The Government recently published a report titled "Insight into awareness and impact of the Bribery Act 2010: Among small and medium sized enterprises", which was formed in response to the July 2013 Business Services Red Tape Challenge that recommended SMEs be given more guidance on the appropriate application of the Bribery Act. The new guidance seeks to ensure that SMEs are able to strike a proportionate balance between the level of resources directed towards anti-bribery procedures and the risks faced by the business, so that their competitiveness is not hindered. The paper states that 'what is 'adequate' for a large company facing moderate to high risks, will far outstrip the bribery prevention needs of a small company facing low to moderate risks.
Emma Allen, associate in the Corporate Crime & Fraud Unit at international law firm Taylor Wessing, comments on the findings of the Government's paper:
"The results of the Government's survey of SMEs suggest that there continues to be a need to increase awareness of the Bribery Act and the corporate liability offence of failure to prevent bribery and corruption, amongst the SME community. The survey found that only 66% of those surveyed had heard of the Bribery Act, or were aware of the corporate liability offence, only 33% had assessed the risk of being asked for bribes and only 42% had put bribery prevention procedures in place. This is concerning, particularly given that companies/partnerships who are prosecuted for the corporate offence face unlimited fines, and individuals could face up to ten years in prison.
The lack of awareness amongst SMEs may be linked to the scarcity of Bribery Act prosecutions and whilst it seems unlikely that the SFO will channel its already stretched resources towards pursuing SMEs, the Bribery Act should not be ignored. The Bribery Act is viewed by many around the world as a one of the most effective tools for dealing with international bribery and it provides a useful framework of "best practice" for commercial organisations carrying out business in the UK. As such, there is a continuing need for SMEs to improve their awareness and understanding of the current legislation and to ensure they have taken the necessary practical steps to put bribery prevention procedures in place."
Key findings in the "Insight into awareness and impact of the Bribery Act 2010: Among small and medium size enterprises" paper:
Awareness of the Bribery Act
- Two-thirds (66%) of the SMEs surveyed had either heard of the Bribery Act 2010 or were aware of its corporate liability for failure to prevent bribery. Awareness was greater among SMEs exporting to regions that are less developed, including the Middle East, Asia, Africa and South and Central America (68%) compared to those companies only exporting to developed regions including Europe, North America and Australia (56%).
- Around eight in ten SMEs (81%) that had heard of the Bribery Act were also aware that the Act has extra-territorial reach (i.e. it encompasses bribery offences committed overseas).
- Of all SMEs that were aware of the Bribery Act, almost three-quarters (72%) perceived that their company had sufficient knowledge and understanding to be able to implement adequate anti-bribery procedures. This perceived knowledge and understanding was greatest among those SMEs that were aware of corporate liability for failure to prevent bribery (79%) compared to those that had only heard of the Act itself (45%).
Other guidance and associated costs
- A third (33%) of SMEs aware of the Bribery Act or its corporate liability for failure to prevent bribery provisions reported that they had used some form of guidance other than or in addition to reliance on the MoJ guidance. When asked what the guidance that they had used was, 21% of those using other guidance reported guidance from lawyers or solicitors, 15% used guidance from other business consultants, and 14% used guidance from trade or professional bodies.
- SMEs were also asked if they had sought any professional advice about the Bribery Act or about bribery prevention. Around a quarter (24%) of SMEs who were aware of the Bribery Act or its corporate failure to prevent provisions had sought such advice, which was most commonly offered by legal professionals (54% of those seeking professional advice).
- Almost all (96%) of SMEs that had sought professional advice found the advice that they received useful (58% very useful and 38% fairly useful) and good value for money (45% very good value for money and 45% fairly good value for money). The mean cost to SMEs of professional advice was around £3,740, the median cost was lower at £1,000.
Bribery prevention procedures
- A third of SMEs (33%) had assessed the risk of being asked for bribes, leaving just under two-thirds that had not assessed the risk of being asked (59%).2 SMEs exporting to the less developed export regions (36%) and in particular to China (52%) were more likely to have assessed the risk of being asked for bribes.
- Around four in ten SMEs (42%) said that they had put bribery prevention procedures in place; defined as anything that they thought helped prevent bribery. Among SMEs that did have procedures in place, these procedures were most typically financial and commercial controls such as bookkeeping, auditing and approval of expenditure (94%) or a top level commitment that the company does not win business through bribery (88%). Just under half of those with procedures in place had written staff policy documents about bribery prevention which are signed by staff (48%) or raised awareness and provided training about the threats posed by bribery in the sector or areas in which the organisation operates (44%). Again, SMEs exporting to the less developed export regions (45%) and especially China (59%) were more likely to have bribery prevention procedures in place.
- Of those that had bribery prevention procedures in place that incurred some cost, the mean spend so far on these was around £2,730; and the median spend £1,000. The median is much lower than the mean because there were a few companies quoting a very high expenditure, raising the mean. The average spend was clearly linked to company size with micro companies spending the least (mean spend of £1,030) and medium companies the most (mean spend of £4,610).
Small Scale Solicitation
- Among the SMEs that exported only 6% reported that employees of their company or agents acting on the company’s behalf had ever been asked for cash payments, gifts, donations or goods in kind such as cigarettes or alcohol that could possibly be described as a bribe. The most commonly mentioned country where this has been experienced was China (mentioned by nine SMEs), followed by Russia and Saudi Arabia (three SMEs each).
Impact on exports
- The majority of SMEs aware of the Bribery Act (89%) felt that the Act had had no impact at all on their ability or plans to export. Furthermore, when prompted as to whether they had any other concerns or problems related to the Bribery Act, nine in ten (90%) reported they had no specific concerns or problems.