Part 1 of a two part blog.
We discuss the UK Bribery Act and highlight some recent examples of UK companies caught by the corporate offence of failing to prevent bribery.
What is the UK Bribery Act?
The Bribery Act 2010 (“the Act”) came into force in the UK in July 2011. Section 7 of the Act introduced a new corporate liability, by which a business is liable to prosecution if it fails to prevent bribery being committed on its behalf. A full defence is available if a business can show that it had adequate procedures in place to prevent bribery.
We cover adequate procedures in part 2 of this blog series.
Who is caught by the corporate offence of failing to prevent bribery?
If you are thinking “bribery risk – that only affects big international businesses doing dodgy deals with government officials overseas” you aren’t alone. A number of SMEs are unaware of the Bribery Act, or think the Serious Fraud Office (SFO) is only interested in pursuing the large “headline grabbing” international conglomerates. However, this is a misconception as any organisation carrying on business in the UK is caught by the corporate offence.
What are the consequences of failing to prevent bribery?
The Act has resulted in a number of recent, successful prosecutions. For example, earlier this month Scottish based Braid Group (Holdings) Limited (“Braid”) became the latest company to be penalised under Section 7 of the Act and was ordered to pay a £2.2 million penalty after it self-reported “potentially dishonest activities” by one of its subsidiaries to the Scottish Crown Office. The conduct related to two freight contracts entered into in 2012. Upon investigation, two separate instances of bribery were identified, the first being payment of unauthorised expenses of a customer’s employee through invoice inflation, and the second being a profit share arrangement with a company director as reward for orders placed with Braid. Braid has subsequently taken steps to implement adequate anti-bribery procedures and training.
This follows shortly after another successful prosecution in February 2016, when Sweett Group PLC (“Sweett”) became the first company to be sentenced under Section 7 of the Act. Sweett was ordered to pay £2.25 million plus c£95k of costs to the SFO. Sweett admitted the offence relating to a bribe paid by its subsidiary in order to secure and retain a contract worth £1.6 million in the Middle East. The fine levied on Sweett was significantly more than the value of the contract. Sweett may have thought it wasn’t at risk as it had a number of internal anti-bribery policies in place, however these were deemed to be inadequate due to the poor anti-bribery controls adopted by its subsidiary.
Awareness and impact of the Bribery Act on SMEs
The Act, and the corporate liability provision in particular, is regarded by many as world leading anti-bribery legislation prompting many businesses, large and small, to assess their bribery risk and put in place anti-bribery procedures to mitigate their risk. However, not all SMEs are on top of the Act and its impact on their business, as demonstrated by the UK government’s 2015 survey of 500 SMEs which found:
- only two thirds of those surveyed had either heard of the Act or were aware of its corporate liability for failure to prevent bribery;
- only a third of SMEs surveyed said they had assessed their bribery risk, and
- around four in ten SMEs had in place anti-bribery procedures.
The results of this survey indicate that a number of SMEs are leaving themselves exposed to bribery risk and the risk of prosecution under the Act if they fail to prevent bribery on their behalf.
Here is part 2 of this blog series. We discuss how a company can manage its bribery risk by implementing adequate anti-bribery procedures.
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: