The current laws on bribery and anti-corruption are contained in various pieces of legislation but a new Act, known as the Bribery Act 2010, is due to come into force shortly. An exact implementation date is yet to be set but it was anticipated to be April 2011 (although the Government are currently reviewing this). If implemented, it will result in an extension in the scope of this area of law. This article focuses on the effects of the new Act.
Under the Bribery Act 2010, there will be various offences, including:
Bribing another person (i.e. active bribery);
Being bribed (i.e. passive bribery);
Bribing a foreign public official; and
Failure of a commercial organisation to prevent bribery (as well as an offence of consent and connivance by a senior officer).
Although there is no express definition of "bribery", it is clear from the Act that bribery occurs where an advantage is given in exchange for improper decision-making or action.
Take the following fictional situation as an example of what could happen:
A director of a warehouse group is invited by the M.D. of a major supplier to take a free holiday in his Spanish villa. The director realises that this invitation has been offered because his current contract with the supplier is due to expire in a few months and the MD wants him to renew it without going through a formal tender process. Is it lawful for the director to accept the holiday offer?
In this situation, there are a number of potential offences under the new Act:
1. If the director accepts the Spanish holiday, both he and his company are potentially committing the offence of being bribed since he is accepting the holiday with the intention that he will forgo the usual procurement process;
2. The MD of the supplier and his company are committing the offence of bribing another as he is offering the director the holiday as an inducement for bypassing the usual tendering process; and
3. The warehouse company that employs the director have committed the offence of failing to prevent bribery, unless it can show that it had adequate procedures in place to prevent bribery. Also, any other senior officers of the company (such as the other directors and managers) who consent to or connive in the bribe may have personal liability.
BRIBERY ACT CHECKLIST
A bribe occurs under the Bribery Act 2010 where a person offers, promises or gives a financial or other advantage to another person and either intends the advantage to induce or reward the improper performance of a public function or business activity or knows or believes that the acceptance of the advantage would itself constitute the improper performance of such function/activity.
Both individuals in their own capacity and corporate bodies can be liable for the offences of active bribery, passive bribery and bribing a foreign public official.
The Bribery Act 2010 does not mean that all corporate hospitality will be classified as an illegal bribe. Draft guidelines have made it clear that routine and inexpensive hospitality that is reasonable and proportionate is unlikely to fall foul of the Act as, practically speaking, it is unlikely to impact on the decision-making.
A commercial organisation may be able to avoid liability for failing to prevent bribery if it is able to show that it had adequate procedures in place to prevent bribery.
It remains to be seen exactly what organisations must do to show that they have "adequate procedures" in place. However, draft guidance has suggested that it will involve risk assessments, top-level commitment, due diligence, clear, practical and accessible policies and procedures, effective implementation as well as monitoring and review.
If you fall foul of the new Act, there are tough criminal sanctions. An individual can be sentenced to up to 10 years imprisonment and/or receive an unlimited fine. A body corporate can be punished with an unlimited fine.
Additionally, there may be civil penalties, including recovery of the proceeds of the crime. Also, directors may face disqualification proceedings, effectively banning them from holding any future office as a director. Companies can also be permanently disbarred from tendering for Government contracts.
Article by Katee Dias - Goodman Derrick LLP- firstname.lastname@example.org