bribery brochure

8/4/2019 Bribery Brochure

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www.pannone.com

COMPLIANCEADVISORY:BRIBERY


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THE BRIBERY ACT 2010KNOW YOUR ABC

The most signicant development

in the legislation is the strict

liability corporate oence o ailing

to prevent bribery. This oence

will make it easier to prosecute

companies since no intent is

reuired. I companies are to avoid

the risk o prosecution they must

develop ABC compliance procedures

that are proportionate and risk

sensitive, taking into account their

size, the industry they operate in,

the people they do business or and

with and the particular corruption

risks to which they may be exposed.They must also ensure that the

tone rom the top is clear and

unambiguous a zero tolerance

approach to bribery and adeuate

resource to provide their sta with

the tools to combat bribery.

The governments guidance on

what may constitute adeuate

procedures or commercial

organisations, is high-level and

does not provide rms with a

sae harbour rom regulatory

enorcement, although applying

the six principles on which the

relates to ABC to provide a modern

and comprehensive scheme o

bribery oences that seeks to

enable the courts and prosecutors

to respond more eectively to

bribery taking place in the UK

and, crucially, abroad. Following

detailed consultation by the Law

Commission, which was tasked with

examining the UKs outdated bribery

laws, recommendations were madeas to the proposed overhaul o the

existing legislation. The consultation

ollowed sharp criticism rom non-

governmental organisations such

as Transparency International o

the UKs seriousness in combating

corruption.

The Act contains three potential

oences:

A general oence of oering or

receiving bribes;

A specic oence of bribing a

oreign public ocial; and

An oence of commercial

organisations ailing to prevent

bribery.

Corporate entities which are not

incorporated in the UK but which

carry on business here may also all

oul o the corporate oence.

guidance is based will go some way

to providing protection to a business

should any bribery issues surace.

Pannone has brought together an

ABC Compliance Advisory team to

deal with the challenges that the

Act will pose or our clients. The

team is led by Partner Zia Ullah

who was ormerly the Group head

o sanctions and policy at Barclays,

responsible or the ABC, AML and

sanctions policies.

THE NEW LAW

The Act is concerned with bribery. In

simple terms, bribery can be dened

as giving a person a nancial or

other advantage to encourage that

person to perorm their unctions

or activities improperly or to reward

that person or having already done

so.

The Act was passed into law by

Parliament on 8 April 2010 and

its main provisions are due to

come into orce on 1 July 2011.

It reorms the criminal law as it

This guide is intended to provide a short summary o the BriberyAct 2010 (the Act), the governments recently publishedadeuate procedures guidance and specic areas on whichcorporate clients should ocus their attention to ensure theiranti-bribery and anti-corruption (ABC) systems and controls areupdated to take account o the new legislation.


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on what may constitute adeuate

procedures on 30 March 2011.

Having consulted extensively on

the guidance prior to its publicationthere was a view rom industry

that the strict approach to the law

being espoused by the authorities

would lead to a reduction in the

competitiveness o UK businesses.

However, the nal version o

the guidance has generally been

accepted as taking a much more

common sense approach to the law.

The guidance stresses the need or

businesses to adopt six principles in

developing adeuate ABC procedures

and the action necessary to bring

these to lie in any business can be

summarised as:

Responsibility for anti-corruption

programmes should be at board

level and a senior ocer should be

accountable or oversight;

Assess the risks that are specic

to the company and its business,

including risks linked to the nature

or location o its activities;

Establish clear policies and

procedures, and train new and

existing sta in anti-bribery

procedures;

Implement internal controls andrecord keeping to minimize the risk

o bribery;

Establish whistle-blowing

their consent to or connivance with

a bribery oence committed by their

company. This senior ocer liability

does not extend to the corporate

oence o ailing to prevent bribery.

Company directors also ace the

prospect o director disualication

proceedings.

It should also be noted that the

commission o bribery oences mayalso lead to companies and their

shareholders incurring separate

money laundering liability, with the

conseuent statutory obligations

that arise under the Proceeds o

Crime Act 2002 (POCA). Examples

o such conduct includes handling

the proceeds o bribery, increasing

company prots, paying/ receiving

dividends or increasing the value o

shares as a result o bribery.

