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While it is not a legal requirement to have a bribery policy in place for a business, if bribery does occur within an organisation, a defence will not be available without an effective policy in place. In order to safeguard your business, it is always recommended to have an anti-bribery policy. The policy should be in line with the level of risk that your business faces. For instance, if you are running a financial business, there is generally a greater risk of bribery.
According to the Bribery Act 2010, it is illegal to receive, agree to, request, give, promise, offer or accept bribes in a business. If you think someone in your business has a role that could be exposed to bribery, then a policy should be in place. An anti-bribery policy should be monitored and updated frequently, and include details of:
- How your organisation approaches and reduces the risks of bribery.
- Clear rules on how, in what context and when gifts, donations or hospitality can be accepted.
- Rules on preventing conflicts of interest.
- Guidance on how to negotiate contracts and create business agreements without risk of bribery.
An anti bribery policy and anti-bribery clause operate at different levels. An anti-bribery policy is a set of guidelines and procedures put in place by a company to prevent bribery and corruption within its operations. Anti-bribery policies typically include guidance on gifts and hospitality, facilitation payments, third-party relationships, due diligence, reporting mechanisms, and consequences for non-compliance.
An anti-bribery clause on the other hand is a specific statement within a contract that addresses the parties’ commitment to complying with anti-bribery laws and regulations. Having an anti-bribery clause within a contract formalises an obligation to conduct business in a legal and ethical way, preventing and prohibiting bribery and corruption.
Why should a company need an anti-bribery and corruption policy?
Section 7 of the Bribery Act 2010 makes business directors liable should a bribery offence be committed by an ‘associated person’.
An ‘associated person’ is an individual who provides services on a company’s behalf, but is not an employee of that company. For instance, people who undertake roles such as consultancy, sales agents, subsidiary companies and other partners or contractors are ‘associated persons’.
A business has a defence in a bribery case if it can show that it has ‘adequate procedures’ in place to prevent bribery that is linked to associated persons.
Having adequate procedures does however go further than just having an anti-bribery policy. According to the Ministry of Justice, businesses should have an ongoing approach to prevent bribery. This includes frequent monitoring, assessment for risk, and taking swift and appropriate action if bribery has occurred.
The amount a company needs to monitor for bribery depends on risk level and the industry the business operates in.
The six principles for bribery prevention
In more detail, here are the six principles for bribery prevention that have been issued by the Ministry of Justice. These principles should be upheld by all companies, and especially those operating across several countries, or in countries where bribery is seen as a more standard form of business practice.
Proportionate procedures
The anti-bribery procedures and policies a company has in place must be proportionate with the level of bribery risk involved.
Top level commitment
Top level management such as the board of directors and company owners, must be totally committed to preventing bribery within an organisation, and must demonstrate this in their own actions.
Risk assessment
An organisation must monitor the extent to which bribery could take place both externally and internally. As a business evolves, so does its level of risk.
Due diligence
Individuals who carry out services for or on behalf of an organisation must exercise due diligence and monitor risks of bribery.
Clear anti-bribery communication and training
Organisations must ensure that bribery prevention policies are understood across the company, and that ongoing training is undertaken.
Reviewing and monitoring
A company should frequently monitor, review and update procedures designed to prevent bribery.
Examples of bribery
Bribery is the receiving or giving of goods, services or money in exchange for action, influence or preferential treatment.
Bribery can involve authoritative figures, officials or private individuals. Some common examples of bribery within a business context include:
Bribing a public official
Giving or offering gifts, money or other benefits to a public official such as an immigration official, police officer, etc. to influence their actions or behaviour.
Bribing a private business or person
Offering bribes to competitor companies, business partners, contractors or other private companies to gain an advantage in business.
Facilitation payments
Making bribe payments to government officials in order to speed up application processes or approvals for licences or permits.
Kickbacks
Giving money or other benefits to contractors or other business officials/employees to gain favourable treatment.
Hospitality and gifts
Offering hospitality or high value gifts in order to influence a person's decision-making process within a business or government department.
Third-party bribery
Engaging an agent, contractor or other representative to engage in bribery practices on behalf of a company.
Unfair hiring practices
Promoting or hiring people based on personal relationships or favours rather than skills and experience.
Unfairly influencing political processes
Offering financial gifts, sponsorship or other advantages to political parties or politicians in order to get preferential treatment or to influence political decisions.
