legal updates
Monday, 28 Feb 2011
Act now or pay later
The Bribery Act 2010, which was set to come into force on 1 April 2011, has now been pushed back to allow further guidance to be issued and to give businesses time to get to grips with its tough new rules. The date of its implementation has not been set but looks likely to be later this year. In the meantime, businesses should prepare by ensuring they have adequate policies and procedures in place to prevent corruption and safeguard themselves (and, in certain circumstances, directors) from substantial penalties.
Under the Act, an offence is committed if a person gives, or intends to give, advantage to another person to induce or reward them for improper performance of an activity. The person who accepts the inducement will also be guilty. Two new general offences will be created by the Act: bribing a foreign public official; and commercial organisations failing to prevent bribing by a person associated with them. This has potentially enormous consequences for businesses. The reach of the Act extends outside the UK, meaning international businesses will also have to take note.
Businesses have to be aware of the risk that what some would regard as gifts or simple hospitality could, under the Act, be considered bribes - resulting in criminal penalties for both the company and individuals.
Ignorance of the Act is not a defence, though there will be a defence available to businesses of their having ‘adequate procedures’ in place. With that in mind businesses should review existing compliance procedures or put these in place where they do not already exist, including policies relating to hospitality and political contributions, contractual arrangements, and the reporting of suspected bribery activities.
Implementing these procedures - as a matter of urgency - will be important to any organisation's compliance, as will ongoing training. HR matters will be a key area in which adequate procedures should be in place, demanding the drafting of policies, procedures and contractual provisions to address the requirements of the Act.
Getting up to speed for the Bribery Act will undoubtedly involve considerable upheaval, but the severity of potential penalties means adequate preparation is nothing less than essential.