December 2010

Bribery Act 2010

The Bribery Act 2010 comes into force in April 2011 and may prove to have a telling impact upon some UK businesses, particularly those operating in less financially transparent overseas markets.

The Act is of significant strength as it applies globally, not just to the UK. As long as any party involved is either a British citizen or resident or a commercial organisation incorporated under UK law, the provisions of the Act apply.  Similarly, foreign companies carrying on business in any part of the UK must ensure compliance.

Persons ‘offering, promising and giving’ financial advantage as well as the ‘requesting, agreeing to and receiving’ of the same are subject to the Act.  An offence is committed where advantage is either intended to or known to bring about improper performance of a relevant function of the person receiving the financial advantage.

A further and separate offence exists whereby a party intends to influence a foreign public official and the foreign public official is neither permitted nor required to be influenced in such a way by the written law of the relevant jurisdiction.  It should be noted that this definition extends to those working for public international organisations, as well as government officials.

Commercial organisations are specifically covered through Section 7 of the Act.  Should an act of bribery be committed by a person associated with a particular organisation, typically an employee agent or subsidiary of the organisation, and a business advantage is intended to pass to the organisation, that organisation is liable unless it has adequate procedures in place to prevent bribery from taking place. 

For individuals, breach of the Act can lead to either a maximum of 10 years’ imprisonment or a £5000 fine.  Companies and their directors can also be subject to criminal penalties; unlimited fines apply.

Companies are advised to prepare for the implementation of the Act immediately, should they not have already done so.  It is no defence to argue a rogue employee has breached the provisions of the Act and the company cannot be held accountable.  There is strict liability unless ‘adequate procedures’ are in place and, as such, all companies are advised to put into place anti-bribery procedures as soon as possible.  For example, hospitality policies, staff training and the use of standard clauses in commercial contracts can all be used to protect your business. 

It may be the case that in some parts of the world ‘off the record’ payments are made as a matter of course to facilitate the smooth processing of the matters in hand.  Quite clearly, such payments would be unlawful under the Bribery Act whilst the non-payment of such sums could lead to significant operational hardship.  Swinburne Maddison can offer you and your company the legal advice necessary to ensure full compliance with the Act whilst maintaining minimal disruption to your business.