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Protect your business against allegations of bribery and corruption

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The Bribery Act 2010 came into force July 2011. For a long time the Act seemed to ‘lack teeth’ and now finally it seems to be having an impact. In July 20103 the Serious Fraud Office (SFO) admitted the Act appeared to be lying dormant and then by August they had announced the first charges and first prosecution brought by SFO. Four individuals appeared before Westminster Magistrates Court in September 2013 and three of those were specifically facing charges under the Bribery Act. It is correct to say that the Crown Prosecution Service (CPS) has prosecuted before but this is the first from the SFO with a declaration that there are more in the pipeline.

A recent report revealed that SMEs are less likely to export due to the confusion surrounding the Bribery Act and the responsibilities that come with it. The Institute of Directors are so concerned about this that they have called for an urgent overhaul of the legislation as they believe many SMEs will be deterred from exporting.

What should business owners do?

Bribery was specifically targeted in the suggested sentencing guidelines and the emphasis was placed on the fact that bribery is not a victimless crime as many currently see it. Some of the negative effects quoted include the undermining of democracy; distorting markets leading to higher prices and substandard goods or services. It has even been seen to be encouraging organised crime and terrorism.

It is for these reasons that it is important to not become complacent about the Bribery Act and assume the lack of prosecutions so far is how this will remain. As such it is important to show your business has in place adequate procedures to prevent you or your business being prosecuted.

  • Have an anti-bribery policy in place
  • Make sure the policy is proportionate to the size of your business and your business operations e.g. if you are exporting then you may need to show more due diligence if you are exporting to countries where bribery is more commonplace
  • Regularly update the policy
  • Communicate the policy and ensure all employees and associated persons are made aware of the anti-bribery policy and that they are regularly updated with any changes
  • Assess the risks – under the Bribery Act an individual can be given a prison sentence of up to 10 years – businesses face an unlimited fine and the Company could be barred from all public contracts – internet research, contact with relevant bodies such as UK diplomatic posts etc may help. Further due diligence may require asking for CV’s, financial statements or accounts and other references that you should follow up to ensure they are genuine.
  • Due Diligence – carry out thorough due diligence on all individuals and associated persons – this doesn’t mean on all suppliers but on those people who will actually perform services for you

By Rachel Adamson, Partner and head of the serious fraud team