The Bribery Act - Are You Prepared? 02/07/2011

The Bribery Act 2010 came into force on 1 July 2011 creating new personal and corporate criminal offences with a range of penalties up to imprisonment. 

The principal offences include the giving, offering, receiving and accepting of bribes and failing to prevent bribery by third party service providers, such as contractors, both within the UK and overseas.

The overseas aspects of these new offences mean that businesses with overseas operations should look at what they do and put in place anti-bribery procedures to ensure that any exposure is limited. 

The Oil & Gas industry, in particular, has a history of low level payments to ensure the freedom of movement of personnel and freight in certain countries where such payments became almost standard.  Payments of this type will now be caught by the new legislation and it remains to be seen whether the public officials who previously received such payments will adapt their behaviour in an effort to disguise the payments as something more legitimate.

To be effective a business should have procedures that are:

1.  Proportionate and adequate to address the risks;
2. Endorsed and actioned by senior management;
3. Based on an initial and regularly refreshed risk-assessment;
4. Involve effective enquiries on the actions of employees and third party service providers;
5. Based on top down communication and visible implementation;
6. Ongoing with a monitoring and review capability.

Third party service providers and joint ventures are viewed as high risk due to the remote performance of the activities.  Procedures in these areas should effectively assess the potential dangers and put in place checks to ensure that the risks are addressed.  This is particularly important because the Act recognises that a business cannot fully control the actions of third parties and there is a complete defence available where “adequate procedures” are in place and followed.

Legitimate hospitality and promotional or marketing expenditure is still acceptable as long as there is no intention to induce an improper act by the recipient.  However, with foreign public servants care should be taken  because it is less easy to show that the aim of the expenditure was not to secure a business advantage.

With the introduction of these new criminal offences this is clearly an increasingly complex area of business and organisations that may be affected should act now to mitigate the risks to them and their personnel.  At Ritson Smith we can offer a review and risk assessment of an organisation’s current practices along with advice on the implementation of appropriate and proportionate procedures.