Governance
Watch out for the new Bribery Act |
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| Governance | |
| Written by Tim Constable, Partner at Matthew Arnold & Baldwin LLP | |
| Friday, 12 March 2010 | |
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The new Bribery Act should force most commercial organisations to rethink their procedures.
Most of us associate corruption with people such as football agents and foreign potentates. Having taken eons to get off the mark, the Bribery Bill is now steaming ahead. Jack Straw has set out his determination to see the Act brought in before the General Election. According to the Government the new Act will reform the criminal law to provide a new, modern and comprehensive scheme of bribery offences that will enable Courts to respond more effectively to bribery at home or abroad. There are two new general offences which cover the offering, promising or giving of an advantage (bribing) and requesting, agreeing to receive or accepting of an advantage (being bribed). There are two reasons why almost every commercial organisation in the UK will need to pay attention to the new legislation. The first reason is corporate hospitality (CH). CH will be caught by the legislation because of the way the offence is defined, ie to give out “an advantage” with the intention of inducing a person to perform “improperly”. There is no minimum amount. The Government has made it clear that CH will not be exempted from the new Act and the nearest it has come to placating concerns about CH is an official letter, which does not actually make things much clearer. The letter draws the line between “routine and inexpensive hospitality” (allowed) and “lavish or extraordinary hospitality” (not allowed). Other than that however, the distinction is to be left to the jury. It is going to take time for case law to establish whether any particular corporate event crosses the line. For example, could a golf day ever amount to bribery? Perhaps not for an afternoon at the local municipal, but what about St. Andrews? Or Valderrama? Or Dubai? And will (dare I say it?) investment bankers be entitled to enjoy a higher level of CH than (again, dare I say it?) accountants? These are all matters where the Act offers no guidance at all. Where should you draw the line? One rule of thumb is comparable activity. If you can point to an accepted general level of corporate hospitality within your market then this should be a starting point for what is acceptable for the purposes of the new Act. Individual cases may vary of course. You should also use common sense; you will know what is acceptable and what is taking the proverbial. These are perhaps the best guides for the moment, however unsatisfactory. The second reason? The new Act makes it an offence for a “commercial organisation” (ie any type of trading entity except for, seemingly, a sole tradership) to be associated with any person who makes bribes in order to win business for that commercial organisation. If your company engages a rogue who bribes his way to a better commission then, at first blush, it will be committing an offence even if the rogue is never prosecuted and wherever in the world he is situated. But there is a defence where the commercial organisation is able to prove it had in place “adequate procedures” to prevent its rogues from undertaking such conduct. Moreover, the Secretary of State must publish guidance about the types of procedure that you can put in place to prevent this offence. There is a wealth of information on its way to help you, including; (1) a good practice guidance to be developed by the OECD later this year; (2) authoritative tips for countering bribery published by TI on its website; (3) a new ISO (number 26,000). As well as providing certainty, the easy availability of guidance may help you avoid the inevitable satellite industry of training courses and guidelines on avoiding prosecution under the new Act. In summary, UK corruption is worse than you think. A new Bribery Act will affect your organisation and you need to consider your Corporate Hospitality policy and your anti-corruption procedures. But there is no need to panic or spend large amounts on training courses. Wait for further developments and follow the practical internet guidance given out by organisations such as Transparency International.
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