BRIBERY ACT 2010 TO COME INTO FORCE IN APRIL 2011: BUSINESSES NEED TO GET READY

All UK businesses will need to consider the implications of the UK’s new Bribery Act. It was announced on 20 July that the Act will come into force in April 2011.

The offences under the Bribery Act 2010 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. “Senior officers” (including non-board level managers) will themselves commit offences under the Act if they connive in or consent to bribery offences committed by or on behalf of their organisation.

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 plans, in early 2011, to issue guidance on what such procedures should comprise, following a consultation process to be held this Autumn. However it seems very unlikely that the guidelines will offer definitive answers and each organisation, from SMEs to multi-nationals, will need to assess and tailor its own procedures to the risks inherent its own operations and sector. Substantial international businesses will need a significant range of checks, controls, audit and other processes in order to establish the “adequate procedures” defence.

Hill Hofstetter will issue further updates as the likely content of the Government’s guidelines becomes more clear later in 2010. 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 consider incorporating changes which will be advisable for compliance with the new Act.

If you would like further information or any specific advice concerning the implications of the Bribery Act 2010 for your organisation, please contact Tim Foster.