Companies must ‘self-regulate’ to prevent bribery

BUSINESSES across the North West are being advised to ‘self-regulate’ to avoid falling foul of the Bribery Act.

The act, which has been passed by Parliament, means that companies now have to comply with tough new bribery and corruption laws.

It makes it an offence to ‘fail to prevent bribery’ which could land companies in the courts if they have not put adequate procedures in place in the workplace.

The World Bank estimates that around a trillion dollars’ worth of bribes are paid each year.

The new act means that a company is “strictly liable” for any bribe paid by a person performing services on its behalf, unless the organisation proves that adequate anti-bribery procedures were in place.

The new act, which has also had Royal Assent, will set out exactly what constitutes a bribe and is set to significantly enhance the UK’s anti-bribery legislation which had been criticised by the US for being antiquated.

Kevin Hills, Manchester partner in forensic dispute at business advisors Ernst and Young, said: “Bribery and corruption risk doesn’t only come from within – businesses need to ask what is being done in its name. 

“Agents, consultants, distributors, joint ventures and new acquisitions create exposures which can be difficult to assess, but these are precisely the areas where the risk can be greatest.  Organisations need to look carefully at the due diligence they carry out on third parties who act on their behalf.

“Essentially, what this means, is that companies must be able to demonstrate that they have implemented adequate procedures to prevent corrupt practices within their ranks or by third parties on their behalf, and if they are unable to they could face unlimited fines.

“The guidance issued so far on putting the Bribery Act into practice has been too high level.  It is expected that some guidance will be available three months before the corporate offence comes into force, but this is likely to come too late for many businesses to be able to make the necessary changes in time.” 

Sarah Cleary, partner in DLA Piper’s North West corporate crime and regulatory practice, based in both Manchester and Liverpool added: “The new act has transformed the corporate regulatory landscape and has huge implications for business big or small. 

“From now on executives will have to effectively police their own business and hand the company into the authorities if they uncover any malpractice. 

“The Serious Fraud Office expects, and has already issued guidelines on self-reporting by businesses who uncover bribery.

“The legal advice being given to businesses is to put in place robust anti-bribery programmes, including drafting a comprehensive code of conduct for staff as well as providing a means for people to report any suspicions that bribes are being paid.”

The act passed through the House of Commons and the House of Lords with no changes to the main clauses which include general bribery offences, bribery of foreign public officials and failure of commercial organisations to prevent bribery.

Sarah Cleary added: “The global intention is certainly clear; in practice, a number companies, including big household names, have uncovered bribery and had to improve their systems. Construction companies like Mabey and Johnson were fined £6m after a plea bargain and Balfour Beatty paid a £2.5m civil penalty. 

“At the higher end of the scale BAE Systems agreed to pay £30m in the UK and $400m to the US authorities for committing a related offence; but the biggest fine so far was paid by Siemens and was nearly a billion Euros.

“Anti-corruption is a critical corporate governance issue – the risks to businesses of not complying equates to ignoring the risks of a huge fine, damage to reputation, exclusion from contracting with government agencies and criminal convictions.”