December 02, 2010
An act to deal more effectively with bribery in public and private companies and partnerships is due to be implemented in April 2011.
At present, the law in relation to corporate bribes is unclear and piecemeal. Section 176 of the Companies Act 2006 deals only with the acceptance of gifts and corporate hospitality by Company Directors. It contains a duty on Directors not to accept benefits from third parties conferred by reason of doing anything as a Director, which could give rise to a conflict of interest on the part of the Director.
The Bribery Act 2010 will contain a new corporate offence of failing to prevent bribery, which may be committed by a company if someone performing services on its behalf accepts or gives a bribe in the attempt to gain an advantage for the business. As well as the company’s liability, the Directors may also be made personally liable for the offence if they ‘consented or connived’ in the Act. So the company and Directors may be found vicariously liable for the actions of their employees, agents and contractors, even if they themselves had no direct knowledge or involvement in the bribe. The Act will apply to companies and partnerships that conduct any business in the UK, even if they are foreign-owned or have their main place of business abroad. The company could receive an unlimited fine under the Act and guilty individuals could receive a jail term of a maximum of seven to ten years.
There will be a defence under the Act if the company and/or Directors can prove that there were adequate company procedures in place to prevent the acceptance of bribes and that these were adequately implemented and enforced at the time of the bribe taking place.
This means that it will be more important than ever for companies to have in place adequate and effective anti-corruption policies and procedures and financial control mechanisms. If the Directors are in any doubt as to what such procedures should contain, they should seek legal advice before the Act is implemented. The Secretary of State is under a requirement to publish guidance before the implementation of the Act, which should assist in this regard. Businesses should also conduct thorough due diligence on potential contractors before they engage them and ensure that adequate control mechanisms and contracts are in place to regulate their actions.
