business with confidence icaew.com 22 february 2012 bribery & corruption!

BUSINESS WITH CONFIDENCE icaew.com

22 February 2012

Bribery & Corruption!


Michael Izza, Chief Executive

Welcome


Felicity Banks, Head of Business Law

Bribery and Money Laundering

Requirements in the UK


© ICAEW 2012

INTERNATIONAL BUSINESS CRIME

Business crime is mostly a matter of domestic law (modified by common/civil law traditions and Commonwealth co-ordination). Exceptions are:

• International agreements– Unmonitored

– Mutual evaluation

• Extraterritorial action

• National embarrassment and arm twisting


© ICAEW 2012

BRIBERY AND MONEY LAUNDERING

Money Laundering– Financial Action Task Force (FATF)

– EU Directives

Bribery– OECD Convention

– US Foreign Corrupt Practices Act (FCPA)

– UK Bribery Act


© ICAEW 2012

THE UK BRIBERY ACT 2010

• Core offences of paying or receiving a bribe

• Specific offence of bribing a foreign public official

• Corporate offence of failure to prevent bribery

• Offences for senior officers, consenting or conniving to one of the other offences


© ICAEW 2012

THE BRIBERY ACT 2010 – THE CORE OFFENCES

• in good faith• impartially; or • where the person involved is in a position of

trust

The core offences relate to the giving or receipt of ‘inducements’ to improperly perform a function expected to be carried out:


THE BRIBERY ACT 2010 – THE CORE OFFENCES

‘Improperly perform’ defined in terms of the expectations of persons performing those functions in the UK – even if the functions are carried out abroad

UK citizens will be held to UK standards of behaviour, wherever they are located – unless local ‘written law’ provides for different standards


THE BRIBERY ACT 2010 – THE CORE OFFENCESThe offences apply whenever:• Any part of the offence (including but not limited

to the improper performance) takes place in the UK; or

• All parts of the offence take place outside the UK, but the offender is:– A UK citizen, or overseas citizen,– Ordinarily resident on the UK,– A UK incorporated body


THE BRIBERY ACT 2010 – THE CORE OFFENCESThese offences go beyond OECD convention

requirements in that:• There is no exemption for ‘small facilitation

payments’• Bribe receivers are covered as well as bribe

payers (action can be taken against foreign nationals being paid in the UK)

• All bribes, not just bribes to obtain business or a business advantage

• Bribes to private persons, not just public officials


THE BRIBERY ACT 2010 – BRIBERY OF FOREIGN PUBLIC OFFICIALS Additional offence, to ensure full implementation of OECD Convention

Any financial advantage paid, offered or promised:– Intending to influence foreign officials, in

performance of their functions;– Intending to obtain or retain business or a

business advantage.

No improper performance is required

‘Functions’ defined in UK terms, unless ‘applicable written law’ differs


THE BRIBERY ACT 2010 - THE CORPORATE OFFENCE

Commercial organisations (including partnerships) commit offence if any person associated with them bribes another person intending to obtain or retain business or a business advantage for them.


THE BRIBERY ACT 2010 - THE CORPORATE OFFENCEThis offence can be committed not just by UK companies, but by any other body corporate (wherever incorporated) which carries on a business, or part of a business, in any part of the United Kingdom

‘Associated persons’ includes anyone who performs services on behalf of the organisation – may specifically include employees, agents or subsidiaries, but is not limited to them

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THE CORPORATE OFFENCE – ADEQUATE PROCEDURES

• Defence to the corporate offence to have adequate anti-bribery procedures, covering all associated persons

• Statutory guidance on adequate procedures specifically required by Bribery Act and now in place


THE CORPORATE OFFENCE – ADEQUATE PROCEDURES

Six principles for bribery prevention:

1. Proportionate procedures

2. Top level commitment

3. Risk assessment

4. Due diligence

5. Communication (including training)

6. Monitoring and review


© ICAEW 2012

DIFFICULT AREAS

• Hospitality & promotional expenditure

• Duress

• Facilitation payments


© ICAEW 2012

AML LEGISLATION

• Proceeds of Crime Act 2002 / Terrorism Act 2000

Definitions of money laundering and terrorist financing offences and requirements to report to the FIU (The Serious Organised Crime Agency – SOCA)

