On 19 November 2009 the Bribery Bill was introduced into Parliament, receiving its first reading in the House of Lords. The Bill, which seeks to modernise and consolidate the law on bribery and corruption in the UK, completed its journey through the House of Lords on 8 February 2010. The House of Lords Report on the Bill was issued on 3 February 2010. A key change has been the Government's approach to the issue of guidance.
In our briefing of 24 November 2009 (see Bribery Bill introduced into Parliament), we set out the provisions of the Bill as it was introduced into Parliament. In this briefing, we highlight the changes made to the Bill by the House of Lords. The scheme of the Bill remains to repeal the current statutory and common law offences and replace them with four new offences:
- an offence of active bribery (i.e. giving, promising or offering a bribe), which applies in the public or private sector;
- an offence of passive bribery (i.e. requesting, agreeing to receive or accepting a bribe), which applies in the public or private sector;
- a specific offence of bribing a foreign public official; and
- a new 'corporate' offence which applies where a corporate or partnership fails to prevent persons performing services on their behalf from paying bribes. As the only available defence in the Bill is to show that an organisation had in place "adequate procedures" to prevent such bribery, it is essential that all organisations assess, and take steps to mitigate, the risks of their employees, subsidiaries and agents paying bribes on their behalf.
For those who have been following the progress of the Bill, the key changes are as follows:
Key changes and implications
Despite the Joint Committee agreeing with this firm's recommendations as regards the issuance of statutory guidance, at earlier stages of the Bill the Government had stated that, following Royal Assent but before the Bribery Act came into force, it would issue non-statutory guidance which would be non-prescriptive, principles-based and illustrative in nature as to what "adequate procedures" means. The Government had also declined to approve guidance prepared by interested bodies on the issue of adequate procedures (as it can in relation to anti-money laundering compliance guidance).
The House of Lords has now introduced an obligation in the Bill for the Secretary of State to publish guidance about procedures that organisations can put in place to reduce the risk that persons associated with them engage in bribery. The Bill also provides for the guidance to be updated from time to time at the discretion of the Secretary of State. The provisions do not currently provide a safe harbour as with the Money Laundering Regulations, in that they do not expressly provide that where an organisation can show it complied with guidance this fact has to be considered by a court when deciding whether or not the corporate offence has been committed.
At the House of Lords Report Stage, the Government set out its approach in relation to the publication of guidance. It was noted that the Ministry of Justice and the Department for Business, Innovation and Skills have been working closely with business groups and non-governmental organisations to come up with a set of key anti-bribery principles that will form the basis of the guidance. The Government indicated that preparation of the guidance in discussion with a group of stakeholders is ongoing, and that stakeholders will be given an opportunity to consider a first draft before it is circulated more widely. Although the Government has stated that it is committed to publishing guidance well in advance of the coming into force of the new corporate offence, it has not indicated a date when a draft can be expected.
It is expected that the guidance will set out a number of key principles which, if adopted by commercial organisations, would go a long way towards preventing bribery. These principles are expected to focus on the responsibility of an organisation's board of directors to design, implement and regularly review policies for preventing bribery within that organisation.
Examples of the principles the Government thinks the guidance should contain, include:
- the importance of the board of directors taking responsibility for anti-corruption programmes and appointing a senior officer accountable for oversight;
- assessing risks specific to the organisation, which might include risks linked to the nature or location of the organisation's activities;
- establishing clear employment procedures and training of new and existing staff in anti-bribery procedures;
- having internal financial controls and record-keeping to minimise the risk of bribery; and
- establishing whistleblowing or speak-up procedures so that employees can report corruption safely and confidentially.
It is anticipated that further detail will be given as to how these principles can be implemented. Examples of the issues that the Government has indicated the guidance will cover, include:
- what organisations can do to plan, implement and monitor anti-bribery policies;
- how organisations might ensure that policies cover risks specific to the organisation concerned, for example, by looking at those parts of its operations that are particularly susceptible to bribery because of the nature of the supply chain or location in which they are carried out;
- how organisations might have documented policies through a board-level statement, code of ethics or strategy document, as well as a gifts and hospitality register; and
- how organisations might embed their anti-bribery programmes into their administrative structures and ensure that employees, particularly operational staff, understand the new policies through effective communication and training.
The guidance will specifically cover facilitation payments and corporate hospitality, and the challenges faced by organisations when seeking to put into place measures designed to deal with the risk of bribery on their behalf by subsidiaries and other organisations with which they are associated in a joint venture.
The Government has stated that it is committed to the issue of facilitation payments remaining an area governed by prosecutorial discretion exercised in the public interest. The Government has indicated that the factors which will influence the prosecutor's decision will include any penalty that may be imposed if a conviction is secured and the cost of the prosecution to the public purse. A physical threat to the health and safety of an organisation's employees or extortion of the organisation will also be considered.
The Government maintains its position that whilst the legislation should not be used to penalise legitimate and proportionate hospitality, including in respect of foreign public officials, hospitality is also an issue best governed by prosecutorial discretion and guidance. It will, therefore, be open to prosecute in respect of entertainment or hospitality which is given with the intention of subverting the recipient's duties of good faith, impartiality or trust which are owed to his employer.
Given the commitment to enacting this Bill as soon as possible, and the fact that the Government has not indicated a date when either draft or final form guidance will be made available, it is essential that organisations assess their risks and systems now to ensure that they have an effective anti-corruption compliance programme in place before the law enters into force. This will ensure that, once guidance is published, a 'gap analysis' can be undertaken and any changes that are required can be implemented quickly.