The Final countdown to new UK Bribery Act

21/06/2011

Strict protocol only defence against bribery allegations

Non-compliance could bring harsh penalties

With just weeks to go before the new UK Bribery Act comes into force on July 1st businesses of all sizes are being advised not to underestimate the risks of being unprepared. While there may be an assumption that bribery is an issue that will affect larger corporations the impact on SMEs should not be overlooked. Colin Fyfe, Divisional Director for Clydesdale & Yorkshire Banks, says companies which have not prepared could pay a high price.

“Earlier this year the UK Government said that the new Bribery Act would be good for business because it creates the conditions for free markets to flourish. The main aim is to tackle corruption while supporting growth but what will the new legislation mean for companies in practice?

“The Act is based around six guiding principles: proportionate procedure; top level commitment; risk assessment; due diligence; communication and monitoring and review. It will be an offence for commercial organisations to either solicit or accept a bribe at home or abroad and also covers agents acting as third parties. With the maximum penalty being raised from seven to ten years imprisonment for those found guilty of bribery and corruption, it will be sensible to put robust procedures in place to ensure your company doesn’t fall foul of the new legislation.

“One example might be that a small company has opened up a new market overseas but has concerns about bribery after being asked to make facilitation payments. To avoid getting it wrong your business will need to show that it has researched local law, made sure the people being dealt with are aware of your anti-bribery procedures and that you have made sure that every attempt has been made to enquire why fees are due if they seem to be over and above normal practice.

“Similarly if you are dealing with foreign countries and there is little in-house expertise of that market it will pay to make enquiries. Find out who you need to speak to and make enquiries to verify reputations; this could be the Foreign Office, local chamber of commerce or business contacts. It will also be important to be able to demonstrate your company’s anti-bribery procedure is driven from the top level and that you have invested time to train staff to spot the danger signs.

“There is also the need for business leaders to consider the UK domestic market. Agents and consultants involved in the tendering process need to be made aware of bribery procedure and how their conduct reflects on your business. The process of due diligence will be important here with checks on anyone contracted to do work on your behalf vital to maintain peace of mind.

“The issue of corporate hospitality has been widely debated but if you get the basics right then your company will have no cause for concern. The main thing to do is to make sure everything is out in the open and that everything has been risk assessed. It must be made clear to clients that they are in no way obliged to do business with you but your hospitality is there to build bridges and promote the work you do. If you are dealing with public officials it will make sense for you to declare all hospitality to the appropriate body. Travel costs, accommodation and gifts will all have to be accounted for and it will be safer to be completely transparent on all costs so there can be no suggestion of corrupt practices in your business dealings.

“At the end the only defence your business will have against bribery charges is that your company has embraced a culture of anti-bribery, that staff are aware of and trained in acceptable methods of conduct; that in foreign markets you have done everything possible to check local law and custom with both companies and third parties, and that for all cases involving hospitality you have been 100% open about what you are doing and that you have been promoting your business rather than making payments in kind in order to further your own personal interests.”