The Bribery Act – that was years ago? Wrong. It’s here to stay, being updated and it is wise to ask just how proactive your anti-bribery procedures are currently. You issued an anti-bribery policy and asked everyone old and new to read it? Unfortunately that isn’t good enough when someone breaks the law. Simply publishing an anti-bribery policy doesn’t fulfil the level of compliance required and if you don’t know how you should be addressing this serious issue, then read on.
If your organisation does not have a people compliance solution you should seriously consider one as your organisation could be heading for a serious problem. The climate for compliance is increasing and you cannot afford to put your head in the sand. Should a bribery situation occur you are going to have to demonstrate exactly how good your procedures in situ are. But first a bit of background and detail.
Most people want to live in a fair society where business and trading occur on merit and where the free market is a fair and level playing field. Reality or fantasy, the law is here to help make that happen. Bribery or the threat of it across industry stops fairness from occurring and results in corruption. The greater the frequency of the occurrences of corruption, however minor, the greater the problems of Government, business and society at large.
The primary bribery and corruption legislation in the United Kingdom is the Bribery Act 2010 which came into force on 1st July 2011. Its task was and remains to tackle corruption. In May 2018, the Government announced that a House of Lords Select Committee had been appointed to consider and report on the Bribery Act. In July 2018 it started to hear evidence from various stakeholders, and it is expected to report on its findings in late Spring 2019. Updates are therefore expected shortly.
The Bribery Act 2010 defines the criminal offences of bribery in a general way and covers many areas including the primary offences of bribing another person, receiving a bribe and bribing a foreign public official. Critically, the Bribery Act introduced the new corporate offence of failure to prevent bribery, where the only defence available to commercial organisations can be for them to show that they have & adequate procedures policies and active monitoring in place to prevent bribery.
The definition of adequate is not one you should make alone as it will be down to prosecuting authorities to decide what they deem as adequate. Therefore the better your procedures and pro-active compliance solutions the better the possible outcome.
To date corporate bribery prosecutions have been minimal but are expected to increase and be exemplary in terms of fines etc. in the coming years. A lack of exposure of cases has ensured that most organisations have rested on their laurels and only paid lip service to anti-bribery rules. This may well now come back to haunt them should a breach now occur. Current prosecutions have been directly related to offence of failing to prevent bribery.
One is as much at risk as a senior manager as the organisation itself as both have levels of responsibility and therefore culpability. Let us remind ourselves what bribery actually constitutes under the Bribery Act.
The offence of bribing another person may include promising, offering or giving a financial or other advantage intending to induce or reward improper conduct, or knowing or believing its acceptance to amount to improper conduct. A bribe does not actually have to be given as it can be implied; for example just offering a bribe, even if not accepted, could be sufficient to constitute an act of bribery. As stated above, the offer of a bribe does not have to be explicit, and any offer made through a third party will fall within the Bribery Act. It is extremely important to understand that an individual being bribed or receiving the bribe also commits an offence under the terms of the Bribery Act.
Some will resist by referring to the term ‘proportional’ in terms of what could constitute a bribe, however this is an extremely risky strategy. Giving or receiving tickets as hospitality to a sporting occasion, a dinner or an official event may appear innocent in isolation but what happens when attendance at such an event on a repeated or longer term basis leads to being unfairly prioritised for new business opportunities and recommendations? What happens when organisations and their employees or agents start offering business opportunities via preferred but undeclared partnerships due to reciprocal arrangements? What happens if these are exposed? Are you complicit or are you compliant?
Consider therefore how sales people may act in terms of how they court preference, receive priority and preferential treatment and win business deals. Consider how agents may be provided with incentives, managers offered incentives by 3rd parties or indeed away-day events and gifts. They are all potentially prone to generate breaches under the terms of the Bribery Act and the liability may fall on the organisation as well as its senior managers along side the perpetrator and recipient. What have you put in place to monitor this on a continual basis?
If one considers that the bribery Act is a UK issue or limiter and that business taking place abroad is exempt then think again. Within the terms of the Bribery Act, the act of bribery itself does not need to have occurred in the United Kingdom for a bribery offence to have been committed. As long as an organisation is incorporated or formed in the UK, or the organisation carries on a business or part of a business in the UK (whatever the country in which it is incorporated), then the organisation falls within the remit of the UK Bribery Act, wherever the act of bribery takes place. For a global corporation this means that pro-active global anti-bribery diligence is required on an on-going basis.
Let’s consider what we mean by diligence in this context?
