The Bribery Act 2010 is due to come into force on 1 July 2011. It provides for a number of criminal offences which are defined very widely. Breach of the new rules may result in the imposition of severe penalties for individuals (fines and jail) and organisations (fines) and obvious reputational damage for all concerned.
We are working with a number of public bodies to ensure that they have adequate procedures in place to reduce the risk of a bribery scandal and to assist them in helping their staff stay on the right side of the law.
Offences under the Act
Broadly, the Act provides for four categories of offence: (i) bribing another person; (ii) being bribed; (iii) bribing a foreign public official, and (iv) the failure of a relevant commercial organisation to prevent bribery by an associated person.
Obvious issues for the public sector
There is an evident need for public officials to perform their functions in an appropriate fashion and without undue influence. This is particularly so for officials involved in procurement and, for example, licensing and similar functions. The decisions of such officials are already subject to scrutiny and the Act is likely to add an additional tool by which any perception of improprietary (whether well founded or not) is questioned and potentially prosecuted.
Other issues to be kept in mind by public bodies are: the clear linkage between the Act and public interest, transparency and budgetary issues; the effect of the Act on hospitality (received or given), particularly in relation to a public body maintaining effective procedures to ensure there is not even the perception of improprietary; the impact of the Act on human resources; and the effect of the Act on tender exercises (due to EU and UK legal obligations to black list (or to consider black listing) organisations and individuals that have been convicted of bribery).
Media focus on the Act has largely surrounded the new offence of a commercial organisation failing to prevent bribery by associated persons (a concept that captures employees and, for example, agents). In very broad terms, central to this offence is the notion that the body in question is carrying on a “business”. While this strikes mainly at the private sector, it remains a grey area as to what functions carried on by a public body could be argued to fall within the (broad and undefined) notion of carrying on a business (e.g. where the public body, in addition to its classic public functions, also engages in economic activity, potentially in competition with the private sector).
In any event, having adequate procedures in place is best practice for all bodies, whether public or private, in order to maintain the reputation of the organisation. This does not necessarily entail the total overhaul of pre-existing policies. We have found that in most cases adequate anti-bribery policies and procedures can be bolted onto what already has been put in place, buttressed by appropriate training.
Public bodies should therefore be aware of how the Act affects them and how they can ready themselves both during and after the countdown to implementation.
Our Regulation and Markets team
Our Regulation and Markets team has advised on a number of key issues and concerns for the public sector, including:
- The provisions of the Act of which a public sector body should be aware (generally and in relation to their particular risk profile)
- How public sector concerns differ from those within the private sector and how should these be catered for
- Whether a public body, either generally or in relation to a specific function, could be viewed as a commercial organisation subject to the offence of failing to prevent bribery
- How should public bodies manage the risks (legal, reputational, budgetary, etc) linked with “associated persons”
- The issues public bodies should keep on their radar both before and after implementation of anti-bribery measures
- How and when should public bodies report instances of bribery
- The interaction with the Proceeds of Crime Act 2002
- Whistle blowing procedures (in terms of ensuring potential instances of bribery are properly investigated and managed from the PR perspective)
- How to ensure compliance with anti-corruption/anti-bribery best practice.