The importance of robust anti-bribery policies

Neil Williams at Reeds Solicitors LLP explains how strong anti-bribery policies can keep your business and your employees safe

The importance of strong and robust anti-bribery policies for corporate entities cannot be understated, given the broad reach of legislation both in the UK and abroad. 

The potential reputational harm for a company, together with criminal sanctions for corporates and individuals, bring into sharp focus the need for policies which are fit for purpose, and not merely weighty tomes gathering physical or digital dust in company archives.

They should be dynamic and reviewed frequently to ensure they meet the requirements of an ever-evolving regulatory landscape. 

In the UK, the Bribery Act 2010 (the Act) has been in force for over 11 years, consolidating previous anti-bribery laws, and extends the reach of UK authorities far beyond domestic shores.  In summary, the Act has created offences for both private and public companies, together with individuals, which include:

• Paying bribes, or offering / promising the same
• Accepting bribes
• Paying bribes to foreign public officials

For offences of paying bribes, if a financial or other advantage is provided, even if only promised, then if the intention is to induce that person to perform a function improperly, then an offence may have been committed. 

Likewise, the same is applicable for accepting or soliciting bribes.  As for what constitutes a function, this will be any public function, or an activity undertaken in the course of a person’s employment.

For payments to public officials, improper performance is not required.  The mere act of giving an official any type of benefit which is not permissible by local laws may fall foul of the Act.

The Act reinforces the position that payments which may be considered acceptable in some jurisdictions, in order to facilitate business transactions, are approached with zero tolerance.  The standards of a reasonable person based in the UK are used to judge how a person performing a function behaves.  Unless expressly allowed by local laws, what may be acceptable to the goose is certainly unacceptable to the gander.

In addition, there is a corporate offence of failing to prevent bribery, which is perhaps one of the most significant features of the Act, and which has led to a change in thinking as to how anti-bribery policies are to be shaped and implemented. 

Companies cannot hide behind the activities of others, as they will be guilty of an offence if another person such as an employee, a subsidiary, or a third-party agent who performs services on behalf of the company pays a bribe.  This is essentially a strict liability offence, however there is a defence if the company can demonstrate that it had ‘adequate procedures’ in place to prevent the payment of bribes.

Whilst the defence of, ‘adequate procedures’ provides an important safety valve for companies operating in the UK and overseas, it is also a burden which must be borne to ensure legislative compliance.  

Companies which operate in sectors which could be considered at higher risk, such as extracting resources overseas, or in developing countries will need to ensure that as well as their own robust anti-bribery policies, parties with whom they operate can demonstrate a similar level of compliance.

As to what constitutes adequate procedures, it is very much driven by a demonstrable commitment from the higher echelons of a company as to the approach to anti-corruption.  On a practical level, this will include:

• Risk assessment and planning
• Policies and procedures
• Working in high-risk areas
• Managing third parties
• Communications and training
• Monitoring and review
• Reporting issues to authorities

The Act reaches far and wide and applies to all companies which carry on a business, or part of a business in the UK.  This means that payments which constitute a bribe can be paid anywhere in the world yet prosecuted in the UK under the Act when the jurisdictional test is applied.

Whilst there have been relatively few prosecutions under the failing to prevent offences to date, there have been a number of significant cases which have been concluded through the use of Deferred Prosecution Agreements (DPAs).  These were introduced in 2013 as an alternative means of enforcement and resolution for financial crime offences, including bribery and corruption.  They essentially require the co-operation of a company in an investigation into potential wrongdoing, usually following self-reporting. 

The sums involved by way of financial penalties have been significant, but DPAs themselves have come under scrutiny for a number of reasons, notably through the difficulties securing convictions for individuals implicated in the agreements.

As stated above, anti-bribery policies need to be adaptable to develop and grow as risk areas increase.  The pandemic has brought about a number of challenges, both socially and economically, and these will resonate for some time. 

The contracts which have been awarded in the health sector, and procurement from overseas may well reveal issues in the future.  Pressures on companies’ finances bring their own pressures, no matter the sector in which it works.   

In addition, the increased move to home working, together with paperless offices mean that adequate controls and policies need to be in place, no matter how a company operates, or where their employees work from. 

A company has to be in control of how it conducts business and demonstrate what is expected of its employees and associates.  A failure to do so can mean a defence becomes indefensible.

Neil Williams is deputy head of complex crime at Reeds Solicitors LLP

Main image courtesy of iStockPhoto.com