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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examining the UKs outdated bribery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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