London Calls: UK Bribery Act Guidance is Out!

After a bit of a delay, guidance for complying with the UK Bribery Act has finally been released. The UK Bribery Act will come into effect on July 1st.

Posted by Joe Gerard in Ethics & Compliance on March 31st, 2011

After a bit of a delay, guidance for complying with the UK Bribery Act has finally been released. The UK Bribery Act will come into effect on July 1st. Yesterday I attended a webinar that discussed the final guidance that’s been issued to help businesses prepare for the Bribery Act. The webinar was hosted by Securities Docket and featured Vivian Robinson of the SFO, Barry Vitou and Richard Kovalevsky of and Julian Glass.  Members of the panel mentioned that there are still a ton of questions floating around about the Act. In particular, commercial organizations have a lot of questions about the relationships between companies and their subsidiaries.

Here are my notes from the webinar:

Final Guidance

  • Businesses have three months to familiarize themselves with the Act and prepare for compliance.
  • Important for businesses inside and outside of the UK.
  • FCPA compliance doesn’t equal Bribery Act compliance.
  • 6 guiding principles:
    • Proportionate procedures in place– Guidance isn’t once size fits all. What is considered adequate for a small company might be different for a large multinational. The same goes for companies that operate in countries that are known for corruption as opposed to countries that are not.
    • Top level commitment
    • Risk assessment
    • Due diligence– Was due diligence taken at the appropriate time? Companies need to demonstrate that adequate procedures were in place at the time of the incident.
    • Communication/Training
    • Monitoring and review– Record keeping- Companies will likely have to show the changes to their program over time to prove they’ve been monitoring and reviewing it.

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Additional Considerations

Corporate hospitality– Government doesn’t plan to prohibit promotional business expenditures or reasonable spending. Proportionate entertainment is approved under the Act. The panel advised the audience to keep documentation from the approval process – what the gift or entertainment is, what the person’s role is, why the payment/activity is taking place, etc., in case any issues arise in the future. Prosecutors will have to prove intent to influence when chagrining someone under the Act. Facilitation payments remain illegal under the Act.

Associated persons– Companies should employ risk based due diligence when selecting members of their supply chains. The government will take into consideration the amount of control a person/company has over a situation during a business transaction. Bribes on behalf of a subsidiary will not necessarily directly impact the parent company unless it can be proved that the bribe was paid through the subsidiary to gain business for the parent company. Parent companies will have to prove the subsidiary acted independently of the company and that the company had no/limited control over the subsidiary.

Government contracts– Originally, companies found guilty under the Bribery Act would be barred from obtaining government contracts. However, changes have been made and debarment from obtaining government contracts will now be determined on a discretionary basis.

Here are some additional tips from the webinar:

  • Follow up on payments to make sure correct payments are made to the right people. Keep this information on file for future reference.
  • Common sense- if your actions were on the front page of the paper the next day, would you be alright with it?
  • Total transparency is a major issue – self-reporting is encouraged and will be taking into consideration when penalties are decided.
  • SFO wants to see steps being taken to prevent bribery – the Act doesn’t deal with other types of crime/misconduct.

Factors tending in favour of prosecution:

Barry and Richard have published a number of blog posts about the guidance. Their post “SFO/DPP Guidance: Facilitation Payment Ban Continues & SFO door remains open,” includes a list of factors that could lead a company to be prosecuted under the Act:

  • Large or repeated payments are more likely to attract a significant sentence
  • Facilitation payments that are planned for or accepted as part of a standard way of conducting business may indicate the offence was premeditated
  • Payments may indicate an element of active corruption of the official in the way the offence was committed
  • Where a commercial organization has a clear and appropriate policy setting out procedures an individual should follow if facilitation payments are requested and these have not been correctly followed.

Joe Gerard
Joe Gerard

CEO, i-Sight

Spend my days showing off the i-Sight investigative case management software and finding ways to help clients improve their investigations. Usually working with corporate security, HR & employee relations, compliance and legal teams.

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