The recent FIFA corruption allegations have highlighted the importance of a top-down approach to anti-corruption policies in businesses.
The Bribery Act 2010 (“the Act”) replaced the existing regime of anti-corruption legislation and created a number of new offences, including corporate failure to prevent bribery. This offence can even be committed where no relevant acts take place in the UK. This offence is particularly important for organisations to consider because it imposes strict liability on them for the acts of their employees and representatives in the UK and potentially abroad.
The FIFA scandal is a timely reminder that organisations need to keep their anti-corruption policies under frequent review. Now is a good time to revisit whether the steps your business took after the Act came into force are sufficient. Sepp Blatter’s comments that he “can’t watch everyone” may be true but this approach would be far from adequate to ensure that a business does not fall foul of the Act and expose itself and its directors to unlimited fines, imprisonment and negative PR.
Under the Act, there is no requirement that the relevant commercial organisation authorise, encourage or even be aware of the payment bribes; businesses must, nonetheless, demonstrate that they had put in place adequate procedures to prevent bribery and filtering that message from the top of the organisation down is essential.
What constitutes adequate procedures?
The risks of corruption will vary from business to business, which means that there is no ‘one-size fits all’ answer to what constitutes adequate procedures. However, there are key principles for businesses to consider with reference to the guidance published by the Ministry of Justice.
1. Risk Assessment
Businesses must review the nature and extent of their exposure to risks relating to bribery. This not only includes external risks, but also internal risks that may not be as obvious. These internal risks could include inadequate training and even risks that may arise as a result of certain workers remuneration.
2. Top-Level Commitment
There needs to be a commitment from the highest echelons of the business to preventing bribery. This needs to be clearly communicated down, so that this policy is engrained at management levels, who can then in turn communicate it to their staff. This principle could be demonstrated by the involvement of management in creating the policies and overseeing them, for example by assigning a board member to oversee the implementation of policies.
This could also be visibly demonstrated by producing a written commitment that is available publically and sent to current and potential business partners.
3. Due Diligence
It is important to undertake the appropriate level of due diligence. This could be demonstrated by undertaking risk reviews of trading in certain jurisdictions or with certain business partners, and considering additional risks that may not be present in the UK.
It could also be demonstrated by something as simple as getting legal representatives to undertake risk assessment interviews with members of staff from relevant high risk departments.
4. Proportionate Procedures
Anti-bribery policies must be clear and easily accessible for staff and businesses should also consider disclosing them to business partners and vice versa.
These policies should include guidance on the acceptance of gifts and charitable donations, and how to report any suspicions of bribery. Organisations should develop a clear whistleblowing policy and reporting procedure.
It is also important to consider the incorporation of these policies into employment contracts which allow the employer to terminate employment should the employee breach the policy.
It is important to show that the policies and procedures have actually been implemented into the fabric of the business. Businesses should regularly review the policies and procedures to make sure they are working effectively. A policy being drafted and left on the intranet without review will not be sufficient. Periodic training is an effective way to demonstrate this, and could even be done through e-training.
Businesses should consider appointing an Anti-Bribery/Compliance Officer to be responsible for ensuring compliance with the Act. They need to have sufficient resource and authority to do this, and should report into the board of directors on their activity.
6. Monitoring and Review
Businesses need to constantly monitor and review activity, and deal with any issues as they arise. This could include monthly reporting from a Compliance Officer to the board and having relevant processes in place following reports of bribery.
In implementing the above principles, it is important to undertake an initial review of what is appropriate in relation to your organisation. Risks will vary based on the size of the organisation, the sectors/jurisdictions in which it operates and the nature of the business. The higher the risk, the more those adequate procedures will ultimately have to be to protect the business from the perceived threats.
We would be happy to discuss the steps that you can take to minimise your business’ exposure to corruption offences.
This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.