The Bribery Act 2010 will come into force on 1 July 2011 setting out procedures which relevant commercial organisations can put into place to prevent persons associated with them from bribing. The government has confirmed that a commercial organisation convicted of failing to prevent bribery under section 7 of the Bribery Act 2010 will not face mandatory exclusion from tenders for public contracts. However, public authorities will have discretion to exclude these organisations from tenders.
On 30 March 2011 the Ministry of Justice published its guidance about procedures which relevant commercial organisations can put into place to prevent persons associated with them from bribing. If an organisation can prove that it has adequate procedures in place, then they can form the basis of a defence to the offence of failing to prevent bribery under section 7 of the Bribery Act 2010.
The Act sets out six principles that are intended to give all commercial organisations a starting point for planning, implementing, monitoring and reviewing their bribery free business regime.
The principles are:
Principle 1: Proportionate procedures: A commercial organisation’s procedures to prevent bribery by persons associated with it are proportionate to the bribery risks it faces and to the nature, scale and complexity of the commercial organisation’s activities. They are also clear, practical, accessible, effectively implemented and enforced.
Principle 2: Top level commitment: The top-level management of a commercial organisation (be it a board of directors, the owners or any other equivalent body or person) are committed to preventing bribery by persons associated with it. They foster a culture within the organisation in which bribery is never acceptable.
Principle 3: Risk assessment: The commercial organisation assesses the nature and extent of its exposure to potential external and internal risks of bribery on its behalf by persons associated with it. The assessment is periodic, informed and documented.
Principle 4: Due diligence: The commercial organisation applies due diligence procedures, taking a proportionate and risk based approach, in respect of persons who perform or will perform services for or on behalf of the organisation, in order to mitigate identified bribery risks.
Principle 5: Communication: The commercial organisation seeks to ensure that its bribery prevention policies and procedures are embedded and understood throughout the organisation through internal and external communication, including training, that is proportionate to the risks it faces.
Principle 6: Monitoring and review: The commercial organisation monitors and reviews procedures designed to prevent bribery by persons associated with it and makes improvements where necessary.
More about the principles in our Bribery Act part 1 article. Small organisations will face different challenges from those faced by larger organisations and organisations with purely domestic operations may face lower risks of bribery than those with international businesses. The respective bribery prevention procedures should be proportionate, but the outcome should always be robust and effective anti-bribery procedures.
The Bribery Act will come into force on 1 July 2011.
Section 1: offences of bribing another person
There have been concerns that this section would prevent certain types of hospitality, such as taking clients to major sporting events. However, the guidance clearly states that in order to bring a case, the prosecution would have to show that the hospitality was intended to bring about the improper performance and that this would be judged by what a reasonable person in the UK would think. It is therefore seen as unlikely that taking clients to, say, a Six Nations match at Twickenham would be an offence.
Section 6: Bribery of a foreign public official
The guidance notes that there may be an overlap between the section 1 offence and section 6 offence, in that bribing a foreign public official may involve conduct which amounts to improper performance of a relevant function. The lesser evidential requirement of section 6, that is, of proving the intention only to influence the official in his capacity as a foreign public official, is aimed at making section 6 more effective to prevent the influencing of decision making of public officials.
- The provision by a UK mining company of reasonable travel and accommodation for foreign public officials visiting mining operations to review the company’s installations, safety and operating systems would fall outside the intended scope of the offence.
- Flights and accommodation for foreign public officials to meet with senior executives of a UK commercial organisation in New York as a matter of genuine mutual convenience, and some reasonable hospitality for the individual and his or her partner, such as fine dining and attendance at a baseball match are unlikely to raise the necessary inferences. However, if, for example, the organisation’s senior executives could easily have seen the official with all the relevant documentation when they visited the relevant country the previous week then the necessary inference might be raised by holding a second meeting in New York.
- Offering ordinary travel and lodgings to enable a foreign public official to visit to a hospital run by the commercial organisation providing private health care is unlikely to engage section 6 but if that same commercial organisation offered the foreign public official an unrelated five-star holiday this might well raise the necessary inference.
More examples in our Bribery Act part 2 article. The guidance therefore suggests that while an organisation is reviewing policies and procedures for the purposes of the defence under section 7, should also establish proper standards for hospitality and other similar expenditure.
More on the Bribery Act in our Bribery Act part 3 article.
All articles are for general purposes and guidance only and do not constitute legal or professional advice. Copyright 2010 Anassutzi & Co Limited.