Long awaited official guidance on what companies need to do to avoid prosecution under the new UK Bribery Act has been published. The full text of the statutory guidance is available here. The guidance differs from the earlier draft version that was released in September 2010 and also provides additional interpretation on the Act. The Act will now come into force on 1 July 2011.
One of the new offences created by the Act is committed when a relevant organisation “fails to prevent bribery” by anyone associated with it. The Act provides such an organisation with a defence only if it can show that it had put in place “adequate procedures” to prevent bribery. The Act also requires the Government to publish guidance on those procedures. It is this statutory guidance that has now been published.
As well as giving the requisite guidance (summarised below), the UK Government has also provided assistance on other aspects of the Act. Addressing an area that has generated considerable negative publicity, the guidance emphasises that while hospitality and promotional business expenditure can amount to bribery, “reasonable and proportionate hospitality” will not breach the Act. Contrasting examples are given, such as an organisation providing “ordinary travel and lodgings” to an official to enable a visit to the organisation’s premises (not bribery) and a five-star holiday provided to the official unrelated to a demonstration of the organisation’s services (likely to be bribery).
There is also useful guidance on the geographical scope of the Act, particularly in relation to the offence of failing to prevent bribery, which applies only to businesses either incorporated or formed in the UK, or which carry on a business or a part of a business in the UK. The guidance states that whether a company is carrying on a business or part of a business in the UK will require “a demonstrable business presence.” The mere fact that a company’s securities are listed on the London Stock Exchange, or that it has a UK subsidiary, will not in itself mean that the company is carrying on a business in the UK.
There is little change from the earlier draft guidance on the controversial issue of facilitation payments. The guidance emphasises that facilitation payments are illegal under UK law, even if they are permitted under the FCPA. The guidance says that other than where payments are necessary to avoid loss of life, limb or liberty (where a defence of duress may succeed), anyone making a facilitation payment will have to rely on the benevolent exercise of “prosecutorial discretion” to avoid being charged with an offence.
Turning to the statutory guidance on “adequate procedures” to prevent bribery, the guidance avoids a “checklist” approach and is instead formulated around six guiding principles. These principles are designed to be universally applicable across all sectors and for all types of businesses (although non-statutory “quick-start” guidance has also been published, aimed at small businesses).
For each of these principles, the guidance is short and general, and includes a brief commentary followed by suggested procedures and other observations about what companies can do to meet the guidance.
In summary, the six principles are:
- Proportionate procedures. Companies should adopt not only anti-bribery policies but also sound implementation procedures (guidance on which is provided by the other five principles). As is the case throughout, this principle stresses the need for a risk-based approach reflecting the size and complexity of the business and the type and nature of the persons associated with it;
- Top-level commitment. The board of directors should foster a culture of integrity and commit itself to preventing bribery by communicating (internally and externally) a zero-tolerance approach and being involved in developing anti-bribery procedures;
- Risk assessment. Organisations need to make assessments that are “periodic, informed and documented”. The guidance suggests that this should involve, inter alia, top-level management oversight, appropriate resourcing and identification of all potential information sources. The risks that organisations face include country risk, sectoral risk, transaction risk, business opportunity risk and business partnership risk;
- Due diligence. Companies should take a proportional and risk-based approach to assessing relationships. In some cases, it may be appropriate to undertake direct interrogative enquiries, indirect investigations or general research on proposed associates;
- Communication (including training). Companies need to ensure that their policies and procedures are embedded and understood both within the organisation and outside it. Internal communications may include information on policies on areas such as decision making, financial control, hospitality and promotional expenditure, facilitation payments, training, charitable and political donations and penalties for breach of rules and the articulation of management roles at different levels. Companies may also be expected to establish so called ‘speak up’ procedures for whistle-blowers and those wishing to make suggestions. General and specific training for new employees and agents, as well as monitored and evaluated ongoing training for all staff, should be considered; and
- Monitoring and review. Organisations should change policies and procedures to reflect changing risks and variations to the organisation’s business.
The guidance also sets out 11 non-statutory case studies.
There will now be a three month period before the Act comes into force to allow businesses to comply with the guidance. The Act will take effect on 1 July 2011.
For additional details on the Act in general, please see our previous guidance note here. For additional information concerning the UK Bribery Act as well as U.S. anti-corruption enforcement abroad, please contact the lawyers listed above.