New bribery legislation: A compliance plan

New bribery legislation: A compliance plan


Author: Ron Reid

A top New Year priority for many will be to ensure that their organisation has adequate procedures in place to comply with the Bribery Act 2010.

Coming into force in April 2011, it includes a 'corporate offence' - the failure by a commercial organisation to prevent bribery.

This offence is committed when a person associated with the organisation bribes another intending either to obtain or retain business for that organisation or intending to obtain or retain a business advantage for that organisation.

It is a strict liability offence, or, perhaps more accurately, one of vicarious liability based upon the actions of the associated person.

However, notwithstanding an offence of bribery, there is a defence available if an organisation can prove, on the balance of probabilities, that it had in place adequate procedures designed to prevent associated persons from paying bribes. You will note the reverse burden of proof.

The definition of 'associated persons' is wide, and includes anyone performing services for the corporate body, including employees, agents, intermediaries, joint venture partners, and subsidiaries.

Whilst the Ministry of Justice has yet to publish the guidance (expected January 2011) required by the legislation on what amounts to 'adequate procedures', it is not expected that this will differ greatly from the draft guidance put out to consultation in September 2010.

Whilst the Act is not retrospective, organisations will have barely three months to put procedures in place. That may be long enough for organisations with established anti-corruption policies and procedures that require to be tweaked in the light of the guidance, but those without them will struggle to be ready in time.

For the latter, we suggest the following action plan, which can be started immediately:

  1. Carry out a risk assessment to identify vulnerable areas, enabling you to develop policies to counter specific risks. You might need help from across the business to assist in this task. Some companies have involved a risk committee where business is diverse.
  2. Write/review your anti-corruption policy. Consider how this is to be implemented in all business entities over which your company has effective control.
  3. Write/review your gifts, hospitality and promotional expenses policies (to include charitable donations, political contributions, facilitation payments etc.)
  4. Develop public statement of commitment - to be visible on your website and for communication to business partners, contractors, suppliers etc.
  5. Identify and appoint a compliance officer. They in turn will need to set up and put in place monitoring and auditing systems.
  6. Ensure accounting system can identify possible infringements, and that people know what to do about suspicious transactions.
  7. Introduce standard wording in contracts to confirm third party compliance.
  8. Review employment contracts to set out the consequences of breach.
  9. Review your whistleblowing policy and how to give information to employees about what to do if approached to accept a bribe.
  10. Consider systems for due diligence on appointment of agents/joint venture partners/intermediaries, for example appropriate audit rights and relevant termination clauses.
  11. Having identified the recipients, roll out anti-corruption training. Consider whether to include/involve contractors, agents, joint venture partners.
  12. Keep written records of all of above to help prove 'adequate procedures' are in place.

You might need to change the order of the above slightly for your business, and you may have already addressed some of the issues, or may not need to do them at all.

Some of these may have a knock-on effect in other areas, for example crisis management planning.

Shoosmiths can and is assisting clients with implementing such plans by writing policies and reviewing contractual documentation.

One of the real challenges will be to design and deliver effective anti-corruption training once your procedures are in place, so that you can, if necessary, prove compliance. This is where we can help.

Shoosmiths has developed a cost-effective online compliance training course that can be adapted to your individual procedures. This includes evaluation by multiple choice questions tailored to your industry, as well as more traditional face-to-face training courses.

Many clients have found it helpful to discuss with us their plans for compliance, or to make sure they fully understand the Act and the measures they must put in place.

We have a specialist team ready to help. If you feel you would benefit from such a discussion, please don't hesitate to contact us.

For advice on:

Compliance and training contact Ron Reid ( 03700 863317) or Rachael Darwen (03700 863243)

Due diligence in corporate transactions, Damien Phillips (03700 868793)

Employment contracts and HR policies, Louise Randall (03700 866911)

Commercial transactions and contracts, Andrew Pickin (03700 865032) or Rachel Clarke (03700 866754)