Australian companies that run a business in the UK will be subject to a new anti-bribery regime that extends beyond financial reward to include inducements such as entertainment, privileges and gifts.
The UK Bribery Act 2010, which commences on 1 July 2011, casts a wider net in that it reverses the burden of proof, so someone can be successfully charged with bribery even if they had no idea of the activity.
Under the new law, it will be a criminal offence to give, promise or offer a bribe and to request, agree to receive or accept a bribe - either in the UK or abroad.
The law also covers bribery of a foreign public official. Under the Act, bribery is constituted as any action
that might "improperly influence" someone in order to obtain business or an advantage in the conduct of business, and extends to foreign employees, subsidiaries or agents in other countries who make "facilitation payments" without company permission.
The new law will apply to all UK-registered companies as well as companies registered anywhere else in the world but which do business in the UK, according to Will Kenyon, a London-based partner in the forensic services group of PricewaterhouseCoopers.
"One of the key tricky issues for everybody trying to interpret the Act is what is a bribe and where do you draw the line? Discussions have focused on what is an appropriate level of corporate hospitality, promotional expenditure or gifts and entertainment," said Kenyon.
There has also been debate around the level of due diligence that might be required to ensure that adequate anti-bribery procedures are in place for third parties, he says. "So if you have sales agents or other intermediaries who are either out there selling for you, or helping you to interact with government or other third parties in any way, shape or form, those third parties can create vicarious liability for your organisation if they pay bribes in effect on your behalf."
Companies that come under the Act will need to improve their communication, training, policies and monitoring and control procedures to make sure that employees understand what is expected of them and that they know where to turn for more information when needed, said Kenyon.
"For large multinationals there is potentially quite a lot to do, and my concern is that some may well have waited and they now only have three months in which to try to put something in place. I think that is good grounds for urgent action, but not for panic, because this is a long-term thing," he said.
While a business can avoid conviction if it can show that it has adequate procedures in place to prevent bribery, a recent guidance document published by the UK Government states that the question of whether an organisation has adequate procedures in place to prevent bribery is a matter that can only be resolved by the courts.
"In other words, we're back to square one," says Ian McDougall, vice-president and legal director for LexisNexis International (also publisher of Lawyers Weekly). Fundamentally, the new Act creates a mens rea ("guilty mind") offence; that of "intending" to "induce" "improper" performance of some kind.
"When combined with the guidance document advice, it is clear that identical acts may or may not be offences, depending on circumstance and proving mens rea," he said.
According to McDougall, ethics has been a topic of debate since the time of Plato. "I'm not quite sure this Act takes us any further forward in our understanding of what is or is not ethical behaviour. It just says, 'let the courts decide'."
However, he believes it is the big fish or utterly flagrant behaviour that the authorities will be after. "Therefore, it is clear that companies need to establish clear policies," he said, while programs of awareness also "need to be commenced, and probably a program of auditing established for compliance purposes".
McDougall also advises risk management professionals to factor their company's profile into risk assessments. "The higher the profile, the more likely you are to be in the crosshairs," he said.
"In addition, establish a set of criteria which can help judge what might be higher-risk activities, with higher-risk individuals, so that 'alarm bells' can ring where appropriate."
Defences against the Bribery Act
Companies that are subject to the UK Bribery Act 2010 can avoid being convicted of the offence of failing to prevent bribery if they can demonstrate "adequate procedures" are in place to prevent bribery. These include:
2. Top-level commitment
3. Risk assessment
4. Due diligence
6. Monitoring and review
For more information, see the UK Ministry of Justice's Bribery Act 2010: Guidance about commercial organisations preventing bribery, and Quickstart guide, both at http://www.justice.gov.uk/.
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