Wise up on bribery issues
In April this year, the Criminal Finances Act achieved Royal Assent, bringing with it stronger anti-bribery measures.
Along with new anti-money laundering regulations introduced in June, these are just a few of the measures the government is adopting to tackle corruption. They serve as a timely reminder of the importance of having robust anti-bribery and corruption measures in place.
What constitutes corruption?
It is important to understand that corruption can take many forms (e.g. bribes, fraud or extortion) and occurs on different scales. Bribery, for example, is not just about envelopes stuffed with cash, it can take the form of gifts; hospitality; misuse of loyalty/reward programmes; honours/awards; or endorsements. Knowingly accepting a bribe is just as much an offence as offering a bribe in the first place. Consider the following example:
You are responsible for selecting accommodation for inclusion
in a holiday package deal and have a shortlist of three hotels.
In discussion with one of the managers you are offered a
number of loyalty points which have no cash value but can be
redeemed against a free weekend stay in a luxury suite.
There may not be any implication that the points are conditional on your choice, but if it is perceived that this may influence your decision, you could be guilty of accepting a bribe.
Additionally, it is not just your own actions that you must consider. As a business, you are also accountable for the actions of your employees and that of third parties (including suppliers and partners) – whether you know about their actions or not. This is referred to as corporate bribery. It is therefore your responsibility to take appropriate steps to educate employees and prevent bribery and corruption.
What are the implications?
Although what constitutes corruption varies from country to country, the UK government takes a hard line when it comes to tackling corruption and in January it was ranked 10th in the Transparency International Corruption Perception Index 2016.
Over the last few years, there have been several high profile investigations into the practices of various organisations, from aircraft manufacturers and airlines, through to government tourism bodies. If found guilty, there can be serious consequences. For example, an aviation company had to pay a $107m penalty as part of a deferred prosecution agreement, while two businessmen who pleaded guilty to bribing foreign aviation officials were imprisoned for 18 months.
What action should you take?
With Brexit negotiations now underway, and following the result of the recent election, there has been speculation that the uncertainty will lead to a ‘business at all costs’ mentality. However, as tempting as it may be to gain a competitive advantage, the legal, financial and reputational consequences of stepping out of line can be far reaching. So how do you minimise the risk of falling foul of international anti-corruption legislation?
- Undertake a risk assessment to identify high risk areas
- Take a top down approach to anti-corruption
- Put in place appropriate policies and procedures
- Ensure staff receive regular training on anti-corruption measures
- Conduct due diligence (including checks for sanctions and politically exposed persons) on new and existing suppliers and customers
- Ensure contracts include anti-corruption clauses to protect your business from corrupt acts committed by a third party
- Monitor compliance with anti-corruption measures.
This article was published in the Travel Trade Gazette on 7 September 2017.
For more information or to start a conversation, please contact Aaron Zoanetti, Solicitor - Commercial.
Published: 14 Sep 2017