The Bribery Act – Keep Calm and Travel On!

The Bribery Act 2010 (the Act) came into force on 01^st July 2011 with important implications for both UK and international businesses aimed at bringing the UK in line with the Organisation for Economic Co-operation and Development’s (OECD) recommendations in dealing with bribery and corruption.

The Law:
Under the new Act, not only is it an offence to commit bribery, but more significantly there is a new strict liability offence for failing to prevent bribery by a commercial organisation.  The main provisions are as follows:

1. Section 1 – Bribing another person – it is an offence to offer, promise or give a financial advantage or benefit in an effort to encourage another person to perform a relevant function or activity improperly or to reward them for doing so.
2. Section 2 – Being bribed – it is an offence to request, agree to receive or accept a bribe as an inducement to perform a relevant function or activity improperly or as a reward for the improper performance.
3. Section 7 – Failure of Commercial Organisations to Prevent Bribery – an offence will be committed by a commercial organisation where a person “associated” with the organisation bribes someone with the intention of obtaining or retaining business or a business advantage for the commercial organisation.  This offence can be committed in the UK or overseas.

The application:
The Act applies where the offence or any act or omission related to the offence take place in part of the UK; and/or, where the offence or an act or omission related to the offence does not take place in the UK but the person’s act or omission would constitute an offence in the relevant country and they have a “close connection” with the UK.

What are the Penalties?
If you are found to be in breach of the Act, criminal sanctions under the Act include:

• Jail and/or unlimited fines for individuals
• Commercial organisations can also receive unlimited fines which are likely to be substantial;
• Both a commercial organisation and its directors/senior officers could be subject to criminal penalties;
• A director convicted of a bribery offence is also likely to be disqualified from holding a company directorship for up to 15 years.

The Travel Industry
Invitations to corporate events, familiarisation trips to new destinations and commission for services are common throughout the travel industry and whilst the wide drafting of the Act seeks to draw scrutiny on these activities, it does NOT seek to bring an end to them.

The main impact of that Act is to make businesses stop and think what is expected or what could be inferred by the corporate hospitality or the expenditure and whether or not it might be considered “reasonable”.

The question of reasonableness is, however, somewhat of a grey area which will only become clear when the scope of the Act is put to test.  On 30^th March 2011 the Government published guidance on the Act to assist commercial organisations in implementing anti-bribery policies and procedures so as to comply with the Act.

Points to consider:
In the case of a Section 1 offence, the guidance states that the prosecution would have to show that any hospitality was intended to bring about the improper performance and that this would be judged by what a reasonable person in the UK would expect.  It is this, underlying intention to encourage or achieve something other than a genuine social event with a client that is key.

To have confidence in the events that you organise is essential; the following are just a few pointers that could cause suspicions to be raised:

• Events that coincide with renewal of contracts
• Events at a similar time to when new business is about to be agreed
• Events with excessive expenditure

Clarity is also key! Accurate details of all expenditure relating to corporate events should not only be kept, but should be kept in an easily accessible format.  The guidance sets out six principles which are all designed to give commercial organisations a basis for planning and implementing their regime to prevent bribery.

1. Proportionate procedures – procedures to prevent bribery by persons associated with a business should be implemented and should be proportionate to risks faced by the business in consideration of the nature, scale and complexity of the business activities.  The procedures should be clear, practical and enforceable.
2. Top level commitment – any procedures to be implemented must be bought into and implemented by the management team so that all members of the business are aware that any culture of bribery is unacceptable in any and all circumstances.
3. Risk Assessment – the company should regularly (as appropriate) carry out risk assessments in the view of the commercial activities carried out by the business to identify any potential risks it faces.  Records of such assessments must be kept to show what systems the business has in place.
4. Due diligence – the company should not only assess itself internally but it must also perform proper checks on anyone who will or is likely to perform services on behalf of the business to identify and mitigate any potential risks.
5. Communication – within any business, communication is key and the guidance simply reiterates this point.  The management of the business should ensure that all members of staff are aware of what procedures are in place and receive adequate training in such procedures couple with adequate checks to ensure that the policies and procedures are fully adopted and understood.
6. Monitoring and review – the business must ensure that all policies and procedures that are implemented in relation to the Act are monitored and reviewed and that improvements are made quickly in keeping with the changing face of the business.

Going forward
The Act does not mean an end to corporate hospitality; it simply means that you need to equip your business with the right policies and procedures to ensure that the culture of bribery is stamped out.

This article was originally published on: 10 October 2012