Noble Solicitors talks about the Bribery Act
In 2011, Mr Munir Patel became the first person to be prosecuted under the bribery act 2010. He was a magistrates’ court official, who offered to ‘get rid’ of a speeding charge for a person quite unrelated to him, for which he received a bribe of £500. His actions led to him receiving three years imprisonment for bribery (six years concurrently for misconduct in a public office). For many, this will be a welcome example from the courts as to the stance they will take against corruption.
But many in the private sector may be asking how does this affect me? The Bribery Act 2010 came into force on 1st July 2011 and made it an offence, not just for individuals involved in bribery, but for commercial organisations who fail to prevent bribery by persons employed by or associated with them. It also includes any bribery committed abroad by any person (individual or corporate) having a ‘close connection’ with the UK. In addition, there is a specific part of the act for senior officers of the body corporate, if it is proved that bribery has been committed with their ‘consent or connivance’.
The penalty for individuals convicted of offences under this act is up to ten years imprisonment. However, for commercial organisations the penalty is an unlimited fine, which in the current climate many of us can ill afford to be at risk of.
So what constitutes bribery? The act sets out two separate terms, active bribery and passive bribery. Active bribery is described as offering, promising or giving. Passive bribery, however, is described as requesting, agreeing to receive or accepting an advantage. The bribe does not have to be explicit, or verbal. It can be an implied offer, and can be brokered through a third party.
In very general terms, it therefore becomes an offence to intend to receive any form of advantage, financial or otherwise, where this is done with the intention that a relevant activity or function should be performed improperly, or that the acceptance of the advantage is in itself an improper activity.
The people who therefore might become susceptible to a bribe within the act include :
- those who carry out a function of a public nature;
- those who are connected with a business;
- those within someone’s employment, or act on behalf of a corporate or unincorporated body; and
- any of the above persons who are expected to carry out their function impartially, in good faith or in a position of trust.
As to what constitutes an ‘improper activity’ will no doubt be open to interpretation. It is described as a breach of expectation of good faith, impartiality or trust. The question is, where is the line drawn between an elaborate marketing event and what could be considered a ‘bribe’. We expect to see a number of test cases in the next few years exploring exactly that point.
This means that whether you are a civil servant, a hospital administrator or a merchant banker, if you undertake an act which is considered to be improper activity for some form of advantage, you can be charged personally with an offence and your employer can be charged with failing to prevent bribery.
To try and prevent this, the government has set out guidance for businesses to ensure they have discharged their duty to prevent bribery by those employed by them. This lengthy guidance can be found at www.justice.gov.uk/legislation/bribery. It will be incumbent on employers to make sure that they follow the advice given, that they tailor it to the needs of their company, and that they have ensured their staff are trained in the area if they do not want to find themselves liable for an unlimited fine.
So, what do companies do now to protect themselves? The MOJ has set out guidance for businesses that can be summarised as follows:
- Undertake a risk assessment for your business working out where the weaknesses are and who would be affected;
- Ensure that your top level management has put procedures in place to explain the company’s position with regards bribery and if necessary issue a formal statement to all staff;
- Training of all staff of the company’s procedure on bribery, and the procedure they must follow if they have been approached with something that may be considered to be a bribe;
- Draft some due diligence procedures within the firm, particularly for use of third parties who may be a risk to the company;
- Constant review of procedures put in place to ensure that changes to the law, or changes to the business which give rise to new areas of risk are communicated to staff, and feedback from staff as to how effective the training is are all ways to show effective monitoring on behalf of the company.
It will not be a defence for a company director to say ‘I did not know that one of my staff would accept a bribe’ if they have not taken adequate steps to prevent that bribe having been taken in the first place.
Time and planning will have to be devoted to ensuring that companies have adequately protected themselves from the risk of bribery within the company, and that they have protected themselves should somebody within the company ‘go rogue’. Legal departments within companies should already have something in place, but it is strongly advised that if this has not been done that urgent steps are taken now.