What's the problem? $1 trillion every year (World Bank estimate) African states lose 25% GDP each year 1/4 of UK based international companies lose out to corrupt competitors Costs of business increased
Bribery blights lives. Its immediate victims include firms that lose out unfairly. The wider victims are government and society, undermined by a weakened rule of law and damaged social and economic development. At stake is the principle of free and fair competition, which stands diminished by each bribe offered or accepted. Kenneth Clarke QC Secretary of State for Justice
The other side Administrative burden Competitive disadvantage Uncertainty continues
Bribery Act s.1 Offer, promise or give financial or other advantage Intending the advantage to induce improper performance of a relevant function or activity Or intending to reward such improper performance
Or offer, promise or give financial or other advantage Knowing that the acceptance of the advantage would in itself be improper performance of a relevant function Still an offence if done through a third party Conduct rather than result crime - intent/knowledge. Need not succeed!
Also an offence to be bribed Briber - s.1 offence Bribee - s.2 offence
Relevant Function or Activity Defined in s.3 - in two parts Function of a public nature Activity connected with a business, trade or profession Activity performed in course of employment Activity carried out by or on behalf of a body of persons
Functions and Activities 2 Second part of the test Expected to perform function/activity in good faith Expected to perform it impartially Person performing is in a position of trust by virtue of performing role Still relevant functions even if outside UK
Improper Performance Defined in s.4 Performed in breach of a "relevant expectation" Failure to perform may amount to such a breach Relevant expectation means the expectation of good faith, impartiality or manner in which expected to perform as result of trust
Expectation Test Test of what a reasonable person in the UK would expect Disregard local custom or practice unless permitted or required by local written law
Section 6 - Foreign Officials Specific offence for bribing foreign officials Must intend to influence them in their capacity as foreign public official Must also intend to obtain or retain business or advantage in business Must not be permitted by written law to be influenced by gift (etc)
Key Issue for Business Corporate Liability - s.7 This remains to uncertain in some respects No case law as yet Government guidance issued under s.9 Ministry of Justice website Quick Start Guide and Full Guidance
Section 7 Commercial organisation guilty of this offence Punishment is a fine - can't imprison a company! Remember under s.14 senior officer can be individually liable (and imprisoned) if bribery committed with their consent or connivance
Conditions for Liability An associated person bribes another person Intending to obtain or retain business Or intending to obtain or retain an advantage in the conduct of business Required that the bribe be proved to be criminal
Conditions continued Section 8 defines associated person A person who performs services for or on behalf of the organisation Capacity does not matter Includes employee, agent or subsidiary Look at relevant circumstances
Adequate Procedures Defence under s.7(2) Prove had in place adequate procedures designed to prevent such conduct Prove on balance of probabilities
What is adequate? Starting point is the statutory guidance Intended to encourage procedures to prevent bribery Taken into account when making prosecution decisions
The Procedures Flexible and outcome focussed The outcome should be robust and effective Domestic businesses recognised to face lower risk than those in foreign markets Small organisations may face different challenges
Six Principles Proportionate Procedures Top-level Commitment Risk Assessment Due Diligence Communication (including training) Monitoring and Review
Risk Assessment How can you decide what is proportionate without assessing the risk? Assess and periodically review the risk of bribery by associated persons Document the assessment (evidence) Country - sector - transaction - opportunity - partnership
Common Risks Bonus culture Poorly motivated employees Lack of financial controls Ambivalence about policy Mixed message from management
Proportionate Procedure Differ according to size and nature of business Look at associated persons too Top down policy Procedures which may need a bribery aspect
Top-level Commitment Avoids the mixed message risk Leads to an appropriate culture Communication of commitment to zero tolerance Manage anti-bribery at a senior level
Due Diligence Linked to risk assessment and mitigates the risk Level depends on the risks - assess third parties, new relationships etc Risk based approach - need more info re companies than individuals Includes own employees and prospectives
Communication Internal message including training Convey the top down commitment External message acts as a deterrent Training should be tailored and refreshed
Monitoring and Review Not enough to do it just once Continually assess risks as business evolves Periodically review and document Continued top-level interest, reports etc
Corporate Hospitality "...no-one wants to stop firms getting to know their clients by taking them to events like Wimbledon or the Grand Prix" (Kenneth Clarke) "Bona fide hospitality and promotional... expenditure which seeks to improve the image of a commercial organisation, better to present products and services, or establish cordial relations, is recognised as an established and important part of doing business and it is not the intention of the Act to criminalise such behaviour. " (MOJ Guidance 2011)
Hospitality continued Not a bribe unless the s.1 or s.6 criteria are made out (intent to influence or induce improper behaviour) Must be a personal advantage to that person rather than their employer Check re routine levels Expenditure not the only consideration, but the more lavish the greater the risk Be more careful with foreign and public officials.
Facilitation Payments Were illegal already under the old law Thought to have a corrosive effect Whether would be prosecuted - question of balance
Suggestions Top level meeting to assess risks "Ethics committee" Company ethics statement Marketing and hospitality guidelines Train and inform re the above
Be more careful abroad. Don't tolerate facilitation payments Communicate your position to business partners, especially agents or contractors. Due diligence with accounting and records. No hidden or unexplained transactions or expenses. Records for entertainment budgets. Require approval Guidance and clear line of communication for staff
Training and induction for new staff Sign up to policies Named person with responsibility Annual review by senior level staff Any incident should trigger an additional review Seek advice but don't rely only on that
If it goes wrong... Seek advice sooner rather than later Review what has happened Document any changes of procedures to show ongoing commitment Failure of the procedure does not necessarily lead to prosecution or guilt
Prosecution Hopefully won't have to deal with this Evidential and public interest tests Prosecutorial discretion Keir Starmer QC or Richard Alderman
Risk relatively slight. Big vs. Small bribery. Budgets limited But if convicted - penalties potentially high Confiscation or civil recovery proceedings Answer is - don't go there!
Some Examples First Prosecution - Munir Patel. Corrupt court clerk. 4 years for bribery (6 year total) Macmillan & Willis - self reporting. No prosecution but very, very expensive. Ozakpinar - procurement manager for CPS!
How we can help Review procedures and advise. Bribery Act audit. Criminal and road traffic defence from police station to appeal. Advice on all aspects of business law, from employment to contractual disputes and debt recovery.
Useful Links www.birdandco.co.ukwww.birdandco.co.uk - us www.justice.gov.uk/guidancewww.justice.gov.uk/guidance - Bribery Act under Legislation Guidance www.SFO.gov.uk/bribery--corruption.aspxwww.SFO.gov.uk/bribery--corruption.aspx - lots of guidance and useful links www.legislation.gov.ukwww.legislation.gov.uk - search for the Act itself www.cps.gov.ukwww.cps.gov.uk - Prosecution guidance
Bird and Co Solicitors LLP Email: email@example.com@birdandco.co.uk Web: www.birdandco.co.ukwww.birdandco.co.uk Tel: 01522 803050 or 0800 389 4832