The Bribery Act will now to come into force on 1 July 2011.
The Ministry of Justice today published the Guidance on Adequate Procedures that businesses have been waiting for, following a slew of scare stories in the period leading up to the guidelines being finalised.
Draft Guidelines were published last September, and since then there has been much criticism of the Act and its perceived impact on UK companies and their ability to compete with their rivals based overseas.
At one point the CBI called the draft guidelines 'not fit for purpose', and the Government has been anxious to quell fears that its approach is 'anti-business' and divorced from reality.
The guidance follows the same broad shape as its draft predecessor, but is a considerable improvement, particularly the case studies now included.
Overall it remains 'goal setting' in character and so is not prescriptive in the guidance it provides. It also maintains the same six principles seen in the draft, although some have been renamed.
However, there are signs that the encouragement from business to 'get real' has been heeded, with more detail around the problem areas of facilitation payments and corporate hospitality, as well as refining the circumstances under which a person is considered 'associated' with a commercial organisation if a bribe is made.
Many foreign companies were concerned about the far reaching implications of the Act and whether mere admission to the UK Stock Exchange would mean they carry on business here and subject them to the Act. The guidance makes it clear that such companies will need to have a demonstrable business presence in the UK for the Act to bite.
At the same time, the directors of the Serious Fraud Office (SFO) and Public Prosecutions have issued 'joint prosecution guidance' on the Act, which sets out some parameters of the public interest test for prosecution of each offence under the Act, and also deals in some detail with two key areas:
- facilitation payments - which have caused consternation among many businesses operating in parts of the world where there is an expectation of such payments
- hospitality - which has been overhyped by the media and many commentators
Key issues that might affect the public interest decision on whether to prosecute with regard to facilitation payments will include large or repeated payments, planned payments, or those accepted as a standard way of conducting business (pre-meditation); and payments that are in clear breach of robust company policies on facilitation payments.
Payments that are small or self-reported to the SFO through a proactive approach to anti-corruption, or made by those in a vulnerable position, will tend towards a public interest decision not to prosecute.
We have long advised that sensible, reasonable hospitality, gifts or promotional expenses (and business trips) which, in their broader context, are not aimed at influencing performance and decision making, will remain outside the scope of the Act.
Only where the payment, gift or hospitality is extraordinary or lavish, or has the ability to influence or reward improper performance by the recipient, will the payment be considered under the Act.
However, even a relatively small gift to a sole or key decision maker at an inappropriate time (such as in advance of a tender proposal) may be caught by the Act if, in its context, it could elicit the improper performance of that function. Furthermore, where gifts or hospitality are deliberately concealed or are not genuinely connected with legitimate business, these may also be prosecuted under the Act.
One thing that remains constant following the guidelines' publication is the fundamental part they will play in the new anti-bribery framework which will now become law in three months' time.
From that time it will be essential for all businesses carrying on business or any part of their business in the UK to have adopted and to be implementing anti-bribery procedures that satisfy the criteria laid down in the guidelines.
This will be necessary if companies are to be confident they could defend any allegation that they have committed the new criminal offence of failing to prevent bribery which is included in the new Act.
Many businesses are having to do some homework conducting risk assessment exercises and have been putting in place the right policies and training their workforces. But this need not be unduly onerous if the exercise is approached in the right way.
As for scare stories circulating before the guidelines were published, including claims that all corporate hospitality would be outlawed, appear to be without substance. The Ministry of Justice has made clear that provided such hospitality serves a legitimate business interest and is not disproportionate, it should not be a problem.
The SFO, which will prosecute businesses under the new law, has made it very clear in recent public statements that its targets are those businesses involved in real wrongdoing, a point underlined in the joint prosecution guidance issued to prosecutors to coincide with the publication of the Guidance on Adequate Procedures.
It is not intended to penalise companies going about their normal business in a reasonable way. With the right procedures in place, innocent companies should have little to fear.