The much-anticipated and widely misunderstood Bribery Act 2010 came into effect on 1 July 2011.

Some three years in the making and the subject of considerable change following consultation, the Act is designed to outlaw corrupt practice and to promote the UK as one of the world’s least corrupt countries.

It introduces four offences:

  • bribing another person;
  • being bribed oneself;
  • bribing a foreign public official; and
  • (for commercial organisations) failing to prevent bribery.

The main effects of the provisions will be to limit the extent to which any business or person may use inducements or hospitality in soliciting work or advantage, and to make anyone offered lavish entertainment think twice about any purpose or intent behind it. Equally, however, Kenneth Clarke, Secretary of State for Justice, has indicated that ‘no one wants to stop firms getting to know their clients at Wimbledon or the Grand Prix’.

All directors and business proprietors should take care to ensure that systems are put in place to prevent bribery, and to police and restrict inappropriate activity.

In particular, unless there are adequate procedures in place, the directors or managers of the business can be found liable – even without proof of fault on their part – for the acts of employees, partners, agents and even contractors, whether in the UK or elsewhere in the world.

The penalties for complacency could be extreme. The maximum penalties under the Act are ten years’ imprisonment for an individual and an unlimited fine. Businesses can also be barred from bidding for public contracts.

Government Guidance may assist in interpreting the way in which the Act may be policed by the Serious Fraud Office (which has responsibility for prosecutions).

Six guiding principles apply to organisations wishing to prevent bribery:

  • having proportionate procedures in place;
  • top-level commitment to bribery prevention;
  • bribery risk assessment;
  • anti-bribery due diligence procedures;
  • communication of bribery prevention policies and procedures; and
  • bribery prevention procedures being monitored and reviewed.

Perhaps less obviously, the Act can also apply to charities and those who direct them; and beneficiaries of offshore trusts in particular will find that trustees are becoming increasingly concerned about the ultimate destination of any funds they release.