obtain business advantage, then the act is likely to be an offence under the new Act and at risk of prosecution.

Who will the new law affect?

The new law applies to any company carrying on any part of their business in the UK, regardless of whether the company is British or not and regardless of where in the world the bribery takes place.

What is the offence of bribery under the new law?

A person will commit the offence of bribery if they:

Your company would commit the offence of bribery if anyone performing services on behalf of your company pays a bribe in order to obtain a business advantage for your company, and your company has failed to prevent this happening.

How can our company prevent an employee, agent or supplier paying a bribe on behalf of our company to gain commercial advantage, when we do not have complete control over their actions?

Your company may not be able to prevent this happening and companies operating in high risk sectors or countries are much more at risk of an offence being committed. However, the company can raise a defence if it can prove that it had adequate procedures in place to try to prevent the bribery. The government has published guidance on what would be regarded as adequate procedures.

What do I need to do to ensure my company has adequate procedures in place?

What should I do if I discover an individual acting on behalf of my company has paid a bribe?

You should immediately seek professional legal advice. Although, there is no suggestion yet in the UK of companies being treated with leniency in exchange for coming clean to the authorities (unlike in the US) full disclosure to the authorities may be the best strategy, depending on the circumstances of the offence.

You should also immediately carry out a full internal investigation to determine the facts surrounding the offence and to try to prevent any further offence being committed.

What would happen if an employee of my company is found guilty of bribery?

The employee could go to prison for up to 10 years and face an unlimited fine. If the employee was also a director, they are also likely to be disqualified from acting as a director for fifteen years.

In addition, your company would face an unlimited fine for failing to prevent bribery. Harsher fines would apply if a public official has been bribed.

Sounds very serious; should the new Bribery Act be keeping me awake at night?

The penalties are serious. However, companies should be preparing for the new law in a measured and proportionate manner. The Serious Fraud Office has already indicated that from April 2010 it will have the highest expectations of the large blue chip companies, particularly those in high risk sectors. SMEs are less likely to be in the spotlight from April, particularly in less risky sectors.

Current thinking is that in April we are unlikely to see a large wave of prosecutions pursuant to the Bribery Act. However, this should not be an excuse for companies to not have adequate procedures in place in their organisations to prevent bribery. Effective and proportionate anti-corruption procedures and policies should be an integral part of corporate governance and best commercial business practice in every company, regardless of size or profile, both before and after April 2010.

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This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.

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