• Money Laundering Regulations 2007

Systems requirements for the regulated sector including CDD, reporting systems, and supervision

• CCAB Guidance

Must be taken into account by courts


© ICAEW 2012

PROCEEDS OF CRIME AND TERRORISM ACTS

• Suspicion reporting regime – no routine transaction reporting

• All crimes reporting

• No de minimis

• Inclusion of passive “laundering” (inclusion of proceeds of own crime)

• Criminalisation of non-reporting

• “Tipping-off” offence


© ICAEW 2012

MONEY LAUNDERING REGULATIONS 2007

• Client Identification and on-going monitoring

• Suspicion Reporting Procedures

• Record keeping (5 years after end of client relationship)

• Internal control

• Staff training and communication

• Supervision


© ICAEW 2012

CLIENT DUE DILIGENCE

• Independent documentary evidence of name & address of client

• Risk based approach to CDD

• Beneficial Owners

• Continual monitoring


© ICAEW 2012

REPORTING

• Internal reports to MLRO

• Reports to Serious Organised Crime Agency (SOCA)


© ICAEW 2012

REPORTING TO SOCA

• Reason to be suspicious

• Criminal offence not civil wrong

• On-line reporting form

• Consent requests

• Exemption in privileged circumstances

• Guarding confidentiality


© ICAEW 2012

FURTHER INFORMATION

www.icaew.com/bribery

www.icaew.com/moneylaundering

Library enquiries

Technical Advisory Helpline

http://www.icaew.com/bribery

http://www.icaew.com/moneylaundering

A world leader of the

accountancy and finance profession



AML - cases and opportunities

Paul Simkins, Director of Quality Assurance


Copyright © ICAEW 2011. All rights reserved.

Outline

• What to look out for – 3 recent cases

• AML Supervision for practice members

• AML Benchmarking for practice members



Improper: accountant behaving badly



Improbable: massaging the figures



Impossible: highly geared grandmother



AML Supervision for practice members

Practice members of GAA bodies:

• Can choose ICAEW to be their supervisor

• Can be supervised via our Practice Assurance (PA) scheme under contract

• Can get valuable help and support with access to leading brains in the field

• Can join a useful and proportionate scheme to help maintain good practice standards



Benchmarking

Purpose – share good practice, raise standards

• Pilot group benchmarked in Q1 2011– Many performing too much CDD (on low risk clients)– Some not conducting sufficient monitoring & training

• Further sample initiated in Q1 2012

• Output: group overview or bespoke assessment


Imelda Moffat, Manager, Information Law & Legal Services

Legal update



Example of slide notes • Enlightened shareholder value – what does it mean?• Codifying the common law requirement to act in the company’s best interest. Directors must act in a way that

promotes company success for the benefit of shareholders as a whole, and in doing so must have regard where appropriate to:

– long-term factors– interest of other stakeholders (eg, employees, suppliers and customers)– community and environment– company reputation.

• Government guidance is available at www.berr.gov.uk/files/file40139.pdf

• Other useful links are http://www.berr.gov.uk/whatwedo/businesslaw/co%2Dact%2D2006/ and• http://www.companieshouse.gov.uk/companiesAct/companiesAct.shtml

• And some ICAEW links are: icaew.com/companylaw• CA06 and major accounting changes: icaew.com/index.cfm/route/156108/• FFM CA06 Summary: icaew.com/index.cfm/route/148125/

• GOODIE ! There is a useful and short leaflet summarising the changes for private companies available at www.berr.gov.uk/files/file42262.pdf