The Bribery Act 2010 (and as a matter of course the Government advice for related Criminal Finances Act 2017) requires key elements to be considered and provable. These may be summarised as:
- Executive commitment – the senior management team should be committed to preventing bribery across the board and a senior manager should have overall responsibility for an active anti-bribery strategy. Is the executive team really doing something about the risk of bribery and associated culture and how can they prove it? The question to be asked is what technology and resources have you actively applied to demonstrate that this is the case?
- Risk assessment – the organisation should carry out timely and frequent documented assessments of its internal and external exposure to bribery, and act on the outcomes. This should include interactions with 3rd parties and agents. Without a true risk assessment the organisation will be left exposed. The question to be asked is what technology are you using to proactively carry out these risk assessments and at what frequencies? Do you have a solution that operates in real time on an on-going basis?
- Due diligence – appropriate checks should be carried out on people performing services for the organisation whether internally or as contractors and agents. In turn they should be required to carry out similar checks on the persons who they deal with within the supply chain. There is a liability for everyone involved. The question to be asked is when is this occurring, how and what methods are you using that can be presented as evidential reports and where is information being stored that can be evidenced?
- Monitoring and reporting – the risks and procedures should be regularly monitored and reviewed by senior management to ensure that they are being followed in practice. The question to be asked is how you are monitoring this situation and what technology have you put in place to provide review reports on an ongoing basis and in real-time. The more you have in place the better protected you and your organisation may be.
But the most important of all in the context of compliance solutions:
- Communication (including read and comply lists that link to training sources) – bribery prevention policies should be clearly communicated internally and externally, frequently and including the very latest version, with update frequencies and there should be continuous training related to anything published and in a format that is effective. As importantly, the question to ask is how you are proving that your employees have completed the training and read the updated anti-bribery policies and what methods of training and communication are you providing? Can you show specifically how many employees are actively compliant in anti-bribery at any point in time? How would you achieve this within minutes of being asked? If not then you may need people compliance solution to provide evidence should it be required at a moments notice.
In the light of the UK Bribery Act and its requirements upon you and your organisation, what happens if you choose to do little or nothing about it. What happens if you have simply retained old or manual anti-bribery policies and procedures that are infrequently tested or haphazardly updated? More importantly still, what happens if you suffer a breach?
The Crown Prosecution Service prosecutes bribery offences investigated by the police, committed either overseas or in England and Wales. The Serious Fraud Office (SFO) is the key authority in England and Wales for investigating and prosecuting cases of corruption, including those committed overseas. In England and Wales the Director of Public Prosecutions or the Director of the Serious Fraud Office will provide permission to proceed.
One should expect deterrent sentencing. The penalty for any individual convicted of general offences under the existing Bribery Act is a maximum of 10 years imprisonment and/or an unlimited fine. A commercial organisation convicted under the Bribery Act may face an unlimited fine or one based on a percentage calculation. One should also consider the damage to reputation and business at home and abroad as these cases are reported widely in the media. Other fallout from a prosecution may include senior management restriction on being able to hold a directorship and sanctions that may affect trade such as the barring from tenders across the UK and EU. Indeed it could be enough to cause an organisation to fail entirely.
Without a proactive compliance strategy and solution regarding anti-bribery your organisation could be heading for trouble. Your only plausible defence at the organisation level would be to clearly demonstrate that it had in place at the time of the breach, processes and procedures in situ that were designed prevent an act of bribery from occurring. However whether your processes and procedures were good enough would be open to interpretation.
A potential prosecution would therefore take a close look at what you did have implemented, how pro-active it was and how you were actually monitoring your anti-bribery compliance. What was written in the anti-bribery policy is not the issue, it is what your organisation (or you as a senior manager) were doing to actively prevent bribery taking place. This would require evidence.
A people compliance solution such as Orchestra Read and Comply™ allows you to demonstrate to an authority specifically how frequently you have updated the anti-bribery policy, related procedures and related content; it allows you to communicate a refresher notice. It allows you to record how many of the employees have explicitly consented to comply with the anti-bribery policy at any given time and what anti-bribery training you have updated to ensure that the number of employees consenting and fully trained in anti-bribery practices is as close to 100% as possible. As a senior manager or executive it also demonstrates that at a senior level you have been taking a pro-active stance against bribery.
The more provable the evidence you can provide on demand the better. Without such a compliance solution it may only be a matter of time before a major issue is heading your way. Is it worth the risk?
For more information on Signarus compliance solutions contact us on (UK) 020 7 788 9445