Transcript Bribery Act 2010 - Bird and Co Solicitors

Bribery Act 2010
Marketing or Bribery?
Chris Jeyes - Bird and Co Solicitors LLP
www.birdandco.co.uk
Basics
• Bribery Act 2010 in force from 1 July 2011
• Covers offences committed only AFTER that
date
• Covers wide variety of conduct
• Giving or receiving bribes, or failing to prevent
bribery
Issues
• What is a bribe?
• Hospitality or bribe?
• Corporate responsibility
• Business protection
What's the problem?
• $1 trillion every year (World Bank estimate)
• African states lose 25% GDP each year
• 1/4 of UK based international companies lose
out to corrupt competitors
• Costs of business increased
Bribery blights lives. Its immediate victims include
firms that lose out unfairly. The wider victims are
government and society, undermined by a weakened
rule of law and damaged social and economic
development. At stake is the principle of free and fair
competition, which stands diminished by each bribe
offered or accepted.
Kenneth Clarke QC
Secretary of State for Justice
The other side
• Administrative burden
• Competitive disadvantage
• Uncertainty continues
Bribery Act s.1
• Offer, promise or give financial or other
advantage
• Intending the advantage to induce improper
performance of a relevant function or activity
• Or intending to reward such improper
performance
• Or offer, promise or give financial or other
advantage
• Knowing that the acceptance of the advantage
would in itself be improper performance of a
relevant function
• Still an offence if done through a third party
• Conduct rather than result crime intent/knowledge. Need not succeed!
Also an offence to be bribed
Briber - s.1 offence
Bribee - s.2 offence
Relevant Function or Activity
• Defined in s.3 - in two parts
• Function of a public nature
• Activity connected with a business, trade or
profession
• Activity performed in course of employment
• Activity carried out by or on behalf of a body of
persons
Functions and Activities 2
• Second part of the test
• Expected to perform function/activity in good
faith
• Expected to perform it impartially
• Person performing is in a position of trust by
virtue of performing role
• Still relevant functions even if outside UK
Improper Performance
• Defined in s.4
• Performed in breach of a "relevant
expectation"
• Failure to perform may amount to such a
breach
• Relevant expectation means the expectation
of good faith, impartiality or manner in which
expected to perform as result of trust
Expectation Test
• Test of what a
reasonable person in
the UK would expect
• Disregard local
custom or practice
unless permitted or
required by local
written law
Section 6 - Foreign Officials
• Specific offence for bribing foreign officials
• Must intend to influence them in their capacity
as foreign public official
• Must also intend to obtain or retain business
or advantage in business
• Must not be permitted by written law to be
influenced by gift (etc)
Key Issue for Business
Corporate Liability - s.7
• This remains to uncertain in some respects
• No case law as yet
• Government guidance issued under s.9
• Ministry of Justice website
• Quick Start Guide and Full Guidance
Section 7
• Commercial organisation guilty of this offence
• Punishment is a fine - can't imprison a
company!
• Remember under s.14 senior officer can be
individually liable (and imprisoned) if bribery
committed with their consent or connivance
Conditions for Liability
• An associated person bribes another person
• Intending to obtain or retain business
• Or intending to obtain or retain an advantage
in the conduct of business
• Required that the bribe be proved to be
criminal
Conditions continued
• Section 8 defines associated person
• A person who performs services for or on
behalf of the organisation
• Capacity does not matter
• Includes employee, agent or subsidiary
• Look at relevant circumstances
Adequate Procedures
• Defence under s.7(2)
• Prove had in place adequate
procedures designed to prevent
such conduct
• Prove on balance of probabilities
What is adequate?
• Starting point is the statutory
guidance
• Intended to encourage
procedures to prevent bribery
• Taken into account when
making prosecution
decisions
The Procedures
• Flexible and outcome focussed
• The outcome should be robust and effective
• Domestic businesses recognised to face lower
risk than those in foreign markets
• Small organisations may face different
challenges
Six Principles
• Proportionate Procedures
• Top-level Commitment
• Risk Assessment
• Due Diligence
• Communication (including training)
• Monitoring and Review
Risk Assessment
• How can you decide what is proportionate
without assessing the risk?
