Last week I attended a webinar that featured an interview with Vivian Robinson Q.C, GC of the UK Serious Fraud Office. Robinson reminded listeners that FCPA compliance doesn’t mean you are automatically UK Bribery Act compliant. According to Barry and Richard from thebriberyact.com, the UK Bribery Act has been 15 years in the making. Derived from pressure from the OECD and Transparency International (TI), the UK introduced the Act in 2010. The Act is only a few months away from it’s effective date in April and is still making headlines. Just last week reports were made that Downing Street issued a review of the UK Bribery Act because they feel it could scar growth and opportunities to do business. The Act has been referred to as quite possibly the strictest anti-bribery law to-date. Here are some of my notes from the Securities Docket webinar:
3 Key Groups Impacted by the Act:
The Act imposes stipulations on the following groups of people:
- Individual Liability- Under the Act, individuals are held accountable for their actions. There are 3 primary offences: giving a bribe, receiving a bribe and bribing a foreign public official.
- Corporate Liability- It’s an offence if a company fails to prevent bribery – very broad, causes the most international concern. Guidance on the adequate procedures for preventing bribery will be released soon.
- Officers who consent- Any senior officer of a company with close ties to the UK will be guilty of the same offence committed if they fail to demonstrate that they took action once they were aware of the misconduct. Only applies to senior officers.
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The following 5 events are considered punishable offences under the UK Bribery Act:
- Give a bribe to anyone.
- Receive a bribe.
- Bribe a public official- influence the official, gain business/contracts.
- Officers who consent or connive are liable.
- Failure to prevent bribery.
It’s not an offense to not have adequate procedures in place. Adequate procedures simply serve as a defense for those companies found guilty of violating the Act. Advice offered by Robinson is to establish a culture that makes it hard for corruption to happen. Adequate procedures for complying with the act are similar to Chapter 8 in the US Federal Sentencing guidelines. Robinson recommends that executives should also look to TI’s document about adequate measures for preventing corporate corruption.
The following 4 areas are still being debated and raise some questions about the implications of the Act:
1. Carrying on a/part of a business- Open to debate, err on the side of caution. Contact the SFO if you have questions and they’ll work with you to make sure you’re Bribery Act compliant.
2. Associated people- Employees, agents or subsidiaries. Determined by relevant circumstances, not necessarily the person’s relationship with the company, opening up who the Act applies to. Adopt a policy of anti-bribery, due diligence and monitoring to watch over everyone your organization does business with in order to implement a proper defense.
3. Facilitation payments- Gold standard is zero tolerance. Nature and place business is done will be considered. Problem is that they are often part of organized schemes. Is it a one off or consistently being done over time?
4. Corporate hospitality- Degree of the gift, hospitality and other expenses. Reasonable expenditure to establish relationships is part of doing business, complicating the matter. Cases will be based on the circumstances surrounding the activity. The higher the expenditure and the more lavish it is, it will likely be considered as an attempt to influence a business leader’s decision – which isn’t allowed.
Don’t assume the SFO won’t find out. It’s better to report the matter yourself. Why should we report to the SFO? Increasing probability of the SFO finding out anyways, greater cross-border cooperation, work of investigators from the SFO and whistleblowers passing on information. Reputational damage, charges, debarrement from bidding on certain procurement contracts.
The issue of whistleblowers and the US Dodd-Frank Act were brought up during the webinar. It was noted that under the UK Bribery Act, whistleblowers are not given financial rewards for bringing information forward. Robinson stated that such programs are too vulnerable to misuse and it drives employees away from reporting internally- undermining the point for an internal ethics and compliance program. Robinson also noted that adequate procedures under the Act serve as complete defense to a charge under section 7 of the Act if it’s determined the company meets full expectations of what “adequate procedures” are.
You can listen to a recording of the entire webinar on the Securities Docket site.