The Bribery Act came into force 7 years ago, however, we only recently saw the UK’s first contested prosecution of the corporate offence of failing to prevent bribery, with the defendant seeking to rely on the defence of having in place adequate procedures.
Under the Bribery Act a commercial organisation is guilty of an offence if a person associated with it bribes another person, intending to obtain or retain business or a business advantage for the organisation.
However, the Act provides a defence so that an organisation will not incur liability if they can successfully demonstrate they had in place adequate procedures designed to prevent bribery.
The Facts of the Case
Cash bribes were made by senior employees of the defendant in order to obtain information about tenders whilst seeking to influence the outcome.
Suspicions were raised and the defendant, following an internal investigation, dismissed those employees involved and reported the matter to the police.
The defendant co-operated with the police, disclosing confidential records from the internal investigation, however despite this, the defendant was charged under the Bribery Act for failing to prevent bribery.
The defendants sought to rely on the defence of having adequate procedures in place.
The defendants stated:
- They were a small business, operating from a room smaller than the courtroom
- Due to their size, detailed compliance controls were not needed
- Business was localised and not spread throughout multiple cities or countries
- It was common sense not to pay bribes
- They had policies relating to ethical and honest behaviour and therefore did not need a separate bribery policy
- They had in place financial controls before approving payments
The jury delivered a guilty verdict, finding that the defendant’s controls and procedures were inadequate and were not sufficient to prevent bribery.
Are there lessons to be learnt?
Organisations should give serious consideration as to whether they have in place adequate procedures to combat bribery.
From our experience, many clients deem themselves too small to worry about the risk of bribery, however, this case demonstrates that even the smallest companies need to consider whether they are doing enough.
A key observation to emerge from the case was the lack of an anti-bribery policy at the time of the bribes.
Whilst an anti-bribery policy on its own is unlikely to satisfy the adequate procedure requirement, it is a step towards demonstrating compliance and will form an important part of any defence.
To strengthen the argument that your organisation has in place adequate procedures we would also recommend the following actions:
- Implementing anti-bribery provisions in your contracts;
- Training staff thereby raising awareness and understanding;
- Conducting regular risk reviews;
- Monitoring and updating policies;
- Documenting face to face discussions;
- Appointing a compliance officer; and
- Recording compliance efforts.
Contracts at Risk
The risk of bribery applies to those associated persons of your organisation who typically perform services for, or on behalf of, the organisation regardless of their capacity, and includes employees, agents, distributors or subsidiaries.
Common commercial contracts and transactions that may be deemed to involve associated persons or require anti-bribery provisions include but are not limited to:
- Agency Agreements
- Distribution Agreements
- Supply of Service Agreements
- Commercial Collaboration Agreements
- Confidentiality Agreements
- Franchise Arrangement
- Supply of Goods Agreement
- Consultancy Agreement
Including contractual anti-bribery provisions into these type of agreements, as well as putting in place anti-bribery policies and other compliance documents, along with regular staff training and risk monitoring will go some way to ensuring your organisation has in place adequate procedures.
However, by failing to take such actions, you run the risk of incurring substantial fines and even custodial sentences.
For further information on bribery prevention or any other commercial matter, please contact Dan Dowen on firstname.lastname@example.org or 02920 345511.
Dan Dowen is a Solicitor in the Commercial and Intellectual Property Department at Berry Smith
Tel – 029 2034 5511