The Bribery Act clarifies and simplifies the pre-existing law on bribery, creating a new legal framework to combat bribery in the private and public sectors. It is aimed at corporate activity but it also applies to trustees of individual pension schemes.
What does the Bribery Act prohibit?
The Act creates four criminal offences, three of which are relevant for trustees of pension schemes. Essentially these offences are: giving a bribe; taking a bribe; and the failure of a corporate organisation to prevent bribery by someone associated with it. The first two apply to individuals; the final offence is a corporate offence.
A bribe is very widely defined as "a financial or other advantage", so it can include such matters as corporate hospitality or gifts.
The penalties for breaching the Act are: for an individual on conviction, up to 10 years imprisonment or an unlimited fine or both; and for a company, unlimited fines which can be imposed on both the company and its individual directors. A couple of cases concerning bribery (although not under the Act) have recently come before the courts and substantial penalties have been imposed.
This may all sound very scary for trustees seeking to do, and continuing to do, an increasingly difficult job. However, the Ministry of Justice has confirmed that it is not the intention to stop ordinary proportionate hospitality from taking place. It is recognised that there is a need to build relationships in the business world and that principally remains acceptable. What needs to be shown, if there is to be an offence under the Act, is an intention to influence to gain or retain a business advantage.
The ethos of the Act is not entirely new for trustees who work within existing trust law and have fiduciary duties which already require of them the highest possible standards of behaviour.
What should trustees do to comply with the Bribery Act?
The vast majority of what trustees do on a daily basis means that there is very little chance of them breaching any of the provisions of the Act. However, as with dealing with conflicts of interests trustees should look to establish a policy for dealing with the potential of bribery.
Trustees should take a proportionate look at, and assessment of, their likely risks and formulate a bribery policy accordingly. We would expect such a policy to confirm zero tolerance of any attempts to bribe an individual or acceptance of a bribe.
Acceptable forms of hospitality could be confirmed including a maximum value or level up to which no action is necessary. We would advise trustees to look at disclosing, as they do in relation to conflicts of interests, any areas where they feel they are open to the possibility of bribery or a claim of bribing another person and also to declare any hospitality that they have received, again subject to a tolerance threshold. All trustees should also be given training covering the issues raised by the Act. They should also maintain a risk register. It may be possible for trustees to adapt the policy of their sponsoring employer if it has one already in place.
The corporate offence is only relevant to corporate trustees and requires commercial activity. The associated person has to be performing a service for the corporate entity or on behalf of the corporate entity with an intention to obtain a business advantage for it. Whilst it may be difficult to see where this is relevant to corporate trustees, they are not expressly excluded from the scope of the Act or from this particular offence and therefore we would advise the safest route is to assume that corporate trustees must comply and, importantly, show compliance.
In order to protect against any claims under this offence, corporate trustees should look to put in place procedures to prevent bribery taking place on its behalf. Accordingly consideration should be given to nominating someone to be responsible for looking into issues of bribery, to have a full disclosure policy of any activities undertaken that might fall within this remit and for there to be continuing assessment of activities and opportunities that might constitute bribery. The keeping of a register to confirm actions undertaken to comply with this responsibility would also help to establish the existence of "adequate procedures".
In addition, a corporate trustee could be deemed to be an associated person of the sponsoring employer. Corporate trustees should also therefore understand their sponsoring employer's policy and procedures. For more information on what might constitute adequate procedures, see our recent article 'Throwing light on the meaning of adequate procedures?'.
As with conflicts of interests, if trustees can establish a regular reporting structure and forum for highlighting and discussing the issue of bribery, they should be able to satisfy themselves that in all but very extreme cases they are adequately dealing with this issue and taking it seriously. Trustees should never ignore the issue, and must ensure that their response is proportionate to the risks.