On 30 March 2011, the Government confirmed that the Bribery Act 2010 will come into force on 1 July 2011, the announcement being accompanied by the Government's finalised guidance on adequate procedures (see Government Guidance Report) along with non-statutory "quick start" guidance (see Quick Start Guide). Also on 30 March 2011, the Serious Fraud Office (SFO) and the Director of Public Prosecutions (DPP) issued their joint guidance on how they will exercise their prosecutorial discretion in enforcing the Act (see Prosecution Guidance).
The importance of adequate procedures
The issue of adequate procedures is a critical issue for "a relevant commercial organisation", which under section 7 of the Act can face prosecution for failing to prevent bribery by an "associated person". It will be a defence for a commercial organisation to show that it had adequate procedures in place to prevent unlawful conduct and the Act requires the Government to publish guidance on the "adequate procedures" that commercial organisations can put in place.
Draft guidance, issued for consultation in September 2010, had been criticised for failing to provide sufficient guidance on key areas of uncertainty, such as the extent to which commercial organisations will be found liable for the actions of, for example, supply chain partners, and the level of due diligence required in relation to business partners (see our October 2010 E-Bulletin article: Bribery Act 2010 – Government consultation on adequate procedures defence).
The final guidance
The final guidance (buttressed by the SFO/DPP Guidance) is more prescriptive than the draft guidance, provides a greater number of illustrative case studies (11 rather than five) and does, as noted below, seek to provide more concrete guidance to businesses on certain key areas of concern.
As with the draft guidance, adequate procedures are to be based on six guiding principles but these have been articulated in a more user-friendly manner. Most importantly, the final guidance stresses in Principle 1 that, while anti-bribery procedures are to be clear, practical, accessible, effectively implemented and enforced, they are also to be proportionate to the bribery risks faced. Indeed, proportionality is viewed as the "core principle" to be applied in considering adequate procedures and is a concept that permeates throughout the guidance, reflecting, in turn, a clear Governmental endorsement of a risk-based approach to managing bribery risks.
The other five principles can be summarised as follows and do not come as any great surprise:
- There should top-level commitment to anti-bribery measures fostering a culture within the organisation in which bribery is never acceptable;
- The commercial organisation should carry out, on a periodic basis, a risk assessment of the bribery risk faced;
- Due diligence procedures should be in place, relative to persons who perform or will perform services for or on behalf of the organisation in order to mitigate identified bribery risks;
- Internal and external communication measures (including training) should be in place to ensure that bribery prevention policies and procedures are embedded and understood throughout the organisation; and
- The commercial organisation should monitor and review anti-bribery procedures on an ongoing basis.
Grappling with the grey areas
Space precludes a detailed assessment of the substance of the final guidance but the following salient points can be noted:
- Departures from the suggested procedures contained within the final guidance will not in itself give rise to a presumption that an organisation does not have adequate procedures.
- The application of bribery prevention procedures is of particular importance if an organisation wishes to report an incident of bribery to the regulatory authorities. The commercial organisation's willingness to co-operate with a Bribery Act 2010 investigation and to make a full disclosure will also be taken into account in any decision as to whether it is appropriate to commence criminal proceedings.
- The final guidance explicitly recognises that reasonable and proportionate corporate hospitality (e.g. tickets for a sporting event) is unobjectionable unless the circumstances suggest otherwise. The final guidance also offers some useful comment on when other types of business expenditure (e.g. arranging for visits by foreign public officials) may be objectionable.
- In relation to bribery of a foreign public official (FPO), the final guidance notes that the Bribery Act 2010 does not require proof of intention relative to improper performance. However, the final guidance stresses that it is not the Government's intention to criminalise behaviour where no underlying mischief occurs. Rather, the focus of the Bribery Act 2010 is principally on preventing a FPO's decision making being improperly influenced by personal enrichment.
- Non-UK incorporated bodies that do not have a demonstrable business presence in the United Kingdom will not be caught by the Bribery Act 2010. Indeed, the Government's view is that the mere fact that a company's securities have been admitted to trading on the London Stock Exchange will not in itself qualify that company as carrying on a business or part of a business in the UK. Likewise having a UK subsidiary will not, in itself, mean that a parent company is carrying on a business in the UK, the final guidance noting that a subsidiary may act independently of its parent or other group companies.
- Due diligence of business partners should be focussed primarily on those over which an organisation is likely to exercise control. Further, the final guidance recognises that due diligence is only necessary in relation to persons who will actually perform services for or on behalf of the organisation, which is unlikely to be the case in relation to someone who simply supplies goods.
- While the final guidance confirms the unacceptability of facilitation payments, it does also recognise the problems that commercial organisations face, in this respect, in some parts of the world. The SFO/DPP Guidance usefully lists a number of factors tending in favour of prosecution (e.g. large or repeated payments) and a number of factors tending against prosecution, including where the payments come to light as a result of a genuinely proactive approach involving self-reporting and remedial action.
All in all, the final guidance goes somewhat further than many anticipated in providing greater clarity and comfort to businesses grappling with compliance issues. While there remains a number of areas where careful thought will be required to ensure compliance, the final guidance does provide, in many respects, an extremely useful frame of reference.