The much anticipated Criminal Justice (Corruption) Bill (Bill) is listed among the bills to be published in the Government’s legislative programme for Spring-Summer 2015. Once enacted, this Bill will overhaul and strengthen Ireland’s existing bribery laws. In particular, it will impose liability on commercial entities that inadequately supervise their employees or agents.
The likely contours of this new form of liability are already well known, thanks to the Government’s publication of the general scheme of the Bill in 2012. Head 13 of that scheme provides, among other things, for a new offence criminalising both an incorporate and unincorporated body (Body) where a person acting on its behalf, including an employee or agent, commits bribery in order to obtain or retain business, or to retain an advantage in the conduct of business. It is a defence for the Body to prove that it took all reasonable steps and exercised all due diligence to avoid the commission of the offence. Such steps will no doubt include drafting and implementing an effective anti-bribery compliance (ABC) programme.
From a domestic legal perspective, the new failure to supervise offence is a highly innovative provision. However, the reality is that most Bodies should already have an effective ABC programme in place, at least if they wish to do business abroad, or engage domestically with foreign investors, whether as manufacturers, distributors, agents or in some other capacity.Both the US and the UK’s existing bribery laws target commercial entities which fail to take adequate measures to prevent their employees/associates from committing bribery. In both jurisdictions, a commercial entity can avoid liability if it can demonstrate that it has implemented an effective ABC programme. A breach of these laws can have serious financial repercussions for the entities involved. In particular, the US authorities have imposed multi-million dollar fines on companies for breaching the US Foreign Corrupt Practices Act (FCPA), including for breaches attributable to the actions of an employee or business associate.
As a result, larger companies are being considerably more circumspect when choosing their business partners and are increasingly likely to require those partners to have robust ABC programmes in place. This is also the case where such companies are considering prospective mergers or acquisitions. Because of the particularly expansive territorial scope of both the FCPA and the UK Bribery Act 2010 this holds true for all companies and not merely US and UK ones. In short, any Irish firm seeking to do business with an international element should already have an ABC programme.
Designing an Effective ABC Programme
Fortunately, there is plenty of readily available information for those Bodies that wish to take a proactive approach to bribery compliance. For example, the US authorities have published a resource guide to the FCPA, which contains a section on corporate compliance programmes.
Similarly, the UK Ministry of Justice has issued Guidance on the Bribery Act 2010. The UN and the OECD have jointly published the Anti-Corruption Ethics and Compliance Handbook for Business.
Moreover, despite differences in applicable anti-bribery laws, there is also wide spread international agreement on the hallmarks of an effective ABC programme, namely: top-level commitment; risk assessment; code of conduct and compliance policies and procedures; third party due diligence; sanctions; confidential reporting; communication, education and training; and monitoring and review.
Top-level Commitment: an ABC programme must be clearly and visibly supported by top-level management, including the board of directors. This support must be re-enforced by all levels of management throughout the organisation.
Risk-based Approach: an ABC programme must be adapted to the needs of each individual organisation. A one-size-fits all approach does not work. One of the first steps in designing an ABC programme is to assess bribery risks. Relevant factors in carrying out this assessment include: the size of the organisation; the sector in which it operates; the third countries in which it operates; and the extent to which it uses third parties. Areas of identified risks frequently include: gifts, hospitality, entertainment and expenses, customer travel, and third parties.
Code of Conduct and Compliance Policies: the ABC programme must include a code of conduct as well as compliance policies and guidelines. The code of conduct should emphasise the importance of ethical behaviour overall as well as clearly forbidding employees from engaging in bribery on behalf of the organisation. The compliance policy should set out in more detail the organisation’s approach to compliance. It should also address particular risk factors such as gifts, hospitality, entertainment and expenses. These may also be addressed through individual policies.
Third Party Due Diligence: third parties, including agents, consultants and distributors, may be a significant source of corruption risk and organisations which make use of them should have policies in place setting out a methodology for their identification, selection and retention.
Sanctions: breach of the code of conduct and/or compliance policy should be subject to clear and visible sanctions which reflect the seriousness of the breach, including termination. These sanctions should apply at all levels of the organisation, from the board room to the supply room. Organisations should also consider putting in place incentives to drive compliant behaviour.
Confidential Reporting: organisations should provide confidential and anonymous ways of reporting improper activity and ensure that whistleblowers are protected.
Communication, Training and Guidance: the ABC programme must be communicated effectively to all those doing business on behalf of the organisation, at home or abroad. Employees should also be trained on the programme. Training may be more or less extensive depending on the identified bribery risks. It may also be extended to third parties. It should be possible to obtain guidance on the concrete application of the compliance policy.
Monitoring and Review: the effectiveness of the ABC programme should be subject to on-going monitoring and regular review.For monitoring purposes, it is important to well-document the programme’s operation, including for example: discussions of the programme at board level; the number of whistleblower calls received; details of training provided etc. This documentation will also help evidence the ABC programme’s effectiveness, should the need arise. Consideration should be given to entrusting a sufficiently senior person with ensuring the oversight and implementation of the programme. That person should be independent and have direct access to the Board.
The detailed work involved in designing and implementing an ABC programme should not obscure its overall purpose, namely to: prevent violations of applicable bribery laws: detect those that occur; and remedy them promptly and appropriately. Other measures also play a role in achieving this purpose. These include, in particular, financial and commercial controls such as adequate bookkeeping, auditing and approval of expenditure.
Once enacted, the Bill will bring about important changes in the Irish criminal law on bribery, in particular regarding corporate liability. However, given the international context, Bodies should seriously consider putting their ABC programmes in place now, if they have not already done so. There are compelling risk and commercial reasons for doing so and the information on what is required is widely and readily available.