UPDATE: The Bribery Act 2010 is now in force. Read more in our dedicated section about how this will impact your business.
Today the UK Government published long awaited guidance on the procedures that businesses need to implement to comply with the Bribery Act, which comes into force on 1 July this year. The Act includes a controversial new criminal offence for businesses which fail to put "adequate procedures" in place to prevent bribery. <Click here for a summary of the Act>. Today's guidance provides clarification on how far these procedures need to go and which companies will need to implement them.
The Serious Fraud Office and the Director of Public Prosecutions have also published joint guidelines for prosecutors on how to apply the legislation.
We raised concerns about the wide reach of the Act as part of the public consultation on the impact on UK businesses. We welcome the clarification provided today, which addresses a number of the points raised and clarifies the scope of the new corporate offence. We have reviewed the guidance documents published today. <Click here for our initial analysis>.
The guidance identifies six guiding principles for adopting adequate bribery prevention procedures which are:
- Procedures proportionate to the corruption risk
- Top level commitment to a zero tolerance policy
- Assessment of corruption risk
- Due diligence on those performing services for your organisation
- Communication of bribery policies both internally and externally (including training of staff where appropriate)
- Monitoring and review of anti-corruption policies and procedures
To see how we can help you implement anti-corruption policies and procedures in your business <click here>.
The Government has taken on board the concerns expressed by business and by experts in the legal community. Our primary concern was that there was a real danger that companies operating in the UK would have been found criminally liable for bribery committed by parties over which they had little practical control, and which may have resulted in no direct benefit to them. Greater clarity on what it means for a party to be "performing services", "conducting business in the UK" and benefiting from the bribe in the UK means this risk is greatly reduced. The steps companies should be taking to achieve the desired decrease in overseas bribery are now much clearer and more practical to implement than before.
Our remaining concerns are around whether companies will be found liable for the actions of joint ventures partners and more generally, what status the new guidance has in law. Whilst the guidance has been modified, the wording of The Bribery Act has not, so it will be left to the courts to decide whether following the Government’s guidance will be an adequate defence.
There remains considerable uncertainty for overseas companies on whether a listing on a UK stock exchange alone will be sufficient to found jurisdiction under the Act. The guidance suggests that the Government would not expect the Courts to consider a listing alone to be a sufficient basis for jurisdiction. However in presenting the guidance Ken Clarke made it clear that there is no general carve out for entities with this limited connection to the UK. We shall have to see how the Courts interpret this part of the Act which is an unsatisfactory position for businesses to be in.
Businesses have three months to implement adequate procedures before the Act comes into force on 1 July 2011.
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