After what seems like an endless period of debate and lobbying, the new UK Bribery Act (the Act) finally came into force on 1 July. So, what does it really mean and what impact is it really going to have on UK corporates?
There has been a lot of fuss made in the press about it spelling the end of corporate hospitality, however, the government guidance was quite clear that reasonable hospitality and taking clients to Wimbledon, Twickenham or Silverstone is a normal part of business.
The Act is really intended to catch companies and individuals who pay bribes to win business particularly overseas, and is linked to a no bribery level playing field for global business. The UK has been pressured into the new Act by the OECD anti-bribery working group and the UK’s less than glorious approach to prosecuting BAE Systems over the Al Yamamah affair. Thus, if a UK corporate pays a bribe to win a contract, both the company and the individuals involved will be liable to 10 years in prison and an unlimited fine.
The Act covers an organisation’s global activities that carries on part of its business in the UK, and given the complaints about the Act by UK business, I would not be at all surprised if the Serious Fraud Office (SFO) chooses a non-UK company as one of its first prosecutions.
The other key reason why companies should be worried if they have not put their houses in order is that the SFO has just been given a reprieve by the government - it has 100 investigators purely looking at corruption issues and it is under considerable overseas pressure to bring prosecutions as soon as the Act is in force. In an era where the emphasis is on voluntary or compulsory reporting of both corruption and the related money laundering, companies will be taking a huge risk if they think they can cover up bribes they have paid.
So, what do we recommend? The key (and easy) risk-avoidance measure must be for companies to set up a system of Adequate Procedures to prevent bribery occurring in their company, as this is a defence to the corporate criminal offence of failing to prevent bribery. These Adequate Procedures must be proportional to the size of the company and must be tailored to the risks faced by the company. However as a minimum, they should include zero tolerance of bribery, a clear policy and guidance to employees on what is ethical behaviour and what to do if they come across bribery.
Finally, facilitation payments – the small grease payments made to speed up a visa application or to get something through Customs quicker. The problem of facilitation payments will not disappear overnight, but as from 1 July companies which make such payments anywhere in the world, unless they are allowed under local law, will be breaching the UK Bribery Act. The key issues are zero tolerance and transparency – if you have taken every step to avoid paying, recognise that you are breaking the law, record them properly and then report them to the SFO and/or the local embassy.
For more information on the Bribery Act, please contact BDO’s Andrew Maclay, Director, Forensic Services on +44 (0)20 7893 3487 or firstname.lastname@example.org.