UK Bribery Act comes into effect

The UK Bribery Act comes into force today, 1st July 2011, radically changing the legislation on corporate bribery in the UK.

The legislation, which is viewed as some of the strictest in the world, aims to make it easier to prosecute companies who offer, receive or fail to prevent bribery.

While bribery was previous covered under a number of laws in the UK, including some that date back as far as 1889, the new legislation will make much more clear what is and is not acceptable.

The law was originally due to come into effect in April 2011, but it was delayed due to concerns by businesses, and Justice Minister Kenneth Clarke released new guidance in March fleshing out the law and the governments intentions.

In the guidance, the Ministry of Justice defines bribery as “giving someone a financial or other advantage to encourage that person to perform their functions or activities improperly or to reward that person for having already done so.”

The legislation will cover UK companies' dealings with foreign government personnel as well as private individuals. The US's Foreign Corrupt Practices Act (FCPA), by contrast, only covers public officials.

The law has three main offenses. Like most other legislation, the UK Bribery Act prohibits the payment or offer of bribes. It also specifically prohibits receiving bribes, while the FCPA does not. The most important new addition, and the reason why the UK Bribery Act is considered to be so challenging to business, is that it makes failure to prevent bribery a crime.

Section 7 states that a commercial organisation will be liable to prosecution if a person 'associated' with it bribes another person intending to obtain or retain business or a business advantage for that organisation.

It is not a defence that the organisation had no knowledge of the bribe, however if companies can prove they have 'adequate procedures' in place to prevent bribery, they will have a full defence.

The FCPA specifically allows 'facilitation payments' (small payments or bribes paid to facilitate routine government action) as well reasonable corporate hospitality, while the UK Bribery Act makes exceptions for neither.

This was one of the main concerns for businesses, who were worried that suddenly the corporate hospitality that it so important to building business relations would be illegal.

The guidance specifically deals with this concern: “The Government does not intend for the Act to prohibit reasonable and proportionate hospitality and promotional or other similar business expenditure intended for these purposes.” Indeed, the language of the guidance suggests businesses are unlikely to be prosecuted for normal corporate hospitality or for facilitation payments, as the government has to prove it is in the 'public interest' to pursue a case.

All companies that are incorporated in the UK, or have substantial business interests in the UK will be liable under the act. As such, it is important that all companies ensure they have adequate procedures in place to meet the expectations of the UK Bribery Act, but more importantly, ensure that anti corruption compliance is at the heart of corporate culture.

Top level commitment is absolutely crucial, and company directors can be held individually liable for actions by those associated with the company.

MACCS works with companies on risk assessments, due diligence on 'associated persons' (joint venture partners, local agents, contractors etc), and all other compliance issues, ranging from designing compliance programmes, to training personnel to establishing monitoring and auditing programmes.

Please see the Menas ACCS website to find out more about making sure you're ready for the UK Bribery Act, here.