BUSINESSES NEED TO GEAR UP FOR NEW BRIBERY LAW

All UK businesses will need to consider the implications of the new Bribery Bill, expected to come into force later in 2010.

The offences under the new law will replace the UK’s common law and old statutory offences relating to bribery. The most significant changes will be:-

• The new law will have extra-territorial effect. UK nationals and UK companies could be guilty of an offence even if no part of the offence takes place in the UK;
• An organisation carrying on business in the UK could be guilty of a new offence; failing to prevent bribery, anywhere in the world, by a person providing services to it, such as an employee, agent, consultant or an overseas group company.

As one would expect, the potential penalties under the new Act will be high: up to 10 years’ imprisonment for individuals and unlimited fines for companies.

The Act will establish four offences:-

1. Bribing another person (essentially giving, offering or promising a “financial or other advantage” to procure or reward “improper exercise” of a public or business activity which is expected to be discharged in good faith or impartially).
2. Requesting, accepting or receiving a bribe (using the same concepts for the offence of bribery above).
3. Bribing a foreign public official (largely reflecting the OECD Convention on combating bribery of public officials in international business transactions).
4. (as mentioned above) Failure by a commercial organisation to prevent bribery by a person who provides services to it.

It will, however, be a defence to this fourth offence if the organisation can prove it had in place “adequate procedures” intended to prevent bribery by such persons. Whether procedures are “adequate” will depend on the nature, size and scope of and risk of bribery in the particular business. The Government indicates that even a small low-risk business should ensure an anti-bribery policy is clearly communicated to its workforce. Substantial, complex, international businesses would likely need a range of checks, expense controls, audit and other processes in order to establish the “adequate procedures” defence.

Hill Hofstetter will issue a further update when the form and timing of the new law become final. In the meantime any UK business planning to review its employee handbook, group trading policies or criteria or terms for appointing third party service providers should take the opportunity to consider incorporating changes which will be advisable under the new legislation.

If you would like further information or any specific advice concerning the implications of the new laws, please contact Tim Foster.