Bribery Act 2010 – an update on adequate
procedures.
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Last
year, I advised that the Bribery Act 2010 was coming into force in
April 2011. However, implementation of the Act was delayed to
provide guidance on certain provisions of the Act that were raised
as concerns during the consultation process. That guidance has now
been issued and the Act comes into force on 1 July.
One of the main concerns was how
corporate hospitality would be treated. The guidance provides some
comfort. It stipulates that the Act is not intended to criminalise
bona fide hospitality designed to improve an organisation’s image,
make others aware of its products and services or assist in the
development of relationships which are an integral part of doing
business.
However, corporate hospitality must
still be reasonable and proportionate to the size and nature of the
business. The guidance relates to what will constitute “adequate
procedures” which an organisation must have in place to afford
itself a defence to the new corporate offence of failing to prevent
bribery.
Those adequate procedures are, as
previously, based on the six principles below. The guidance
provides:
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By GlobalData- Proportionate
procedures – the procedures need to be proportionate to
the bribery risk faced, based on the size of the organisation,
geographical scope, business model and market sector. The higher
the risk of bribery, the greater the steps needed to be taken to
mitigate the risk of bribery. - Top-level
commitment – top-level management should be involved in
bribery prevention measures and in the communication of the
organisation’s approach to bribery. This may mean personal
involvement in smaller organisations, or, in larger organisations,
the board setting, overseeing and reviewing policies. - Risk
assessment – this should be undertaken regularly to
identify the areas of the business, individuals and transactions
which are at greatest risk. Top-level management should be involved
in the process and the results recorded and stored. - Due
diligence – there is a continuing obligation to review
those who do business with, or on behalf of, the organisation. In
high-risk situations, due diligence might include conducting direct
enquiries or indirect investigations. -
Communication – there must be effective
implementation of clear anti-bribery policies and procedures and
dissemination of the relevant information to employees. A culture
of enabling employees or external partners to raise concerns about
bribery should be fostered. - Monitoring and
review – anti-bribery policies or campaigns need to be
reviewed and monitored for effectiveness as an organisation’s
business develops.
Comment
Motor finance companies that fail
to implement adequate procedures to prevent bribery will face
unlimited fines and serious reputational damage.
It’s therefore crucial that
companies, their directors and senior officers understand what is
meant by adequate procedures and ensure they are proportionate, put
in place, followed, monitored and reviewed.
The author is a partner in Wragge & Co’s finance,
insolvency, recoveries and sales team
