The Bribery Act creates 4 criminal offences in total:

1. Bribing
It’s an offence for a person to bribe another person

2. Being bribed
It’s an offence for a person to request, agree to receive or accept a bribe.

3. Bribing a foreign public official
Where a person bribes a foreign public official intending to influence them and intending to obtain or retain business or a business advantage.

4. The Corporate offence
A company will be guilty of a criminal offence if a person associated with the company commits any of the offences listed above intending to benefit the company.  It doesn’t matter whether the company knew about the conduct or not.

The definitions contained in the Bribery Act are very wide and all businesses operating or incorporated in the UK are likely to be covered.  A company will be liable if any of its employees, consultants, workers and potentially even contractors commit a bribery offence.  The penalty is an unlimited fine therefore it is important that you take the steps now to ensure you are prepared for the introduction of the Act.

Bribery Act FAQs

What is bribery?

Offering, promising or giving some kind of financial or other advantage to a person:
1. intending them to perform a relevant function or activity improperly; or
2. rewarding them for performing a relevant function or activity improperly; or
3. knowing or believing that accepting the advantage would in itself be an improper performance of a relevant function or activity.

What is a relevant function or activity?

The definition is very wide and includes:
1. any function of a public nature;
2. any activity connected with a business;
3. any activity performed in the course of a person’s employment; and
4. any activity performed by, or on behalf of, a body of persons (corporate or otherwise).

What is improper performance?

Improper performance is where the person carries out the relevant function or activity in breach of a relevant expectation.  The relevant expectation will be dependent on the function or activity but may include:
1. Good faith
2. Impartiality
3. A position of trust

The test as to whether the expectation has been breached is what a reasonable person in the UK would expect in relation to the performance of the activity or function.

Does the Act only apply to functions and activities carried out in the UK?

No, functions and activities carried out anywhere in the world will be covered by the Bribery Act

Which types of company does the Bribery Act apply to?

The Act is wide and applies to:
1. any entity incorporated in the UK (whether it carries on business in the UK or elseswhere);
2. any entity which carries on business in the UK (regardless of where it is incorporated);
3. partnerships formed under UK law which carries on business (whether in the UK or elsewhere); and
4. partnerships which carry on business in the UK (regardless of where they are formed).

Who are “associated persons” for the purposes of the Corporate offence?

The definition is very wide and is anyone who provides services for or on behalf of the corporate body, irrespective of the capacity they provide this in. 

Who are associated persons?

Employees 

Yes. There is an automatic assumption that employeesare associated persons unless the contrary can be shown.

Workers and the self-employed
Almost certainly.  If the person is performing services for or on behalf of a commercial organisation they are likely to be associated persons regardless of their employment status.

Contractors
Probably.  It will depend on the circumstances but to the extent they perform services for or on behalf of a commercial organisation they will be associated persons.

Sub-contractors
Maybe.  Again this will be dependent on the circumstances but it is less likely that a sub-contractor will be an associated person and the lack of control between the commercial organisation and the sub-contractor will be relevant.

Suppliers
Unlikely.  If however a supplier does perform services for or on behalf of a commercial organisation then they will be an associated person.

Joint ventures
Unlikely.  Again however, the degree of control and whether services are being performed will be relevant and whether the test is met will be decided on a case by case basis.

What are the penalties?

For an individual: up to £5,000 (£10k in Scotland) or up to 12 month’s imprisonment, or both or, on conviction on indictment, to imprisonment for a term not exceeding 10 years, or to a fine, or to both. 

For a commercial organisation: an unlimited fine.

Is client hospitality now banned?

No, in generally, you can carry on as normal. Ken Clarke states in his foreword of the Guidance to the Act that “no one wants to stop firms getting to know their clients by taking them to events like Wimbledon or the Grand Prix”.

Hospitality, gifts, and similar are fine, as long as they are not particularly lavish, an unreasonable amount of money is not spent on them, or they are otherwise disproportionate.

How do you protect your business?

Liability for the corporate offence is strict – it doesn’t matter whether the company knows about the unlawful behaviour or not.  An associated person could include sub-contractors as well as employees.  If a business takes no measures to prevent bribery, then they will be at a high risk of conviction and an unlimited fine.

However, there is a defence if a business can prove that it had adequate procedures in place to prevent associated persons engaging in such conduct.  What constitutes adequate procedures will depend on the business and the bribery risks involved.  However as a general guide business should follow the steps below to benefit from the defence:

Steps to protect your business

Risk assessment

First step - develop a risk assessment and carry it out to identify the bribery risks your business faces.  This should be a routine and developing process.  As your business evolves, the risks may change.  The risks you highlight will shape how and to what extent you roll out the remaining steps below.

Policy & procedure

Make sure that you have in place appropriate bribery prevention policies and procedures.  This may include policies concerning: anti-bribery and corruption, whistle-blowing, expenses and corporate gifts/hospitality, disciplinary and code of conduct.  Provide guidance to staff as to what is and isn’t acceptable.

Communication & awareness

Don’t just add an anti-bribery policy to your handbook and think you’ve established the defence.  You need to ensure all employees are aware of the law concerning bribery and of the policies and procedures in place to prevent bribery, allow a forum for concerns to be raised and deal with any instances of bribery.

Due diligence

Ensure you carefully vet your employees, workers, consultants and sub-contractors by taking up references and, where relevant, checking regulatory track records.

Enforcement

Ensure that any suspected incident of bribery or other breach of policies is strictly investigated and sanctions enforced.
Top level commitment

Ensure that senior managers are involved in setting up bribery prevention measures and lead by example.

Monitor & review

Monitor the effectiveness of the policies you put in place and keep them under review, for example, auditing systems and/or financial controls, carrying out staff surveys and feedback from training.

Disclaimer

This information is intended as a guide only.  Whilst the information contained in this document is believed to be correct, it is not a substitute for appropriate legal advice.  Loch Associates can take no responsibility for actions taken based on the information contained in this document.