Transcript Preparing for the UK Bribery Act Enforcement

Preparing Russian
Companies for
UK Bribery Act
Enforcement The Defence of
“Adequate Procedures”
Nicholas Munday
14 December 2010
Moscow
The corporate offence – failing to prevent
bribery
 The new corporate offence of failure to prevent
bribery arises if an “associated person” of a
relevant commercial organisation (“C”) bribes
another person intending to obtain or retain
business for C or to obtain or retain an
advantage in the conduct of business for C.
 It is a defence to the corporate offence for C to
prove that it had in place “adequate procedures”
designed to prevent the associated person’s
misconduct.
Preparing Russian companies for UK Bribery Act Enforcement - The Defence of "Adequate Procedures"
14 December 2010
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Does the UK Bribery Act require a review of
your compliance programme?
 UK companies are subject to the corporate
offence.
 Russian companies will also be subject to the
corporate offence if they carry on any part of
their business in the UK.
 UK branches
 Foreign companies with UK securities listings?
 Foreign companies with UK agents?
Preparing Russian companies for UK Bribery Act Enforcement - The Defence of "Adequate Procedures"
14 December 2010
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What does the anti-bribery programme need
to address in order to provide a defence?
It must be designed to prevent persons
associated with the Company (“C”) bribing
another person in connection with C’s
business.
 The focus is on the prevention of active bribery.
 Active bribery may be of two types (bribery of
foreign public officials or bribery of another person)
 Bribery of another person includes private sector
bribery.
 Bribery includes overseas conduct which would be
bribery if it occurred in the UK
Preparing Russian companies for UK Bribery Act Enforcement - The Defence of "Adequate Procedures"
14 December 2010
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Who are the “associated persons” who need
to be prevented from bribing in connection
with your business?
 Persons who perform services for or on behalf of the
company.
 Employees are presumed to be associated persons
 Other examples include agents and subsidiaries
 Others providing services for or on behalf of C could
include:
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Consultants
Joint venture partners
Members of consortia
Franchisees
 Business partners that do not perform services are not
associated persons (e.g. investee companies, borrowers,
purchasers and suppliers of goods and assets).
Preparing Russian companies for UK Bribery Act Enforcement - The Defence of "Adequate Procedures"
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Draft guidance from the Ministry of Justice
about commercial organisations preventing
bribery
 The draft guidance (which will be finalised in January 2011) is
intended to support businesses determining what procedures to
employ. It is not a list of mandatory procedures and does not
provide a safe harbour.
 Six Principles for Bribery Prevention:
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Risk assessment
Top level commitment
Due diligence
Clear, practical and accessible policies and procedures
Effective implementation
Monitoring and review
 Includes case studies and “further information about the Act”
 The draft guidance suggests the procedures should address bribery
of the company’s own employees even though this would not give
rise to the corporate offence.
Preparing Russian companies for UK Bribery Act Enforcement - The Defence of "Adequate Procedures"
14 December 2010
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Ten points for compliance programmes
 Companies should take steps to assess what bribery risks they are exposed to by
reason of the jurisdictions and markets in which they operate;
 They should have an anti-bribery programme which addresses both public sector and
private sector corruption;
 Policies should prohibit facilitation payments;
 Companies should be able to demonstrate they have carried out due diligence on key
third party business partners, or be able to show why greater scrutiny was not
deemed necessary;
 Companies should consider what further action may be necessary in relation to third
parties, such as review of their anti-bribery policies, anti-bribery declarations; and
contractual anti-bribery warranties;
 Review corporate hospitality and gifts policies for both private and public sectors;
 Review provisions relating to dealings with FPOs, foreign governments and
intermediaries;
 Consider whether policies on charitable and political donations need to be reviewed;
 Companies should ensure that their employees, particularly those at most risk, are
fully aware of the implications of relevant anti-bribery laws, and the requirements of
their corporate compliance programme.
 Companies should monitor compliance with their anti-bribery programme and
regularly revise as appropriate.
Preparing Russian companies for UK Bribery Act Enforcement - The Defence of "Adequate Procedures"
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Private sector hospitality and promotional
expenditure
 Prohibit hospitality that is known to be in excess
of what the recipient is permitted to receive
under his employer’s own policies
 Consider whether controls on gifts and
hospitality are adequate, and whether they need
to be extended to the private sector or have a
bifurcated policy preventing inferences being
drawn that expenditure on private sector
business is linked to misconduct by the recipient
 Absolute limits - v - approvals process
referencing relevant factors
Preparing Russian companies for UK Bribery Act Enforcement - The Defence of "Adequate Procedures"
14 December 2010
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Prohibition of facilitation payments
 UK hard line creates difficulties for operations
in some emerging markets
 Indications by the UK authorities that they will
not prosecute isolated facilitation payments
do not amount to a charter for a carve out of
facilitation payments from a UK Bribery Act
compliance programme
Preparing Russian companies for UK Bribery Act Enforcement - The Defence of "Adequate Procedures"
14 December 2010
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Subsidiaries, joint ventures and third parties
 Extend programmes to non-UK subsidiaries
carrying on business in the UK.
 The draft guidance suggests the programme
should be extended to subsidiaries under the
Company’s control which have no UK
connection.
 The Company’s vicarious liability for associated
persons dictates a risk based approach to due
diligence, training and monitoring of joint venture
partners and other service performers and
contractual warranties where such service
performers may assist C’s business
Preparing Russian companies for UK Bribery Act Enforcement - The Defence of "Adequate Procedures"
14 December 2010
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Other measures for third parties
Because of the risks to which third parties
expose a company for which they are
performing services, companies may wish to
consider requiring a third party:
 to comply with company’s anti-bribery policy;
 to provide a copy of its anti-bribery policy;
 to declare it complies with relevant antibribery laws; and/or
 to provide anti-bribery warranties in respect
of public and private sector bribery.
Preparing Russian companies for UK Bribery Act Enforcement - The Defence of "Adequate Procedures"
14 December 2010
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Do you tighten your programme for dealing
with FPOs and foreign governments?
 There is no requirement that the “bribe” benefit
the FPO or a political party or candidate – it
suffices to establish an intention to influence the
FPO and his acquiescence in an advantage to a
third party.
 Where is the line to be drawn between a
legitimate advantage or concession requested
by an FPO for the benefit of his country and a
bribe?
 Advantages permitted by foreign written law are
legitimate
Preparing Russian companies for UK Bribery Act Enforcement - The Defence of "Adequate Procedures"
14 December 2010
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Preparing Russian
Companies for
UK Bribery Act
Enforcement The Defence of
“Adequate Procedures”
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