The Bribery Act is controversial legislation that attempts to modernise the UK's corporate bribery and corporation rules, which reached royal assent on 8 April 2010.
In late September, the QCA held an informal seminar for Advisor Members on the Bribery Act, where a barristers from 6 King's Bench Walk, a well-renowned chambers with a heavy concentration on white collar fraud and cases involving corporate crime, outlined what is in the Act and what people should know and be doing before the Act comes into effect in April 2011.
There a four main offences outlined in the Act:
- paying bribes
- receiving bribes
- the bribery of foreign officials; and
- the failure of commercial organisations to prevent bribery.
The corporate offence (Section 7 of the Act) is the main departure from the old law and represents the biggest challenge for corporates, who are expected to ensure that their anti-bribery systems and policies are robust (as stated in the Act itself – "It is defence for [a relevant commercial organisation] to prove that [it] had in place adequate procedures designed to prevent persons associated with [it] from undertaking such conduct." (Section 7.2)).
There are a number of issues in Section 7, which has been deliberately drafted to be of a wide scope. Firstly, it places the onus on the company to avoid bribery. It also very broadly defines a 'relevant commercial organisation' as:
- a UK incorporated entity;
- a UK partnership; and/or
- Overseas entity that carries on business or part of a business in the UK.
QCA Advisor Members queried at the seminar whether an overseas company that only had a listing on a market in the UK would potentially be caught by the legislation. This is something that remained unanswered, as there is no body of case law built up yet to determine how the Serious Fraud Office (SFO) will enforce this definition.
The other issue is the wide definition of a 'person associated with the commercial organisation', which does not just capture employees but also anyone that performs a service for the company, including employees, agents, intermediaries, distributors, introducers, subsidiaries or joint venture partners.
Regardless, the barristers at the event stressed the importance of the 'adequate procedures defence' and the need for companies caught by the law to start thinking about how they will put these procedures into place. It was noted that:
- 'Adequate procedures' will depend upon the nature of the organisation concerned.
- Final guidance on the meaning of 'adequate procedures' will be published in early 2011 – but this will only consist of broad principles.
- There are existing sources of guidance, including the US Guidance on Foreign Corrupt Practices; OECD Good Practice Guidance on Internal Controls, Ethics and Compliance and Guidance issued pursuant to the UN Convention Against Corruption.
Steps to consider in terms of developing 'adequate procedures' were also discussed at the seminar and included:
- undertake a risk assessment, which could involve consulting internal audit/investigation reports and analysis of complaints records, and regularly review it.
- have effective leadership in addressing the risk and communicate anti-bribery policies to employees and all other relevant parties.
- carry out due diligence on who a business is doing work with.
- develop a clear policy on anti-bribery, outline who is responsible for implementing it and ensure that it is monitored.
The QCA will be responding to the Government's consultation on its draft guidance on the Bribery Act and will be looking to host a similar event for corporates in early 2011 following the publication of the guidance.
Please not that this article does not constitute legal advice and no responsibility or liability is accepted by the Quoted Companies Alliance (QCA) for any errors, omissions or misstatements it may contain, or for any loss or damage howsoever occassioned, to any person relying on any statement in, or omission from, this article.