Bribery Act Review: Encouraging news for businesses of all sizes
The Bribery Act 2010 is well bedded down in English law, but is it causing any unanticipated problems for the business community?
A review of the Act1, conducted by a House of Lords select committee and published in March this year, has concluded that the Government needs to improve its advice for small and mid-sized companies on how they can best export their products and services while still being compliant.
The impact of the Act on SMEs was a key focus of the review, which considered issues such as:
- Whether the Act has led to a higher conviction rate and a reduction in bribery-related conduct
- Whether UK businesses have been put at a competitive disadvantage in obtaining foreign contracts because conduct which was lawful under foreign laws might be unlawful under the stricter Bribery Act
- Whether SMEs have been sufficiently aware of the provisions of the Act
- Whether Deferred Prosecution Agreements (DPAs) in bribery cases have affected the conduct of companies to prevent corrupt conduct, and in investigations of conduct once discovered.
The final report criticised investigations into alleged offences under the Bribery Act as slow, as well as the lack of progress updates for businesses. These problems are not good for business given the uncertainty, and the report recommends that the prosecuting authorities publish plans on how investigations can be speeded up.
Government issued its response to the Committee on 13 May 2019. The response is currently awaiting debate by the Committee.
Failure to prevent offence
A defence to a charge of corporate failure to prevent bribery under the Act is available where the organisation has adequate procedures in place to prevent bribery. The Committee heard evidence as to the interpretation of the word ‘adequate’ in the defence, with concerns that this would be interpreted too strictly. However, the Committee found that the wording means “reasonable in all the circumstances” – which should appease those concerned.
There is already Ministry of Justice guidance on the adequate procedures businesses should implement to ensure they have a defence to the ‘failure to prevent’ offence. This should also be updated, the Committee says, including further examples of good practice in relation to corporate hospitality, and procedures likely to provide a company with a good defence to the ‘failure to prevent’ offence – if SMEs were to adopt them. Updating the guidance should be done in consultation with the business community, especially SMEs, as they have fewer resources than bigger businesses.
DPAs are giving businesses an incentive for self-reporting and cooperation with the authorities. To encourage this in the business community, the Committee said formal sentencing guidelines should make clear that a discount will be applied to the calculation of financial penalties imposed on a company which has self-reported.
However, DPAs are not a substitute for prosecuting individuals for bribery offences. Companies must cooperate with providing all available evidence that might implicate any individuals, however senior, suspected of involvement in the bribery.
What’s next – and what should we do?
The Ministry of Justice is expected to consult directly with the business community as a result of the review before revising its guidance on the Bribery Act, however this process is likely to take some time.
Meanwhile, businesses of all sizes are reminded of their responsibilities to prevent bribery within their organisations. The key to this is well-documented and effective risk assessments of their processes, regular staff training and proactive implementation of safeguards where a risk is identified.
Businesses should also frequently review their existing anti-bribery policies and procedures so they can identify any new risks and demonstrate that they have a defence to a ‘failure to prevent bribery’ charge.
How can we help?
We understand how the Bribery Act affects businesses. The commercial and regulatory lawyers at Herrington Carmichael LLP can assist you in ensuring you have effective compliance policies and procedures in place to minimise the risks of falling foul of the Bribery Act.
Please contact Mark Chapman on 01276 686222.
This reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to a particular matter.