Toxic debts are just so 2010. The contamination caused by corporate bribery and corruption will be keeping many more Chief Executives awake at night as they watch rolling news reports of Rupert Murdoch’s humble apologies for corporate misbehaviour whilst his wife attacks a protestor intent on doing him grievous bodily harm with a plate of shaving foam. Oh, the majesty of the parliamentary process.
When the UK Bribery Act came into force on 1 July 2011, the common consensus was that given the limited resources available to those charged with enforcing the Act, the first prosecution would have to be seriously high profile to show that this new piece of legislation had real teeth. Just 4 days later, The Guardian broke the News of the World phone-hacking scandal.
The media frenzy surrounding this scandal peaked yesterday with the appearance of Rupert Murdoch and his son James before a Parliamentary Committee. The rumour mill today has it that Rupert Murdoch may be even “encouraged” to move aside as CEO, to be replaced by Chief Operating Officer Chase Carey. David Cameron also finds the media spotlight intensifying on his decision to appoint Andrew Coulson as his media chief in May 2010 very shortly after taking up the post of Prime Minister. If a week is a long time in politics, a fortnight in the media must now be regarded as an eternity.
So will this scandal be used by the regulators to show that the UK Bribery Act has real teeth? In a word, no, as all the allegations relate to events which pre-dated the coming into force of the Act. Nevertheless it brings in to stark focus one of the key characteristics of the Act, i.e. that when the solids hits the corporate fan, the buck increasingly seems to stop with the Chief Executive.
Under the Bribery Act the lack of any knowledge of or involvement in any criminal offences does not necessarily preclude a corporate prosecution. The Act effectively requires “top management” to take a proactive role in assessing their organisation’s exposure to the risk of bribery and corrupt practices, to implement “adequate procedures” to minimise those risks, and to issue a very clear mandate to all staff of the zero-tolerance attitude that will be taken to any breaches of the anti-bribery and corruption policy. Organisations must also undertake appropriate due diligence to ensure that any “associated persons” connected to their business operations are not tarnished with even the faintest whiff of bribery or corrupt practices. Reactive measures are insufficient. If a company is in the firing line, it does not matter how “humble” its Chief Executive is after the event, or what measures it promises to take to take to rectify the situation.
The decision to recruit employees tainted by bribery scandals is also highly questionable. If you are the Prime Minister you might be able to get away with the suggestion that “everyone deserves a second chance”. However, if you are not the Prime Minister but still run the “second chance” argument, do not be surprised if your Board of Directors suggests that it is a very interesting position, and one that you should definitely pursue with your next employer.