March 29, 2011

The greater cost of bribery

The Bribery Act 2010, expected to come into force in April 2011, is intended to make it easier to prosecute companies and directors for corrupt behaviour and may extend to normal  business conduct that many companies will not expect to be affected. Companies and directors who are unaware of the new legislation will not be able to defend themselves against claims on these grounds.  

The new Act will have a significant impact upon UK business; firstly, it will make illegal the offering, giving, receiving or promise of bribes as a means to securing a contract or gaining other advantage.  Secondly, there will be a new corporate offence of failing to prevent bribery by employees, agents, partners or subsidiaries regardless of whether the business knew of the bribe or not.  Finally, it will make illegal the bribery of foreign public officials. 

Despite this new legislation, facilitation (or ‘grease’) payments – nominal payments, gifts, etc. made to individuals or companies – are still a grey area. Whilst the last Labour Government had not intended for the new legislation to penalise the use of hospitality to maintain or build relationships with clients and associates, the greater the value of facility payments or hospitable gestures, the more likely it is to attract the attention of trading authorities.

A company found to have committed one of the above offences is punishable by an unlimited fine. However, in addition to this, directors and senior managers may be prosecuted separately under the Bribery Act 2010 and can also be punished with an unlimited fine and even imprisonment of up to a maximum ten years.

The only defence available to firms is if “adequate procedures” were in place to prevent bribery taking place. What constitutes adequate procedures is not clear but guidance on what procedures organisations should put in place will be provided by the Government prior to the Act coming into full force.  ups site down However, questions are being rightly asked as to whether these are being issued far enough in advance to allow companies time to assess these guidelines, review their practices and implement new ones.

In preparation for the Act coming into force, firms are advised to undertake due diligence of corporate partners and associates, assess and redraft employment documents and staff hand-books and review internal processes. For firms wishing to protect themselves from risks and reduce their potential liability, Holmes & Hills’ commercial team of solicitors offer professional legal advice and support on undertaking and implementing protective measures.

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