In a case which is the first of its kind and has implications for companies of all sizes, a small interior design company has been convicted under ‘failure to prevent bribery’ legislation.
The court was told that a former director of the interior design company had bribed a project manager at a property company with the aim of winning £6 million in contract work.
Charges were brought against the company and two individuals under section 7 of the Bribery Act, which says that a business commits a criminal offence unless it can show that it has adequate procedures to prevent bribery.
The former director pleaded guilty to three offences, while a former project manager at the property company pleaded guilty to two offences.
The firm argued it had done nothing wrong, maintaining that it had suitable rules in place to prevent bribery, bearing in mind factors like its small size and the local base for its trading. It had taken action as soon as the offences came to light.
The jury disagreed and the interior design company was found guilty of the charge. It was given an absolute discharge, the least serious penalty available, because it had been dormant for some time.
This prosecution was meant to send a clear message to companies large and small that they need to make sure they take the right sort of steps to tackle the risk of bribery. The size of a firm or the fact that it only trades locally does not allow it to have inadequate procedures in place. And an offence can be committed even if the person doesn’t directly work for the offending company.
Section 7 of the Bribery Act 2010 says that a commercial organisation commits an offence if a person ‘associated’ with it bribes another person, intending to obtain or retain business, or an advantage in the conduct of business, for that commercial organisation.
However, the organisation has a defence if it can prove it has ‘adequate procedures’ designed to prevent associated persons committing bribery.
In his particular case, the design company was an SME with only 30 employees and had no overseas business, just trading locally.
It had long-standing policies fostering staff integrity and encouraging open and honest interactions with clients and partners and financial safeguards including anti-bribery clauses in several contracts.
Furthermore, when a new CEO at the firm became aware of the issue, he stopped the biggest of the bribes being paid and took measures including starting an investigation and reporting his concerns to the authorities.
But the court is likely to have decided that these steps weren’t enough to qualify as ‘adequate procedures’ under Section 7 of the Bribery Act.
Though the act does not say what constitutes ‘adequate procedures’, the fact that the firm did not have a designated staff member to report bribery concerns to, had never provided anti-bribery training to staff and did not keep adequate records is likely to have counted against it.
Anti-bribery measures should form part of any commercial organisation’s terms and policies – whether large or small. This should include a professionally drafted anti-bribery policy, a properly-documented and up-to-date risk assessment, staff training around the issue, adequate records and the appointment of a dedicated officer to deal to lead on the issue.
Although the Ministry of Justice has said that firms only need to take proportionate measures, the conviction of this small interior design company shows that even SMEs should take his issue seriously and seek legal advice on the issue.
When businesses are first set up, a portfolio of legal documentation is often put in place. However, the law and your business are continually evolving and this documentation may need to be updated over time. For commercial legal advice that’s tailored to your business, call our team on 01616 966 229.