Under POCA, individuals are

protected rom committing money

laundering oences i they report

the conduct in uestion to the

authorities. This may, however,

lead to other action being taken as

a result o the underlying criminal

conduct. Careul consideration o

issues such as condentiality and

privilege are reuired when aced

with these matters and legal adviceshould always be sought to ensure

businesses and their employees are

ully protected.

procedures so that employees can

report corruption saely and

condentially; and

Monitor and review any controlsto ensure their eectiveness.

OVERSEAS REACH

The Act has broad scope and

extraterritorial reach, which means

that:

- Any individual ordinarily resident

in the UK (whether or not a British

national) can be prosecutedor bribery oences committed

anywhere in the world; and

- Any partnership or corporate

(whether or not incorporated in the

UK) can be prosecuted i it does

business in the UK (e.g. through

a subsidiary or other business

operation), even i the oence was

committed outside the UK.

PENALTIES

Corporate bodies ound to have

committed any bribery oence could

ace unlimited nes. In

addition, they may be debarred rom

tendering or government contracts,

under Article 45 o the EU Public

Sector Procurement Directive 2004.

Individuals could ace a maximum

10 year prison sentence and/or anunlimited ne. This includes senior

ocers (which includes a director,

manager, secretary or similar ocer)

o companies held liable through


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KEY ABC RISKSTRATEGIES

Facilitation payments

Recognising that acilitation

payments are bribes and unlawul

under the Act. Understanding the

extent to which employees may be

exposed to such payments.

Political and lobbying activities

Provide clear guidance or employees

that making political contributions

as a means o winning business isstrictly prohibited and ensuring that

all political contributions are publicly

disclosed.

Sponsorships and charitable

donations

Disclose all charitable contributions

and maintain a clear policy on

sponsorships.

Conficts o interestClearly set out the companys

position with respect to potential

conficts o interest and provide

guidance or employees.

Bank accounts, cash and petty cash

Establish and maintain eective

systems o internal controls over

accounting and record keeping

practices and ensure that o-book

transactions are not maintained.

Subject those controls to internaland external review.

exist in order to address any later

inuiry into the extent o any anti-

bribery programme. As a minimum,

policies and procedures should, inaddition to dealing with specic acts

o bribery, deal with the companys

policies with respect to:

Third party intermediaries and other

business partners

Companies should ensure that

adeuate due diligence checks are

carried out on third parties that the

organisation plans to employ. Anycontracts with these third parties

should reuire them to comply

with anti-bribery legislation. They

should also ensure that all books

and records are maintained and are

available or inspection.

Gits, hospitality and entertaining

Ensuring that gits and

entertainment are proportionate and

reasonable and that there exists a

route o escalation and minimum

standards.

As detailed in the governments

guidance, any measures should be

developed as part o a proportionate

risk assessment taking into accountthe particular circumstances o

the company in uestion including

actors such as size, geographical

risk, industry areas and third party

engagement. These themes orm

part o the adeuate procedures

guidance, as discussed above.

What is essential, however, is

that senior management take

responsibility or the ABC agendawithin their rms and ensure

that there are mechanisms in

place to allow or reporting to

appropriate oversight unctions

within organisations, such as legal,

compliance or internal audit, to

escalate any bribery related issues.

These mechanisms orm part o any

rigorous assurance processes and

should compliment other review

mechanisms such as annual risk

assessment or ongoing monitoring.

SMEs may not need such extensive

oversight but should still ensure that

some orm o assurance controls

To counter the risks o committing oences under the Actbusinesses need to adopt comprehensive policies and proceduresto prevent and detect bribery in their organisations.These policies and procedures need to be part o an overallcompliance ramework.


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Sta training on ABC

All employees including senior

management should be provided

with ABC training and consideration

should be given to include third

party contractors and suppliers

where appropriate.

Whistle blowing

Employees should be able to

raise concerns with respect toABC violations and the company

should provide secure and

accessible channels through which

those concerns may be raised

condentially.

SELF REPORTING

Businesses have been encouraged

to become more open with the

prosecuting authorities and to report

any activity that highlights the

commission o bribery or corruption

oences. The SFO has, as the lead

authority or the prosecution o

bribery oences, been vocal in

attempting to persuade companiesto approach them with a view to

settling matters on a voluntary

basis.

This approach, on the ace o it,

has many advantages, including

the potential or civil rather than

criminal penalties being imposed,

thereby avoiding the procurement

issues reerred to above. However,

the courts have expressed theirdiscontent with the SFO approach,

particularly with respect to

negotiated settlements and the

degree to which they are able to

provide certainty to businesses going

orward remains to be seen.

