The long awaited Bribery Act 2010 received Royal Assent in April. It is likely to come into force in October 2010 and businesses should act now to prepare for its implementation.

The Bribery Act 2010 (the Act) has a particular emphasis on corporate criminal liability.

The Act represents a significant reform of UK bribery and corruption law. It will introduce a new strict liability offence for corporates and partnerships that fail to prevent bribery by employees, agents or a person connected to their business. If found guilty then the organisation may face an unlimited fine, prosecution costs and possible debarment from EU and US public sector procurement opportunities. The only defence is that the organisation had in place adequate procedures designed to prevent such behaviour. Although the Secretary of State will publish guidance on procedures that organisations can put in place to prevent bribery, the guidance is likely to be principles based, and so the onus is on businesses to translate those principles into workable internal arrangements. Directors and senior officers may also face personal criminal liability if it is proved that the organisation committed acts of bribery and corruption with their consent or connivance.

UK plc playing catch up

With a ranking of 17th in the corruption perception index compiled by Transparency International (an index which indicates the degree of public sector corruption as perceived by business people and country analysts), UK plc does need to show that it takes anti-bribery and corruption seriously.

Corporate prosecutor with teeth and an appetite

The lead prosecutor under the Act will be the Serious Fraud Office (SFO), which has already shown a willingness and capability to bring criminal prosecutions for bribery and corruption offences under the previous outdated law and already actively encourages organisations to "confess" corrupt acts under the existing self-reporting regime.  

The new Act, with corporate liability at its heart, will encourage the SFO to commence new corruption investigations and bring prosecutions in relation to the conduct of organisations in the UK and overseas.

Double whammy for City firms

The regulated sector (in particular insurance and banking) faces not only the new Act but further scrutiny by the Financial Services Authority (FSA). The FSA's findings into anti-bribery and corruption systems and controls in the commercial insurance brokers sector published this month made harsh criticisms of the industry's control over third party introducers of business and the systems and controls to counter the risks of bribes. The City regulator now intends to extend the scope of its review to the investment banks. Regulated firms that fail to show adequate systems could face costly FSA investigations and subsequent financial penalties.

RPC comments – what businesses should do now

  • Take advice on current anti-bribery and corruption systems and controls – remember that procedures will be a "prosecutor's charter"
  • Prepare and implement new systems to comply with the Act  
  • Carry out specific anti-bribery and corruption vetting of employees, agents, intermediaries and subsidiaries  
  • Review corporate gift and entertainment policies and procedures  
  • Demonstrate a "top down" approach to combating corruption, by way of an appropriate corporate ethos  
  • Provide training for all staff  
  • Regularly stress-test effectiveness of enhanced anti-bribery and corruption systems and controls