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The long-awaited and controversial Bribery Act Guidance has been published this morning by the Ministry of Justice. The Act will now come into force on 1 July 2011. Justice Secretary Kenneth Clarke has sought to reassure opponents of the Act by confirming that he would like to see the legislation implemented in a “workable, common sense” way which he believes the newly published guidance will achieve. 

The Act creates a new offence which can be committed by a commercial organisation which fails to prevent persons associated with them from committing bribery on their behalf. It is, however, a full defence for an organisation to prove that despite a particular case of bribery it nevertheless had adequate procedures in place to prevent persons associated with it from bribing.

Bribery is defined as giving someone a financial advantage or other advantage to encourage that person to perform their functions or activities improperly or to reward that person for having already done so.

The guidance is formulated around six guiding principles each followed by commentary and examples. The onus will remain on the organisation, in any case where it seeks to rely on the defence to prove that it had adequate procedures in place to prevent bribery. The guidance suggest certain procedures, but they may not be applicable to any particular circumstance.

The six principles are:

  1. Proportionality: The action taken should be proportionate to the risks faced and the size of the business. So if an organisation is a large one or a business is in operating in an overseas market where bribery is commonplace, more might need to be done.
  2. Top Level Commitment: Those at the top of the business will want to make sure that they have been active in making sure that staff and the key people who do business understand that you do not tolerate bribery.
  3. Risk Assessment: An assessment of the risks faced should be taken. If business is primarily in the UK, then there may be little or no risk of bribery. If business is conducted outside the UK, then the country or sector will be relevant.
  4. Due Diligence: Knowing exactly who you are dealing with can help to protect organisations from taking on people who might be less than trustworthy. Due diligence will only need to be done on persons who actually perform services for the business. Someone who simply supplies goods to the business is unlikely to do that. 
  5. Communications: Policies and procedures should be communicated to staff and to others who perform services for the business.
  6. Monitoring and review: An eye should be kept on the anti-bribery steps taken to keep pace with any changes in the bribery risks faced.

One of the most controversial areas was the issue of how much hospitality, promotional or other business expenditure could be done. The guidance stresses that genuine hospitality or similar business expenditure that is reasonably and proportionate will not be caught by the Act. So, businesses can continue to provide tickets for sporting events, take clients to dinner, offer gifts to clients as a reflection of good relations or pay for reasonable travel expenses in order to demonstrate goods or services will be fine as long as it is reasonable and proportionate.

Facilitation payments, which are payments to induce officials to perform routine function which they are otherwise obligated to perform are bribes although legally required administrative fees or fast-track services are not facilitation payments.

This document from the Ministry of Justice offers a quick guide to the changes to the Bribery Act that you need to know about to prepare your business for implementation: 

http://www.justice.gov.uk/guidance/docs/bribery-act-2010-quick-start-guide.pdf

The detailed guidance from the Ministry of Justice, published here under section 9 of the Act, will help commercial organisations of all sizes and sectors understand what sorts of procedures they can put in place to prevent bribery:

http://www.justice.gov.uk/guidance/bribery.htm

Employers must ensure that their company has the right policies in place in order to comply with the new legislation. The above guidance should help ensure that they are not caught out.

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Category: Business Law

2 Responses to “UK Bribery Act to Come Into Force on 1st July 2011”

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