5 Misconceptions About The Bribery Act That Could Prove Costly For Your Business

The Bribery Act will be implemented on 1st July 2011 and is commonly viewed as being the strictest anti-corruption law in the world. The Act creates the following new offences:

* offering, promising or giving a bribe;
* requesting, agreeing to receive or accepting a bribe;
* bribing a foreign public official;
* failure of a commercial organisation to prevent bribery.

The clause that has set the cat amongst the pigeons is the new Corporate Offence of failure to prevent bribery by those working on behalf of the organisation, including employees, agents and subsidiaries (whether domestic or foreign).

Penalties for falling foul of the legislation could include: 10 year custodial sentences; unlimited fines and potential debarment from government contracts. Despite the severe nature of the penalties, many directors are displaying a worrying degree of ignorance and apathy towards their compliance requirements.

Here are some of the tell-tale signs of companies that may be in for a shock after the 1st July.

Misconception 1 "The Bribery Act doesn't apply to me; it's only for the Big Guys……"

Think again. If you want to win contracts from prime contractors, they'll require evidence that you are fully compliant with the Bribery Act. You may find that anti-corruption procedures will soon form an important part in the selection process for competitive tenders. Also, insurance underwriters have confirmed that they'll take a close look at anti-bribery and corruption procedures when assessing applications for Directors' and Officers' Liability and Professional Indemnity insurance cover. Organisations that don't meet the required standard will either have their applications declined or face the prospect of higher premiums. This means that if you find yourself in the unfortunate position of being the innocent victim of a bribery investigation, you risk being unable to claim insurance to pay for legal defence costs. And lawyers don't come cheap.

Misconception 2 "I can ignore the Bribery Act because my company is already compliant with the Foreign Corrupt Practices Act (FCPA)".

The FCPA is the US anti-corruption legislation and it applies to any organisation that does business in the US. Companies that have been found guilty under the FCPA have experienced reputational damage, multi-billion dollar fines and jail terms for some of their executives. Compliance with the FCPA does not necessarily denote compliance with the Bribery Act. For example, the Bribery Act draws no distinction between public sector and private sector bribery; has no exemption for facilitation (grease) payments or for promotional expenditure and introduces an explicit offence of failing to prevent bribery by associated parties. Perhaps this is why some US attorneys frequently refer to the "Bribery Act as the FCPA on steroids".

Misconception 3 "I'm already prepared for the Bribery Act as I don't take my clients out to lunch".

If you read the Government Guidance on the Bribery Act, you'll see that organisations will be required to do much more than revise their corporate hospitality arrangements in order to comply with the legislation. An organisation can defend itself if it can prove that it had adequate procedures to prevent bribery. Prudent businesses are now implementing these procedures.

Misconception 4 "I won't get caught".

The Serious Fraud Office will be able to collaborate with police departments, the Department of Work and Pensions, the Foreign and Commonwealth Office, the intelligence services and overseas regulatory authorities. In short, they'll have resources for thorough investigations. In addition, if your organisation is involved in bribery, there is a serious risk of an investigation being triggered by a whistle-blower.

Misconception 5 "There's a bit about our anti-corruption policy in the HR handbook".

Anti-corruption policies and procedures are meaningless if they're not implemented. This was one of the main conclusions from those who investigated the Siemens case after the company was charged a record $1.3 billion in fines for bribery in 2008. The following questions will help you evaluate your current anti-corruption plans so that you can make the recommended changes.

Is your Board charged with overall responsibility for your anti-corruption programme?

Are your anti-corruption policies and procedures communicated to all relevant personnel and have you considered the possibility that translations may be required for non-native speakers?

Are your anti-corruption policies and procedures publicised on your web-site and other public materials?

Are your personnel and other associated persons, such as your subsidiary staff, joint venture partners and agents given access to anti-bribery and corruption training?

Do you have a mechanism that will allow people to report suspicious conduct?

Are there internal controls to ensure that anti-corruption procedures are being followed?

Are your internal controls audited and reviewed?

Please be in no doubt: for your compliance programme to be adequate for the Bribery Act, anti-corruption procedures need to be embedded into all aspects of working practice.