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Don't fall foul of the Bribery Act

Napthens - January 10th 2011

If you are a trading business, you need to be aware of the effects of the new anti-bribery law which comes into force in April 2011. Its ambit is potentially far reaching as it covers arrangements between private sector entities - it can cover corporate hospitality, for instance - and it requires commercial organisations to demonstrate that they have adequate procedures in place to comply with the legislation. It is also extremely relevant to businesses who have dealings with public or administrative officials in local or overseas jurisdictions.

In summary, the new Bribery Act will make it a criminal offence for any commercial organisation to:

  • offer a financial advantage to another person which either encourages or rewards improper performance
  • request or accept a financial advantage from another person which encourages or rewards improper performance

Improper performance is where there is a breach of impartiality or good faith in the course of any business activity. It can also apply where the offence is committed in foreign jurisdiction on behalf of a UK business, so businesses trading overseas ought to be particularly careful.

Offences committed by an entity's agents or employees will result in the entity itself being held strictly liable in the absence of adequate anti-bribery procedures. Senior management and directors can be held personally liable if they are demonstrated to have sufficient involvement in the offence.

The penalties can extend from fines (potentially unlimited) to imprisonment in the case of offences being committed by directors and senior officers.

It might potentially be used as a means to challenge the award of contracts by you or your customers and you should therefore consider developing a clear policy of how to avoid and minimise the risk of bribery offences being committed within your business. The Government is required to give guidance on the form this policy should take, which currently recommends:

  • undertaking a risk assessment of your business and the sectors/markets in which it trades
  • demonstrating top level commitment to compliance with best practice
  • undertaking due diligence into suppliers, customers, agents and joint venture partners
  • establishing clear policies on matters such as corporate hospitality, gifts and facilitation payments within employee handbooks
  • delivering practical training and undertaking ongoing monitoring

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