Bribery Act Guidance

Organisations which are currently setting up, or have set up, their anti-bribery procedures in time for the implementation of the Bribery Act in July must take note of the final guidance on preventing bribery which has now been published by the Ministry of Justice. This will be of relevance to all those involved in HR and management generally, in the private and (to a lesser extent) the public sector, as John Moore explains.

27/04/2011

Organisations which are currently setting up, or have set up, their anti-bribery procedures in time for the implementation of the Bribery Act in July must take note of the final guidance on preventing bribery which has now been published by the Ministry of Justice.  This will be of relevance to all those involved in HR and management generally, in the private and (to a lesser extent) the public sector, as John Moore explains.

The background

The UK’s anti-bribery laws have recently been criticised for being out of date and not fit for purpose.  To address this problem, the UK government passed the Bribery Act 2010, which is designed to modernise and revamp the law relating to bribery.  The Act was originally due to come into force in April 2011, but its implementation was delayed at the 11th hour, following criticism of the draft statutory guidance on preventing bribery. 

The government announced in February 2011 that implementation of the Act would be delayed, until three months after the government published revised guidance.  The final guidance has now been published, along with a Quick Start Guide , and the Act will come into force on 1 July 2011. The Quick Start guide does not form part of the statutory guidance.

This is an important development for all senior management, and particularly those working in HR, because compliance with the guidance may assist an organisation with its defence if it is found guilty of the criminal offence of ‘failing to prevent bribery’. 

The new regime requires organisations to take a very active and ‘top down’ approach to preventing bribery, which should permeate nearly every aspect of an organisation.  And whilst ‘bribery’ might sound like something of an arcane crime, the way in which the Act is drafted may catch a wide range of seemingly innocent commercial activities, such as, for example, certain types of marketing incentives or corporate hospitality.  Organisation and individuals found guilty of an offence under the Act face heavy penalties if convicted.

Please see our December 2010 article for a summary of the Act and why it is important for HR.

Relevance to the public sector

The Act is primarily aimed at private sector ‘commercial organisations’, but it has an indirect effect on the public sector because

  • private sector contractors and providers to public sector organisations are covered by the corporate offence, so public sector organisations will need to update their contracts to refer to it
  • individuals employed in public sector organisations may still be caught by the individual offences; and
  • ‘quasi-public sector’ bodies, such as social enterprises, community interest companies and GP commissioning consortia may be ‘commercial organisations’ and, therefore, covered by the Act.

In addition, even though public sector organisations are not directly caught by the corporate offence, most public sector organisations are likely to take steps to comply with the Act, as a matter of best practice.

Adequate procedures guidance

The stated purpose of the guidance is to help organisations understand the legislation and deal with the risks of bribery; unlike the previous draft of the guidance, the final version clearly states that the Bribery Act is not intended to prevent organisations getting to know their clients by taking them to events like Wimbledon or the Grand Prix.

Both the draft and the final guidance set out six principles to assist organisations wishing to prevent bribery.  However, the final version of the guidance has amended two of these with 'clear practical and accessible policies and procedures', and 'effective implementation' (as was) being replaced by 'proportionate procedures' and 'communication'.

The six principles are

  1. Proportionate procedures
  2. Top level commitment
  3. Risk assessment
  4. Due diligence
  5. Communication
  6. Monitoring and review

Each principle is followed by commentary and examples.  One example given is that offering to provide travel and lodgings for an official visiting a hospital run by a private organisation would probably not be an offence under the Act; but offering the official an unrelated luxury holiday might raise the necessary inference.

The guidance also includes practical case studies on hospitality, facilitation payments and joint ventures to provide additional clarity in these areas.

A risk based approach (rather than ‘one size fits all’) is advocated by the guidance, so that different procedures will be appropriate depending on the size of the organisation and the sectors and jurisdictions in which it does business (as some sectors and jurisdictions will be higher risk than others).

As in the previous draft guidance, the Ministry of Justice guidance recommends that policies and procedures are put in place to prevent bribery. Policies are likely to

  • include a statement of the organisation’s commitment to bribery prevention
  • set out the general approach to reducing bribery risks
  • give an overview of implementation strategy.

The guidance provides a non-exhaustive list of topics that bribery prevention procedures might cover.  Areas that may be relevant to HR include

  • involvement of top level management (see Principle 2)
  • due diligence of existing or prospective associated persons (see Principle 4)
  • recruitment, employment terms and conditions, disciplinary action and remuneration
  • enforcement, detailing disciplinary processes and sanctions for breaches of the employer’s anti-bribery provisions
  • including the reporting of bribery in ‘whistleblowing’ procedures
  • training on, and communication of, the organisation’s policies and procedures (Principle 5)

Next steps

The Bribery Act will come into force on 1 July 2011.  Please see our December 2010 article for details of practical steps that you may wish to take prior to implementation.

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