(Richard Mumford, Partner, Dispute Resolution)
The UK Bribery Act (the “Act”) became law on the 8th April 2010. The Act will have a significant bearing on UK businesses and charities as exposure to anti-corruption offences is increased. The Act will apply to and affect the ordinary activities of many charities. Charities are not immune from fraud and corruption, indeed they are often seen as soft targets for fraudsters. You should therefore take the new legislation very seriously.
The Act came about due to pressure in the international community to reduce bribery and corruption in international trade. Existing laws were not sufficiently clear or robust to ensure that political objectives to eradicate or minimise bribery and corruption could be measurably met.
What is bribery?
The Act makes it an offence to give or receive a bribe. Bribery is the receiving or offering of any benefit, in cash or in kind, in order to influence an individual to improperly perform an activity. This may seem a little nebulous, and perhaps it is. The Act has been drawn widely to catch all forms of perceived ills, and in reality what is or is not improper will need to be decided on a case by case basis. In most cases, what is improper ought to be reasonably manifest from the payment of the bribe. Individuals should ask themselves the purpose of the payment being made, to whom it is being made and the effect of it.
Where this will be felt most keenly is where charities have overseas operations. It is common knowledge that getting things done in foreign jurisdictions often involves making payments to local officials or “fixers”. Many of these are in effect personal payments to those individuals (or to third parties to whom the money is passed through the conduit of these individuals) in order to persuade them to use their influence to make something happen. This is a bribe. The Act makes the bribery of foreign officials a specific offence.
The position is not always entirely transparent. Often such payments are dressed up as “consultancy” or “administrative” fees. It is important therefore to give some thought to each payment being made.
Charities with overseas operations must give this Act careful consideration. It could have serious practical implications for your work.
However, the Act does not only apply overseas. Charities in the UK must also consider how they interact with officials and the business community. A surprisingly high number of bribes are paid in the UK in order to get things done. Sometimes the practical benefit of such a payment might massively outweigh the cost and the stigma of making the payment. Nevertheless, to make such payments now would be a criminal offence.
It is important to note that bribery is not limited to cash payments. Other benefits in kind can be bribes. These include gifts but could also include lavish or otherwise excessive hospitality. It is also important to remember that the offence does not require intent, it is based upon the effect of what is done.
Who commits the offence?
The Act sets out four categories of offences, namely bribing another person and being bribed and it has also introduced a new offence of bribing a foreign public official. These are offences committed by the individual or individuals making the payment.
However, there is an additional offence of failing to prevent bribery that can be committed by a corporate entity or charity. This is another reason why you need to take this seriously.
The offence of companies failing to prevent bribery causes a business to be liable for the acts of their employees and agents. This could be potentially more detrimental to charities in that a director is protected from liability to some degree whereas trustees have a far greater responsibility.
The offence occurs if a business fails to implement adequate procedures to prevent a person committing a bribery offence. Therefore it is important to ensure that everyone who works for the charity is aware of the Act and the charity's position in regards to it. You should take the following minimum steps:
- Undertake a risk assessment to consider where the potential for bribery lies within the charity and its activities. Consider systems and controls to minimise or eradicate those areas of risk identified.
- Ensure all contracts of employment contain anti-corruption provisions.
- Make sure that all trustees, volunteers or anyone else who represents the charity understand the need to avoid bribery.
- Include a statement about bribery in your terms and conditions, on your website and in other externally facing documents.
- Provide training and support to ensure the message is understood.
Demonstrating adequate procedures is not just about documents, it is about culture. You should instill and be able to demonstrate a tangible culture of compliance across your organisation and its activities.
Substantial penalties and fines can result from the new offences as the court is able to impose unlimited fines. Also the giver or receiver of an advantage could be imprisoned for up to ten years for the most serious offences.
For more information or any questions please contact Richard Mumford.
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