The Bribery Act: a burden or extension of sensible working practices?
In 2010, an ACCA survey suggested that 69% of SMEs are likely to be confronted with bribery and corruption in the course of their business dealings. Since the Bribery Act came into force on 1 July, just what are
the practical implications for companies dealing with a variety of suppliers and other third parties, particularly overseas, that might unwittingly expose them to corruption and subsequent prosecution?
The Bribery Act has been a welcome promotional tool for advisers for almost two years and while the implications of being prosecuted are indeed potentially catastrophic, we take the pragmatic view that compliance is not another burden to bear, it is sensible business practice.
Indeed there are numerous examples of engineering and oil services companies prosecuted under FCPA (the US equivalent) that are much more
competitive post-prosecution. Potentially the most penal element of the Act is the offence of “failure to prevent bribery” which places responsibility squarely on your shoulders to actively minimise the risks of corrupt transactions
committed by your staff, agents or subsidiaries. While the definitions around facilitation payments (illegal) and corporate hospitality (broadly permitted) have been cleared up, guidance is still a little vague.
The guidance does acknowledge smaller companies will likely have less sophisticated compliance procedures in place, but that the level of risk is not
necessarily proportionate to size. The six principles remain:
- proportionate procedures
- top-level commitment
- risk assessment
- due diligence
- communication and training
- monitoring and review.
In our view, a “paper policy” will be insufficient and a business will need to demonstrate active steps taken to reduce exposure. These would typically
include: policy reviews, dynamic training, systems and controls reviews, conducting due diligence from a number of perspectives – financial, legal, commercial and possibly reputational, and reviews of key third parties,
agents and intermediaries.
Many of our clients have the perception that the Bribery Act will only impact their operations overseas in emerging markets. Whilst it is crucial to be mindful of international exposure, it is also extremely important to be on top of domestic activity as, in our experience, corrupt activity can unfortunately take place much closer to home.
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