Bribery Act: Compliance for developers

Bribery Act: Compliance for developers


Author: Ron Reid

New legislation, described as the toughest anti corruption measures in the world, came into force on 1 July.

Developers and land agents need to be extremely vigilant in setting up and completing land transactions in the future, to ensure that every element of the deal (whether it be offering the sales back to the agent, the 'last shout' on a deal, or any number of other variables) is squeaky clean.

The Bribery Act 2010 creates four new criminal offences and the penalties for these are severe: up to ten years' imprisonment for individuals and unlimited fines for corporate entities. Individuals can face disqualification from holding statutory directorships in the UK. A corporate entity or an individual might also face exclusion from participation in public contracts within the UK and throughout the EU.

Among the new offences is a corporate offence of failing to prevent bribery.

This is based on the failure to prevent bribery by employees - who are deemed to act on behalf of the organisation - or 'associated persons' - someone who is acting on behalf of an organisation but who is not employed by it, for example this might be an agent acting for a developer.

All that is needed to fall foul of this offence is for a person associated with the organisation and who performs services for or on behalf of it, to offer or give a bribe and so the independent acts of agents or consultants could make an organisation guilty of the offence.

This corporate offence, unlike the other new offences, is one of strict liability - intention or knowledge of the organisation is irrelevant.

By way of example: A employs a land agent who agrees to pay a percentage of the development site price to the seller's agent personally, provided the land is sold to A. This payment is unknown to the seller who follows his agent's advice to favour A. Subject to being able to prove it had adequate procedures to prevent the bribery, A has committed the corporate offence whether or not the payment to the seller's agent is actually made.

The Act provides a defence if it can be proved - by the defendant organisation - that 'adequate procedures' were in place to prevent associated persons from undertaking bribery. It will be essential for a corporate entity to prove that internal systems are effective and that all associated persons are aware of them, not just employees.

Guidance has been published on what amounts to 'adequate procedures'. This is goal setting rather than prescriptive. The extent of the policies and procedures which need to be put in place must be proportionate to the real risks faced.

What do you do to comply? Shoosmiths have a dedicated team to help with Bribery Act compliance including an online training course. Click here to view.

It is commonplace for companies to provide details of ethical and corporate responsibility matters when tendering for contracts. Tender documentation frequently asks about health and safety, environmental issues and the like.

Already, clients are reporting that details of anti-bribery policies and procedures are being required. These need to be robust if companies want to be competitive - and if they want to be protected from liability for third party actions.