• There is also a more detailed one at www.berr.gov.uk/files/file42261.pdf and• www.companieshouse.gov.uk/companiesAct/pdf/berrUpdatingYourClients.pdf• And finally• BERR is now BIS - Department for Business Innovation and Skills – as of June 2009

http://www.berr.gov.uk/files/file40139.pdf

http://www.companieshouse.gov.uk/companiesAct/companiesAct.shtml

http://www.companieshouse.gov.uk/companiesAct/pdf/berrUpdatingYourClients.pdf



Topics

• Employment

• Pensions

• Professional reform



Employment

• 2012 - A year of big changes – rights to claim unfair dismissal

– the tribunal system

– introduction of fees

• Research carefully and take advice

• Availability of good resources

• Interim Management Group at ICAEW



Status

• Employee

• Worker

• Self employed



Recent changes

• Agency Workers Regulations 2010– In force from October 2011

– Blurs lines between agency workers and employees

– Aim for equal treatment in pay and conditions between agency workers and hirers’ permanent employees

• Equality Act 2010– In force from October 2010

– Consolidation

– Protected characteristics



Pinch points

• Give a statement of employment within 2 months

• Plan early on business sales and restructuring and assess position

• Look out for TUPE changes in the future



Retirement

• Default retirement age of 65 abolished October 2011– Employees in transition

– Growth in Golden Goodbyes?

• Possible however if ‘Objective Justifications’ exist



The Seldon case

• Heard by the Supreme Court in January 2012 – decision awaited

• Mr Seldon forced to retire at 65 in accordance with partnership deed

• ‘Avoids the need to expel partners through performance management, thus contributing to the congenial and supportive culture in the firm’



Pensions

• Imelda’s test…….

• Distinguish between a ‘defined benefits scheme’ and a ‘money purchase’ scheme

• Big changes in 2004– Pensions Regulator

– Pensions Protection Fund



Practicalities - moral hazards regime • Notifiable events

• Contribution Notices and Financial Support Directions

• Advance Clearance procedure – for corporate deals; capital restructurings, dividend payments



Auto Enrolment 2012 Watershed

• Auto-enrolment with compulsory employer contributions

• Revised timetable issued January 2012

• October 2012 – largest employers first, steep scale and affecting those with – Less than 50 employees - August 2015

– Less than 30 employees – January 2016

• Automatic staging dates dependent on PAYE reference



Specifics

• Age 22 upwards (but younger can elect)

• Includes permanent, temporary and agency workers

• Administration hurdles – Investment in systems

– Review of existing schemes

– Prepare for self certification

– Guidance for trustees



Arrangements

• Choose Qualifying Scheme(s)– Is existing scheme compliant?

– Two tier arrangements needed?

– Feeder schemes?

• NEST scheme– National Employment Savings Trust



Pensions regulator starting to flex muscles ?

• Lehman and Nortel – October 2011– Large insolvent groups

– Costs rank as insolvency expense and therefore in priority to preferred creditors, floating charge holders, unsecured creditors

• Boxclever - January 2012– FSD issued by the pensions regulator against ITV Television in

respect of a joint venture deal in 2000

– Pensioners left attached to a weak subsidiary overloaded with debt after cash stripped out

– Support must remain in place until scheme winds up

– ITV is appealing the decision



Legal services reform

• Why?

• Legal Services Act 2007– Legal Services Board - LSB

– External ownership and investment – ‘Tesco Law’

– First true MDPs involving lawyers and other professionals

– Alternative business structures – ABS

• Slater and Gordon – a firm over there now involved over here - February 2012



ICAEW concerns

• The procedure ……. And delays in thought process

• Divergent views on nature of ‘legal advice’

• Timing - first ABS operational in October 2011

• Distinguish between:– External ownership

– Work types - personal injury and conveyancing

– Work structures – multi disciplinary practices



Considerations

• You or your client could be a– Participant

– Manager

– Investor

• Appetite depends on business model, size, niche– Consider MDPs to save costs

– Tax services

– Forensic and insolvency specialists

– Novel structures and relationships for service delivery



The future

• Legal competitors will be looking at you, your clients and your business offering

• Innovate – you or your clients may want to add specialised services or enter into collaborative arrangements

• Remember its professional services reform



Any questions..?


Question and Answers

business with confidence icaew.com 22 february 2012 bribery & corruption!

Documents

bribery offences

head of business law

business advantage bribes

core offences

bribery corruption

uk terms

uk citizens

uk incorporated body