April 27, 2010 3758 VIEWS
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Contributed by DLA Piper UK LLP, April 26 2010

Introduction


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.


Key features

The main points of the act are as follows:

  •   It is an offence to give or receive a bribe.

  •   It is an offence to promise, offer, request or agree to receive a bribe.

  •   A specific offence of bribing a foreign public official removes any lingering doubts about overseas jurisdiction.

  •   Both the public and private sectors are covered - commercial bribery is also criminalized.

  •   A new corporate offence applies to a commercial organization that fails to implement adequate procedures where an act of bribery is committed in connection with its business.

  •   The act's broad scope and extraterritorial reach extend to any individual ordinarily resident in the United Kingdom, who can be prosecuted for bribery offences committed anywhere in the world, and any corporate entity that has a permanent establishment, subsidiary or other operation in the United Kingdom.

  •   Unlike the Foreign Corrupt Practices Act in the United States, the Bribery Act prohibits facilitation payments.

  •   The maximum penalty for individuals is 10 years' imprisonment or a fine, or both.(1)

  •   The maximum penalty for a corporate entity is an unlimited fine.

  •   There will be collateral consequences associated with conviction under the act: director disqualification, debarment from public procurement(2) and asset confiscation.

  •   All existing anti-bribery and corruption laws will be repealed.


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:

  •   take responsibility for anti-corruption programmes at board level and appoint a senior officer accountable for their oversight;

  •   assess risks that are specific to the company and its business, including risks linked to the nature or location of its activities;

  •   establish clear policies and procedures, and train new and existing staff in anti-bribery procedures;


  •   implement internal financial controls and record keeping to minimize the risk of bribery; and


  •   establish whistleblowing procedures so that employees can report corruption safely and confidentially.

 
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 (jonathan.pickworth@dlapiper.com).

Endnotes

(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.


Source:http://www.ilonewsletters.com/Newsletters/detail.aspx?g=a5440d70-c8f3-4293-babd-5a5e931f9e47



 

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