Part 2. In part 1 of this two part blog, we discussed the UK Bribery Act and highlighted some recent examples of UK companies caught by the corporate offence of failing to prevent bribery.
In this blog we discuss how a company can manage its bribery risk by implementing adequate anti-bribery procedures.
Taking no action is not an option
Where there is no risk of bribery, a business does not need to put in place procedures to prevent it, however, it does need to be able to demonstrate that it has assessed the risk and concluded there to be none. The Bribery Act places responsibility on companies to prevent bribery and it is perhaps easier for the SFO to identify deficiencies and establish liabilities in the case of SMEs.
What guidance is available and how much is it going to cost me?
To help companies understand the Bribery Act and the anti-bribery procedures they can put in place to mitigate their risk, the Ministry of Justice published guidance in March 2011, which is available on .Gov website. The government survey found that, in addition to using this guidance, around a quarter of the SMEs aware of the Bribery Act or its corporate liability provision had sought professional advice regarding the Act or bribery prevention, with almost all finding the advice useful and good value for money. The mean cost of professional advice was around £3,740 and the median cost was £1,000, with the difference explained by a small number of companies spending much more than £5,000 on professional advice.
The need to think beyond your own conduct
It is necessary for a company to consider whether its anti-bribery procedures adequately address the conduct of others who conduct business on its behalf; for example a subsidiary (as in Sweett’s case), a key employee; a third party agent; a sub-contractor; or a major supplier; all perform services for or on behalf of a company. With a number of associated persons to consider, it is likely that large companies have more sophisticated anti-bribery procedures in place which seek to address the conduct of, amongst others, their SME suppliers.
Although an SME does not have to adopt its major customers’ anti-bribery procedures, some have been expected to sign up to “zero-tolerance” anti-bribery terms in customer contracts or to confirm they have anti-bribery policies, training and a risk assessment in place. The SFO is establishing a “hard as nails” reputation with the sentences and financial penalties it is handing down, therefore the financial, regulatory and reputational risks to large companies are too great to leave the conduct of their SME suppliers unchecked. In some cases, large companies prefer to end their relationships with SME suppliers where they feel that they fail to demonstrate adequate anti-bribery procedures.
So what are adequate procedures?
According to the MoJ guidance, what counts as adequate procedures will depend on the bribery risks faced by a company and the nature, size and complexity of its business. Therefore, an SME facing minimal bribery risks will require relatively minimal anti-bribery procedures to mitigate its risks.
For more information
If all this seems rather daunting, rest assured that adequate procedures can be achieved in a time and cost efficient manner. If, having read the MoJ guidance, you would like further assistance with assessing your bribery risk or implementing adequate procedures to mitigate your bribery risk, please contact the forensic team, we would be happy to help, or call us on: