Bribery: forms it can take and problems it can cause
A recent, high-profile case highlighted the forms that bribery can take and the problems it can cause. Aziz Rahman, of business crime solicitors Rahman Ravelli, considers the legislation and the need to take precautions.
To most people, £58m would seem a hefty fine for employing the wrong people. But it needs to be seen as a warning about the risks – and costs – of bribery.
Just this month, the bank Credit Suisse agreed to pay that amount ($77 m) to settle allegations in the US that it had used bribery to win business in Asia. Credit Suisse’s Hong Kong-based subsidiary was accused of hiring unqualified friends and relatives of Chinese officials in order to win contracts worth millions of dollars.
The bank’s behaviour was in breach of the US’ anti-bribery legislation, the Foreign Corrupt Practices Act 1977. The Act, like the UK’s Bribery Act, does not restrict the issue of bribes to the stereotype of some notes handed over in a brown envelope. Bribery can take many forms; which is why everyone in business needs to be aware of the danger and know how to avoid becoming involved.
The Bribery Act 2010 allows for any company or individual with a UK connection to be prosecuted in the UK for bribery carried out anywhere in the world on its behalf by staff, an intermediary, third party or trading partner. The Act makes it an offence to offer or receive a bribe. It also creates the specific offences of bribing foreign officials and failure to prevent bribery being committed on a company’s behalf. The penalties are a maximum of 10 years’ imprisonment for individuals involved and unlimited fines.
It is the strongest piece of anti-corruption legislation in the world. While few, if any, people reading this will ever find themselves in a situation on the scale of that which Credit Suisse was involved in, that case does at least indicate the problems that can result from using bribery as a business tool – or from taking too relaxed an approach to bribery prevention.
Bribery is defined in the Act as the giving or receiving of a financial or other advantage in order to encourage improper performance of a position of trust. This wording makes it clear that bribery can take many forms: cash, goods and services and many types of preferential treatment.
The scope of the Act, its possible penalties and the fact that ignorance is no defence make it vitally important that companies and individuals do all they can to avoid falling foul of it.
While ignorance is no defence to a bribery allegation, there is a defence under the Act of having “adequate procedures” in place to identify bribery and prevent it. If we take the Credit Suisse example, had the bank been prosecuted in the UK, this defence would not have been available as the bank either did not have prevention procedures in place or was not using them effectively.
The importance of devising and using such procedures, therefore, cannot be over emphasised. These procedures need to include thorough due diligence checks on any companies and individuals you are doing business with or are likely to in the future. Is their background bribery free? Are they themselves taking adequate steps to prevent bribery?
Such procedures also involve a company taking a good look at itself. Are its senior figures familiar with all aspects of the Bribery Act? What improvements can be made to working practices to reduce the potential for bribery? Have checks been made on staff, agents and any third parties representing it anywhere in the world? Do staff know about the Bribery Act? Is there a proper procedure for them to report any concerns?
These procedures can be the difference between bribery going on unchecked and it being prevented – and the difference between a criminal conviction and a clean reputation. If companies are unsure how to devise them, they must seek legal help.
This year saw the first conviction under Section 7 of the Act – the failure to prevent bribery. The case involved Skansen, a small office refurbishment company, being prosecuted; even though it had introduced anti-bribery measures and was a dormant company with no assets at the time it was convicted. It is yet another reminder of the need to tackle bribery properly, regardless of what form it takes.