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Six ways to prepare yourself for the UK’s new Bribery Act

Businesses are concerned that they will have little time to meet the demands of the Bribery Act when its offences come into force next year. If they wait for the Government's guidance on "adequate procedures" to be published, it may be too late.

The Bribery Act offences come into force in April 2011.  Its remit is extremely wide; as the Director of the UK Serious Fraud Office, Richard Alderman told the Anglo-Russian business community at an event in London on 16 November 2010: “I shall have jurisdiction where a foreign corporation carries on a business in the UK and commits an act of bribery in a third country.  This will be an offence even if the act of bribery has nothing to do with the UK business“.  This is because the Act introduces a new corporate offence of “failing to prevent bribery” whereby any corporate which carries on a business or part of a business in the UK, will be automatically criminally liable if anyone performing services for it anywhere in the world bribes to win or keep business for the corporate.  Employees, subsidiaries and even foreign agents can make a corporate liable to unlimited fines, even if management knew nothing about it.  This is the point.  Companies that do business in the UK (not just UK incorporated companies) will be expected to make sure they know what is being done on their behalf and to police it.

The only defence is having adequate procedures designed to prevent bribery. The UK Government's guidance is supposed to help business understand what this requires.  The Ministry of Justice (MoJ) has just completed its consultation on the guidance.  The final version will be published in the new year, but the draft makes interesting reading.  Only when the first cases are prosecuted through the UK courts will matters become clear.  But there are already some obvious steps that businesses should be taking. 

The MoJ's draft guidance is "not prescriptive and is not a one-size-fits-all document." In other words, the guidance won't tell you the answer.  Instead, it sets out Six Principles for Bribery Prevention that corporates can consider applying, together with commentary on each.

First, a "top level commitment" to eradicating bribery: if management don't really believe in it, it's not going to happen. Second, risk-assessment of the business, taking account of size, sectors, modes and places of operation. Third, due diligence on agents, business partners and even staff to ensure they have the expertise required with no conflicting interests and are paid no more than is fair. Fourth, clear, practical and accessible policies and procedures so that everyone acting on its behalf knows what is acceptable and how to deal with any issues. Fifth, effective implementation of the policies and procedures: "this is about going beyond 'paper compliance' to embedding anti-bribery in your organisation's internal controls, recruitment and remuneration policies, operations, communications and training on practical business issues." Finally, monitoring and review can help ensure the procedures are working.

None of this is surprising or novel and there is already ample guidance covering the same ground and more.  Importantly, none of the principles are obligatory, but persuading a court that your procedures are "adequate" may be difficult if you chose not to apply all of them.

The MoJ also published "illustrative scenarios" covering key areas of concern, including intermediaries, joint ventures and hospitality.  Unfortunately, they offer few answers and raise new questions: how much less is expected of small and medium sized companies? The scenarios suggest the bar is still very high.  We will have to see what the courts make of these scenarios, which are not part of the guidance.

In the meantime, businesses should review industry guidance and assume the MoJ guidance will not change.  The UK Financial Services Authority's recent report on corruption in commercial insurance broking is also recommended reading whatever your business.  It offers the best insight we have of how the authorities may assess "adequate procedures".  Developing anti-bribery procedures is not simple and takes time if you really want procedures that are "adequate".  You can't buy an off-the-shelf product.  Those that haven't already got their procedures in place should start working on them now.

For more on the UK Bribery Act visit: www.law-now.com/anticorruptionzone

Omar Qureshi is an anticorruption lawyer and partner at CMS Cameron McKenna LLP

Omar Qureshi
Partner, Dispute Resolution
CMS Cameron McKenna
T +44 (0) 20 7367 2573
E: omar.qureshi@cms-cmck.com