Contributed by DLA Piper UK LLP, April 26 2010
The Bribery Act 2010 became law on April 8 2010 and its main provisions are expected to come into force in October 2010. The act signals a significant reform of the criminal law to provide a modern and comprehensive scheme of bribery offences that will enable courts and prosecutors to respond more effectively to bribery in the United Kingdom and abroad.
A new strict liability corporate offence of failing to prevent bribery, with no corrupt intent required, will make it easier for the Serious Fraud Office (SFO) to prosecute companies. With the recent Innospec judgment casting uncertainty on the negotiated settlement and plea process, the SFO is likely to explore this possibility as soon as possible.
If commercial organizations are to avoid falling foul of the new law, they must develop compliance procedures that are appropriate to their circumstances and business sectors, taking into account their size, their area of operations and the particular risks to which they may be exposed.
The main points of the act are as follows:
Adequate Procedures Defence
The only defence to the corporate offence will be for the organization to show that it had adequate procedures in place to prevent such bribery. One of the main changes to the original draft bill is that the government will have a statutory obligation to issue guidance on what constitutes adequate procedures.(3) The government has pledged to issue the first set of guidelines before the new law comes into force so that businesses know what is expected of them.
The guidance is expected to be issued before Parliament's summer recess and will set out a number of key principles to help corporate entities to prevent bribery. A key focus for larger organizations will be the responsibility of an entity's board of directors to design and implement policies for preventing bribery and to keep them under regular review.
The government has stated that the guidance will stress the need to:
A consultation period on the new guidelines is expected and companies that will be affected by the implementation of the act should take the opportunity to express their views.
Is your business ready?
Businesses that do everything possible to stay on the right side of the law have nothing to fear from this legislation. The government's objective is to make companies and individuals take bribery and corruption compliance seriously.
All corporate entities should (i) review their training, procedures, systems and controls, and (ii) take steps to mitigate the risk of their employees, subsidiaries or agents paying bribes on their behalf. Prudent companies will have been monitoring the development of the act as it progressed through Parliament and will have already set the review process in motion (for further details please see "Bribery Bill aims for corruption crackdown").
To wait for the government's guidance is to risk falling behind, and if bribery allegations surface after October 2010, companies will find it difficult to rely on the adequate procedures defence. Some companies have a lot of work to do in the next six months.
For further information on this topic please contact Jonathan Pickworth at DLA Piper UK LLP by telephone (+44 87 0011 1111), fax (+44 20 7796 6666) or email (email@example.com).
(1) On April 15 2010, in the first SFO prosecution of an individual for corruption (under the existing law), former DePuy executive Robert John Dougal was sentenced to 12 months' imprisonment after entering a guilty plea.
(2) At present, EU procurement bans are mandatory and permanent. In a further debarment development, the World Bank and four other leading multilateral development banks (MDBs) signed an agreement on April 9 2010 to debar companies and individuals found guilty of breaching anti-bribery and anti-corruption laws. Those debarred by one MDB become ineligible to participate in future activities financed by the other MDBs, on either a temporary or permanent basis. The cross-debarment agreement could have a significant effect on companies operating in developing countries.
(3) Section 9.