PEOPLE BUSINESS HR NEWSLETTER
The Bribery Act comes into force – 1st July 2011
The Bribery Act 2010 aims to promote anti-bribery practices amongst businesses and came into force on 1st July 2011.
Organisations need to take steps to address the risks of bribery and demonstrate that they have put clear practical prevention policies in place to avoid prosecution.
Failing to prevent bribery
An employer commits an offence if a person “associated” with it bribes another person for that company’s benefit. Associated persons include all those performing a service for or on behalf of your company, not just employees.
Your organisation therefore needs to think about how to prevent bribes being made by contractors, consultants, agents, employees, partners, subsidiaries and any other persons performing services for your company.
Making out a defence
The government has published the final version of its guidance on procedures that organisations can put into place (see link below). The guidance sets out the following six principles employers should consider when seeking to prevent bribery taking place. They are not prescriptive but are intended to allow flexibility.
1 Proportionate procedures – your organisation’s procedures must be proportionate to the risks it faces and the nature, scale and complexity of your organisations’ activities. The guidance notes that small organisations are unlikely to need such extensive procedures as a large multi national organisation.
2 Top level commitment – top level management need to be committed to preventing bribery and foster a culture in which bribery is not acceptable.
3 Risk assessment – your organisation needs to assess the nature and extent of its exposure to risks of bribery on a periodic basis relevant to the size and structure of your organisation. Organisations will not be required to carry out the expensive exercise of putting together lengthy policies where the risk of bribery is very low.
4 Due diligence – this is about having a risk based approach to business relationships, taking into consideration who you deal with and who provides services for you.
5 Communication – your organisation needs to seek to ensure its prevention policies are embedded and understood through communication and training.
6 Monitoring and review – risks to your organisation may change over time therefore you are advised to carry out regular reviews and re-assessments.
Corporate hospitality
The guidance from the government addresses in more detail the issue of corporate hospitality and promotional expenditure (see link below).
The guidance expressly states “Bona fide hospitality and promotional, or other business expenditure which seeks to improve the image of a commercial organisation, better to present products and services, or establish cordial relations, it is recognised as an established part of doing business and it is not the intention of the Act to criminalise such behaviour”
Examples of what may or may not be considered acceptable are included in the guidance.
What steps can your organisation take to prevent bribery taking place?
The main message contained within the guidance is one of proportionality. It is advisable to look at where your risks are and how you respond.
Recommended steps to take:
Recommended steps to take:
· Take a clear anti-bribery stance. A tone should be set throughout your organisation which communicates and enforces anti-bribery.
§ Assess where risks might lie. Compliance measures should be directed towards the operations that might be particularly exposed to bribery such as sales functions.
§ Management responsibility. Senior management should take responsibility for anti-bribery compliance within the business and ensure the tone is appropriate.
§ Have clear policies. Consider whether your business's existing policies (such as expenses) cover anti-bribery and corruption.
§ Spread awareness and record it. Anti-bribery policies and procedures should be communicated to all 'at risk' employees and third parties who conduct business on the organisation's behalf.
§ Due diligence should be conducted on all key employees and business partners who could be "at risk" including acquisition targets, pre and post engagement. Again this is one of proportionality as background checks and references may not be necessary if the risk is low.
§ Monitor and audit. Proportionate measures should be implemented that monitor and audit "at risk" functions, contracts and transactions.
§ Encourage reporting of misconduct. Consider whether your whistle-blowing and other reporting procedures are open and publicised to employees and relevant third parties. Employees should be certain that they do not face retaliation if they use these channels.
§ Consistent and robust disciplinary processes. Ensure that misconduct is dealt with consistently and proportionately and that employees are aware of the consequences of breaching the rules. Termination clauses in contracts should be reconsidered.
What can your organisation do to check whether “bribery” is taking place?
We would suggest some of the following practices:
· Keep financial records and internal controls in place which evidence the business reasons for making payments to third parties
· Keep a record of any charitable donations made by the company with details of which organisation the donation was made to, reasons for making the donation, when prior approval was sought and by whom
· Check a proportion of expenses and ask employees about the purpose of dinners and lunches
· Introduce a gift register where every item given or received over a certain amount is logged
· Arrange for certain employees to be trained regarding the Bribery Act so individuals who are unsure can ask them for advice to ensure they do not fall foul of the law
· Analyse annual spend with suppliers and assess what has been received over the year
· Review on an annual basis client revenues and consider what marketing, hospitality or gifts have been offered and to which organisations to secure the sales.
Finally……whilst it may be clear what is and is not bribery at either end of the scale, there are still shades of grey in between. Inevitably the guidance does not make everything completely clear so we will have to wait and see how actively the Serious Fraud Office pursue prosecutions under the Act in the current climate, as well as what guidance is produced by the courts in case law.
If you would like help with putting your own bribery act policy together we would be happy to discuss this with you. If you would simply like to purchase ours at £25 please email us at julie.ware@peoplebusiness.co.uk or call us on 01932 874944 or respond at http://people-insight.blogspot.com/
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