• Assess and periodically review the risk of
bribery by associated persons
• Document the assessment (evidence)
• Country - sector - transaction - opportunity partnership
Common Risks
• Bonus culture
• Poorly motivated employees
• Lack of financial controls
• Ambivalence about policy
• Mixed message from management
Proportionate
Procedure
• Differ according to size and nature of business
• Look at associated persons too
• Top down policy
• Procedures which may need a bribery aspect
Top-level Commitment
• Avoids the mixed message risk
• Leads to an appropriate culture
• Communication of commitment to zero
tolerance
• Manage anti-bribery at a senior level
Due Diligence
• Linked to risk assessment and mitigates the
risk
• Level depends on the risks - assess third
parties, new relationships etc
• Risk based approach - need more info re
companies than individuals
• Includes own employees and prospectives
Communication
• Internal message including
training
• Convey the top down
commitment
• External message acts as a
deterrent
• Training should be tailored
and refreshed
Monitoring and Review
• Not enough to do it just once
• Continually assess risks as business evolves
• Periodically review and document
• Continued top-level interest, reports etc
Corporate Hospitality
• "...no-one wants to stop firms getting to know their clients by
taking them to events like Wimbledon or the Grand Prix"
(Kenneth Clarke)
• "Bona fide hospitality and promotional... expenditure which
seeks to improve the image of a commercial organisation,
better to present products and services, or establish cordial
relations, is recognised as an established and important part
of doing business and it is not the intention of the Act to
criminalise such behaviour. " (MOJ Guidance 2011)
Hospitality
continued
• Not a bribe unless the s.1 or s.6 criteria are
made out (intent to influence or induce
improper behaviour)
• Must be a personal advantage to that person
rather than their employer
• Check re routine levels
• Expenditure not the only consideration, but the
more lavish the greater the risk
• Be more careful with foreign and public
officials.
Facilitation Payments
• Were illegal already under
the old law
• Thought to have a corrosive
effect
• Whether would be
prosecuted - question of
balance
Suggestions
• Top level meeting to assess risks
• "Ethics committee"
• Company ethics statement
• Marketing and hospitality guidelines
• Train and inform re the above
• Be more careful abroad. Don't tolerate
facilitation payments
• Communicate your position to business
partners, especially agents or contractors.
• Due diligence with accounting and records. No
hidden or unexplained transactions or
expenses.
• Records for entertainment budgets. Require
approval
• Guidance and clear line of communication for
staff
• Training and induction for new staff
• Sign up to policies
• Named person with responsibility
• Annual review by senior level staff
• Any incident should trigger an additional
review
• Seek advice but don't rely only on that
If it goes wrong...
• Seek advice sooner rather
than later
• Review what has happened
• Document any changes of
procedures to show ongoing
commitment
• Failure of the procedure does
not necessarily lead to
prosecution or guilt
Prosecution
• Hopefully won't have to deal
with this
• Evidential and public interest
tests
• Prosecutorial discretion
• Keir Starmer QC or Richard
Alderman
• Risk relatively slight. Big vs. Small bribery.
• Budgets limited
• But if convicted - penalties potentially high
• Confiscation or civil recovery proceedings
• Answer is - don't go there!
Some Examples
• First Prosecution - Munir Patel. Corrupt court
clerk. 4 years for bribery (6 year total)
• Macmillan & Willis - self reporting. No
prosecution but very, very expensive.
• Ozakpinar - procurement manager for CPS!
How we can help
• Review procedures and
advise. Bribery Act audit.
• Criminal and road traffic
defence from police station to
appeal.
• Advice on all aspects of
business law, from
employment to contractual
disputes and debt recovery.
Useful Links
www.birdandco.co.uk - us
www.justice.gov.uk/guidance - Bribery Act under
Legislation Guidance
www.SFO.gov.uk/bribery--corruption.aspx - lots of
guidance and useful links
www.legislation.gov.uk - search for the Act itself
www.cps.gov.uk - Prosecution guidance
Bird and Co Solicitors LLP
Email: [email protected]
Web: www.birdandco.co.uk
Tel: 01522 803050 or 0800 389
4832