July 2011 – The new Bribery Act 2010 (the “Bribery Act”) came into force on 1 July 2011 in the UK. If your company is doing business in the UK, it is definitely worth taking some time and paying some attention to this new piece of legislation. The main reason is its extra-territorial reach. The Bribery Act applies not only to UK companies but also to any company (whether public or private) doing business in the UK, whether through its permanent presence (e.g. thorough its subsidiaries) or otherwise.
The Bribery Act creates the following offences:
i. the offence of active bribery, which prohibits giving, promising or offering a bribe (the active bribery offence);
ii. the offence of passive bribery, which prohibits requesting, agreeing to receive or accepting a bribe (the passive bribery offence);
iii. the offence of bribing a foreign public official; and
iv. the offence of failing to prevent bribery (a corporate offence).
All of the offences have significant extra-territorial scope and can be committed even where no relevant behaviour takes place in the UK.
Failing to Prevent Bribery
Czech companies, in particular, should pay attention to the offence of failing to prevent bribery. A company will be liable to prosecution if a person associated with it bribes another person with the aim of obtaining or retaining business or an advantage in the conduct of business for the company. An “associated person” is any person performing services for or on behalf of such company (e.g. an employee or agent). The Bribery Act defines “relevant commercial organisation” as:
i. a body which is incorporated under the law of any part of the UK and which carries on a business anywhere (whether there or elsewhere);
ii. any other corporate body (wherever incorporated) which carries on a business, or part of a business, in any part of the UK;
iii. a partnership which is formed under the law of any part of the UK and which carries on a business whether there or elsewhere; or
iv. any other partnership (wherever formed) which carries on a business, or part of a business, in any part of the UK.
The Serious Fraud Office (an independent Government department that investigates and prosecutes corruption and serious or complex fraud) anticipates that courts will interpret the meaning of “carrying on business” in the UK very broadly. Therefore, if your company is carrying on any business in the UK it has to comply with the respective provisions of the Bribery Act.
Defence
How can you protect your company and avoid criminal liability and even unlimited financial penalties? You have a full defence if you can show that your company had adequate procedures in place to prevent bribery. What falls within the definition of “adequate procedures” will depend on the bribery risk that your company faces and the nature, size and complexity of your company’s business. There are several procedures which you could introduce and implement in your company in order to mitigate the risk of being criminalised or sanctioned under the Bribery Act. Good examples of such procedures are various internal regulations (e.g. relating to tenders), ethical codes or special policies relating to the receiving of gifts. It might be also worth considering special training for employees and other co-operating parties. In any case, you should not underestimate the importance of the Bribery Act and the consequences of a breach thereof and you should take some time to review your internal procedures.
Penalties
The consequences for committing offences under the Bribery Act may be quite severe. The Bribery Act, among other fines, allows for unlimited fines. In addition, individuals committing offences can be held criminally liable and the companies can be excluded from public tenders in the UK as well as in other EU countries.
Conclusion
If your company is carrying on business in the UK, it would be prudent to review carefully your business practices and assess whether there is a space for any improvement. You can protect your company by introducing internal regulations, ethical codes or providing training for your employees and other cooperating parties. In addition, you should not forget to keep an eye on the anti-bribery steps your company has taken so that they are in line with any changes in the bribery risks you may face.
For further information please contact Jitka Logesova, Partner, at .