The new Act should come into force in July 2011. We recommend that Companies check that their anti-corruption compliance procedures will be adequate to comply.
The risk is that certain of the new offences will involve strict liability - this means that the offence is committed whether there is any intention to do so or not and irrespective of knowledge.
The director of the Serious Fraud Office has said "The UK will soon have the toughest bribery legislation in the world and it will be vigorously enforced by the Serious Fraud Office".
The 2010 Act creates four new offences:
- Active Bribery - This offence applies in both the public and private sector.
- Passive Bribery - This offence also applies in both the public and private sector.
- Bribery of a foreign public official.
- Corporate failure to prevent bribery.
All of the offences have significant extra-territorial scope and can be committed even where no relevant acts take place in the UK.
The corporate offence of failure to prevent bribery is especially significant for companies because it imposes strict liability on them for the acts of their employees and representatives. The only defence is that the organisation had in place adequate procedures designed to prevent persons associated with it from engaging in bribery.
This is the fundamental area of concern for most companies and the issue is whether or not such "adequate procedures" are in place.
The Ministry of Justice has produced a consultation paper setting out some draft guidance on adequate procedures. It sets out six high-level principles which companies should take into account when reviewing their anticorruption procedures and policies.
Penalties for breach of the 2010 Act are higher than those under the existing law. Companies can face unlimited fines. Individuals guilty of an offence can face an unlimited fine and/or up to ten years' imprisonment. Other sanctions include civil recovery of the proceeds of crime.
Adequate procedures?
What is adequate will depend on a number of factors but, as a minimum, you should take action to adopt the following:
- Create a documented assessment of corruption risk, having regard to internal and external risk factors
- Ensure that there is evidence of top-level commitment to anti-corruption compliance
- Put in place clear and comprehensive anti-corruption policies and procedures including those covering bribery, gifts, hospitality and charitable contributions, facilitation payments and procurement
- Put in place robust procedures for dealing with agents, suppliers, consultants and JV partners.
- Provide anti-corruption training to employees
- Consider appraisals, recruitment and remuneration and how current polices should be amended
- Ensure that books and records accurately reflect transactions and disposal of assets
- Conduct regular reviews of risk assessment, policies and procedures and update where necessary.
- Put in place procedures through which reporting of questionable conduct is prompt
Nick Richardson can be contacted at 01483 302000 or e-mailed at nick.richardson@www.rhw.co.uk