Author: Joshua L. Ray
20 October 2015
3 min read
The UK government found out, via a survey it carried out, that one-third of UK SME’s (small and medium-sized enterprises) had not heard of the Bribery Act five years after it had come onto the statute books. This is despite the Ministry of Justice having issued guidance specifically to help SME's comply with the Act.
The lack of awareness highlighted by the survey was worrying, as the Act is a wide-ranging piece of legislation that carries heavy penalties.
It goes without saying that ignorance of the law is no defence, which is why the survey's findings were so worrying. But it is also worth emphasising that a company will not escape prosecution under the Act if it says, or even if it can prove, that it was unaware of the bribery.
This is because, under the Act, companies have to be able to show they had adequate procedures in place to identify and prevent any potential for bribery.
With the Act including provisions allowing for unlimited fines and up to ten years imprisonment, all companies must make sure they are fully engaged in complying with it.
But what does this involve? Putting it simply, companies have to make sure they are fully aware and informed of the bribery risks that exist in the business sectors and geographical locations in which they do business.
They have to assess the risk as it applies to their staff, business associates, intermediaries, third parties and potential or existing trading partners. In short, anyone with any association with the company.
Under the Act, bribery is defined as the giving or receiving of a financial or other advantage in connection with the "improper performance" of a position of trust, or a function that is expected to be performed impartially or in good faith. Bribery does not have to involve cash or an actual payment exchanging hands and can take many forms such as a gift. It could be bribery to retain or secure a contract or order, to gain an advantage over a competitor or to ensure a "blind eye" is turned to something unsatisfactory.
Any risk assessment carried out will count for nothing — and most likely fail to prevent the aforementioned situations — if it is not followed up with the introduction of company training to remove and prevent the risk of bribery.
Such training cannot just be a one-off exercise to "tick boxes". It has to be thorough, ongoing, regularly monitored and reviewed and clearly communicated to all staff. Crucially, it has to be seen to be part of a commitment from the highest levels of the company to prevent or eradicate bribery.
Similarly, carrying out due diligence on present and potential trading partners and associates has to be thorough and ongoing; reflecting an awareness of the need to exercise caution in proportion to the risk involved. The number of prosecutions has not been huge in the first years of the Bribery Act. But this must not be taken as a reason to be complacent.
Bribery is increasingly on the radar of the authorities both here and abroad, hence the major fines being imposed on many major companies for their activities in various parts of the world. Small and medium-sized businesses should not leave anything to chance in the hope that their failings regarding bribery are not detected. The scope of the Act makes it possible for companies to be prosecuted for what they may regard as merely maintaining a business relationship rather than obtaining a specific reward.
With s7 of the Act having created the offence of failing to prevent bribery, a huge burden of proof is placed on companies to show that they have adequate anti-corruption procedures in place. If they are unsure how to assess the risk of bribery or how to devise and introduce training to prevent it happening, there are legal experts who can help companies of all sizes identify and eradicate the potential for bribery.
Such expertise will cost significantly less than the price a company will have to pay if it falls foul of the Act.
Joshua Ray represents individuals and corporates in complex investigations, prosecutions and regulatory actions regarding market manipulation and multijurisdictional matters involving fraud, bribery and money laundering.