The UK Bribery Act will commence on 1 July 2011, so if your company is carrying on business in the UK, you will need to ensure you are ready for it – or risk being prosecuted for acts done by foreign employees, agents or subsidiaries in other countries (including facilitation payments), and without your permission.
The Act was scheduled to commence on 1 April 2011. The starting date was deferred to enable business time to review and implement Ministry of Justice Guidance about the offence of failure to prevent bribery.
On 30 March 2011 the UK Ministry of Justice released that Guidance, as well as a Quick Start Guide for small businesses. The Guidance clarifies the liability of joint venture members or parent companies, and also sets out the basic principles which should guide preparations – and can help you show that you have taken steps to prevent bribery if you are prosecuted.
Six principles to help you get ready for the UK Bribery Act
The UK Bribery Act introduces a new corporate offence of failure to prevent bribery. It does not matter if the associated person who actually paid the bribe is a British citizen who could be prosecuted for the offence, meaning that a company with a jurisdictional link to the UK could be prosecuted for something that a non-British person did outside the UK. A company will fall within the jurisdiction of the Bribery Act if it carries on "a business or part of a business" in the UK.
A company has a defence if it has "adequate procedures" in place. The Ministry of Justice Guidance deals with what might constitute adequate procedures and, does so by reference to six principles which should inform organisations in developing adequate procedures:
- Proportionality: "The action you take should be proportionate to the risks you face and to the size of your business."
- Top level commitment: "Those at the top of an organisation are in the best position to ensure their organisation conducts business without bribery."
- Risk assessment: "Think about the bribery risks you might face."
- Due diligence: "Knowing exactly who you are dealing with can help to protect your organisation from taking on people who might be less than trustworthy."
- Communication: "Communicating your policies and procedures to staff and to others who will perform services for you enhances awareness and helps to deter bribery by making clear the basis on which your organisation does business."
- Monitoring and review: "The risks you face and the effectiveness of your procedures may change over time."
Subsidiaries, joint ventures and liability for an associated person's bribery
Under section 7 of the UK Bribery Act, a commercial organisation is guilty of failure to prevent bribery if a person associated with the commercial organisation bribes another person intending to obtain or retain:
- business for the commercial organisation, or
- an advantage in the conduct of business for the commercial organisation.
How far does this go? Are joint venturers liable for each other? Parents liable for the bribery committed by agents of their subsidiaries?
The UK Ministry of Justice's Guidance tries to clarify this. A bribe on behalf of a subsidiary by one of its employees or agents will not automatically make the parent company or subsidiaries liable, even if they received an indirect benefit from the bribery. They will only be liable if the person doing the bribing intended to obtain or retain business or a business advantage for them.
Likewise, members of a joint venture operating through a separate legal entity will not automatically be liable for a bribe paid on behalf of the joint venture entity by one of its employees or agents, even if there is an indirect benefit to the member. Liability will however arise if the joint venture is performing services for the member and the bribe is paid with the intention of benefiting that member.
For joint ventures conducted through a contractual arrangement, bribery committed by one member's employee or agent will ordinarily be presumed to be performed for the employer or principal, and not the other members of the joint venture. That presumption can be displaced however by the degree of control any member of the joint venture has over the contractual arrangement underpinning the joint venture.
If your business has a connection with the UK, what should you do now?
First, you have three months to get your own house in order in line with the six principles. The anti-bribery steps you take will not only ensure you are complying with the UK Bribery Act, but will also be an important element in your defence if an employee or associated person does breach the Act.
Secondly, if you are involved in a joint venture, you will need to review the type of joint venture it is and then determine what, if anything, you can do to ensure it complies with the Act.