There can be no doubt that corruptiono oreign government ocials or oreigngovernment ministers is at the top end o

serious corporate oending...

Lord Justice Thomas, R v Innospec Limited


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OUR VIEW

Although the government has stated that it believes thatin some cases businesses may not need to implement anycontrols to deal with ABC risk, it remains to be seen as towhether adopting a wait and see approach to the new lawproves eective.

Those rms that are yet to begin

their risk assessments and who

do not yet have adeuate ABC

policies and procedures will be at asignicant disadvantage and ace

potential regulatory censure should

any weaknesses come to light.

Ultimately, the development o a

strong ABC culture will take time

to embed within an organisation

and senior management need to

exhibit their commitment to the

ABC message by ensuring that

their employees are aware o the

rms zero-tolerance approach tobribery and shown that ethical

business can become a competitive

advantage and not simply a means

to ensure compliance with the law.

In our view businesses should

already be in the process o

assessing the bribery and

corruption risks they ace giventhe imminent implementation o

the Act. ABC should be a standing

item on the board agenda and

senior management should be

tasked with ensuring that the

ABC message is delivered across

the organisation. Both the SFO

and FSA have publicly stated that

ABC is a strategic priority in their

enorcement programme and several

high prole cases (AON, Innospec,BAE, Mabey and Johnson) have

shown that the conseuences or

directors and shareholders can be

dire and the wider damage to brand

and reputation immeasurable; the

day ater the SFO announced that

it was seeking to prosecute BAE

or corruption oences its share

price ell by over 530million and

the ormer directors o Mabey

and Johnson have recently been

given custodial sentences as a

conseuence o the corruption case

brought against the company.


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HOW CANPANNONE HELP?

Reviewing ABC policies and

procedures or drating new policies

to ensure evolving ABC risks are

identied and providing a uniorm

approach across organisations.

Investigations

Providing advice and support

throughout any investigation

brought about as a result o alleged

non-compliance with ABC legal

obligations.

Risk assessments

Considering factors such asindustry, customer type, product

and jurisdictions to identiy the

areas o highest ABC risk within your

business and detailing mitigation

strategies.

Reviewing implementation of

ABC policies and procedures and

conducting benchmarking exercises

on control eectiveness.

Processreview

Considering the operational

eectiveness o end-to-end ABC

compliance processes and providing

advice on industry best practice and

regulatory expectation.

Training

Designing and delivering tailoredABC training to ensure risk sensitive

awareness o issues/best practice

across your business.

Providing advice on contentious

ABC proceedings, legislation,

advising on reporting obligations,

drating sel-disclosure reports,

liaising or negotiating with

regulatory authorities

Our teams expertise and experience in dealing with thesematters allow us to provide advice and assistance on any ABCrelated issue including:


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Pannones Regulatory team is

headed by Anthony Barnather

who is nationally recognised in

both the Chambers UK Guide

and the Legal 500 as a leader in

the eld o corporate deence

proceedings and white collar crime.

His extensive experience includes

cases investigated / prosecuted by

the Financial Services Authority, the

SFO, H.M Revenue and Customs, the

Department or Business, Innovation

and Skills, and the Oce o Fair

Trading.

...a companys anti-bribery programme ismore likely to be regarded as constitutingadeuate procedures i it is based on

good practice rather than an approachthat solely uses compliance with laws todetermine the structure o the programme.Transparency International


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We also believe that many rms are notcurrently in a position to demonstrateadeuate procedures to prevent bribery -

a deence to the Bribery Act 2010s newcriminal oence o ailing to prevent bribery.Financial Services Authority


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KEY CONTACTS

Anthony Barnather

Partner and Head o Regulatory

Telephone: 0161 909 4523

Email: anthony.barnather@

pannone.co.uk

Zia Ullah

Partner and Head o Compliance

Advisory team

Telephone: 0161 909 1591

Email: [email protected]

Chris Stott

Associate

Telephone: 0161 909 8779

Email: [email protected]


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Pannone LLP is a limited liability partnership registered in Englandand Wales with number OC317202. Regulated by the SolicitorsRegulation Authority. Authorised and regulated by the FinancialServices Authority. A list o members is available or inspection atthe registered oce together with a short list o those non-memberswho are reerred to as partners. We use the word partner to reer toa member o the LLP, or an employee or consultant with euivalentstanding and ualications.

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