Failure to prevent bribery
Failing to have anti-bribery procedures and measures in place, and turning a blind eye to knowledge of bribery taking place within a company.
The largest financial penalty for commercial bribery
The largest financial penalty for commercial bribery in the UK was issued to Glencore Energy UK Ltd, which had to pay £280,965,092.95 million, after a Serious Fraud Office (SFO) investigation uncovered that the company had paid $29 million in bribes to gain preferential access to African oil.
The financial penality was the largest ever given by the SFO, and Glencore Energy Ltd. pleaded guilty to seven counts of bribery. The investigation revealed large cash withdrawals, text message communications and concealed bribery payments from Glencore to secure access to oil in markets in Cameroon, Equatorial Guinea, Ivory Coast, Nigeria and South Sudan (source: Serious Fraud Office).
What penalties are there for UK Bribery Act offences?
The UK Bribery Act 2010 states the following penalties for individuals who commit bribery offences:
- A custodial sentence of up to 10 years, depending on the severity of the offence.
- An unlimited fine can be issued, with the amount being dependent on the severity of the offence.
The Act also states that if a company has enabled a bribery or allowed it to happen because of inadequate anti-bribery procedures, the following penalties may be given:
- An unlimited fine (which is typically much higher than fines given to individuals).
- A company can be instructed to uphold a serious crime prevention order, to prevent future bribery offences.
- The return of any funds received through the bribe (as per the Proceeds of Crime Act 2002).
- Directors being disqualified from holding other director positions for up to 15 years.
It should also be considered that an organisation which is found guilty of bribery will also suffer considerable reputational damage, a loss of revenue and high legal fees should it decide to fight the case against it.
Active versus passive bribery
Active bribery is offering, promising, or paying a bribe to an individual or company. The Bribery Act 2010 states that a person can still be found guilty of bribery even if they are under duress. Here are some examples of active bribery:
- Paying public officials to win a licence or contract.
- Providing benefits such as luxury items, travel or hospitality to influence another’s actions regarding business decisions.
Passive bribery is the agreeing to, receipt of or acceptance of a bribe. Examples of a passive bribe include:
- Accepting a bribe to share confidential information.
- A senior executive accepting a bribe from a supplier to award a contract to them.
Anti-bribery training
To create a culture of integrity within an organisation, it is important that all staff and management are educated on what bribery is, the effects it can have on an organisation, and how to report it alongside other misconduct.
By engaging employees with role-based scenarios and training that is relatable, staff can recognise the risks of bribery more clearly, which will reduce the chance of a company falling foul of anti-bribery legislation. At the end of training, staff should take a test to ensure they have understood main concepts.
Effective anti-bribery training will ensure that staff understand the Bribery Act 2010, the differences between genuine business practice and bribes, procedures that are in place to ensure compliance, and penalties for corruption and bribery. They will understand how bribery could affect their role and the business as whole, and will gain insight into how to report bribery and suspicious behaviour.
Unjust enrichment
Under English law, the principle of unjust enrichment is that a person should not receive a benefit at another individual’s detriment without being asked to pay a reasonable value for the benefit. In court cases involving unjust enrichment, questions will be asked including:
- Has the defendant been enriched, and was it at the expense of the claimant?
- Was there unjust enrichment?
- Does the defendant have a defence?
Breach of fiduciary duties
In the context of a business with partners, directors or trustees, if a person conducts themselves in a way that does not benefit the organisation, such as acting dishonestly in their role for their own personal gains, they may be in breach of their statutory and common law fiduciary duties.
For example, there is an expectation that a director will act in good faith and in the company’s best interests, with a level of skill and care. Their fiduciary duties including promoting the company’s success, having independent judgement, accounting for unauthorised profits and avoiding conflicts of interest.
Legal action can be taken against an individual or a company for unjust enrichment or breach of fiduciary duties. Offering or accepting bribes can also result in a person being dismissed for gross misconduct.
We can advise on anti-bribery and corruption policies
At Neathouse Partners we can help you to understand the risks linked to bribery and corruption and how they can affect your business. Our experienced team of HR consultants and employment lawyers can advise on how to eliminate bribery through risk assessments, training and the development of an anti-bribery and corruption policy.
Call 01244 893776 today or use our contact form.
