UK Bribery ActAre you ready for it?

Fraud Investigation & Dispute Services

BackgroundBesides undermining the rule of law and democracy, bribery poses a serious threat to the sustained economic progress of developing and emerging economies and to the operation of free markets.

The recently introduced UK Bribery Act 2010 is intended to respond to such threats and to the extremely broad range of ways in which bribery can be committed. The act is aimed at facilitating the monitoring and control of bribery through the provision of offenses, enhanced sentencing powers for courts (raising the maximum sentence for bribery committed by an individual from 7 to 10 years’ imprisonment) and wide jurisdictional powers.

Bribery has no place in British business, at home or abroad. This robust law reflects the UK’s leading role in the fight against bribery.

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UK Bribery Act

Key provisionsThe UK Bribery Act 2010 covers four major offenses:• Offering, promising or giving a bribe

(Active bribery)• Requesting, agreeing to receive, or accepting a

bribe (Passive bribery)• Briberyofaforeignpublicofficialtoobtainor

retain business or an advantage in the conduct of business

• Corporate liability for failing to prevent bribery on behalf of a commercial organization

Sections 1 to 5 of the act focus on “general bribery offenses.” Bribery is described as a crime that involves a person offering or promising to offer a “financialorotheradvantage”toanotherindividualin exchange for “improperly” performing a “relevant

function or activity.” The offense of being bribedisdefinedasrequesting,accepting or agreeing to accept such an advantage, in exchange for improperly performing such a function or activity.

Theoffenseofbribingaforeignpublicofficialis said to have been committed where a person offers,promisesorgivesafinancialorotheradvantagetoaforeignpublicofficialtoinfluencetheofficialintheperformanceoftheirofficialfunctions. The person offering, promising or giving the advantage must also intend to either obtain or retain business or an advantage in the conduct of business by doing so. A commercial organization will be liable to prosecution if a person associated with it bribes another person intending to either obtain or retain business or an advantage for that organization.

• UK-basedcompaniesplanningtoinvestin/acquirean Indian company

• IndiansubsidiariesofUK-basedcompanies• Indiancompanieswiththeirprincipalplaceof

businessintheUK/Businessorganizedunderanyregion in the UK

• Indiancompanieslistedonstockexchangesin the UK

• UKnationalsemployedinIndia(whetheronemployment or otherwise)

• IndiannationalsemployedintheUK(whetheronemployment or otherwise

Applicability from an Indian perspective

• Statutory/Regulatorylicenses• Travel and entertainment• Gifts• Charitable contributions• Salespromotion/businessdevelopment

• Agents/Intermediaries• Employee advances• Imports and exports• Procurement

Select risk areas from an Indian perspective

Working with legal counsel and otherwise, we assist companies to review their compliance with the requirements of the UK Bribery Act and to conduct internal investigations of suspected or detected cases of non-compliance with the act.

The six principlesThe British Government considers that procedures put in place by commercial organizations to prevent bribery should be governed by six principles:

1. Proportionate proceduresA commercial organization’s procedures to prevent bribery by persons associated with it are proportionate to the bribery risks it faces and to the nature, scale and complexity of the commercial organization’s activities. They are also clear, practical, accessible, effectively implemented and enforced.

2. Top-level commitmentThetop-levelmanagementofacommercialorganization (be it a board of directors, the owners or any other equivalent body or individual) is committed to preventing bribery by people it associateswith.Managementfostersabribery-freeculture within the organization.

3. Risk assessmentThe commercial organization assesses the nature and extent of its exposure to potential risks of bribery (both internal and external) on its behalf by persons associated with it. The assessment is periodic, informed and documented.

Indian companies have been very active in cross-border mergers and acquisitions. The acquiring company may inherit the liabilities of the acquired company under the UK Bribery Act for bribes the target company may have paid.

“ “4. Due diligenceThe commercial organization applies due diligence procedures — taking a proportionate andrisk-basedapproach—inrespectofpersonswho perform, or will perform, services for or on behalfoftheorganization,tomitigateidentifiedbribery risks.

5. CommunicationThe commercial organization seeks to ensure that its bribery prevention policies and procedures are embedded and understood throughout the organization via internal and external communication, including training that is proportionate to the risks it faces.

6. Monitoring and reviewThe commercial organization monitors and reviews procedures designed to prevent bribery by persons associated with it and makes requisite improvements.

Our services: advisory and investigation

With in-depth investigative experience in forensic accounting, law enforcement and forensic technology, as well as a network of more than 1,000 professionals around the globe, we have helped companies across industries and geographies prevent, detect and investigate bribery and corruption.

UKBA compliance program advisoryWe help companies develop assess and improve theiranti-corruptioncomplianceprogramsandprocedures. We review corporate compliance policies and assessment procedures and assist in education, training and audits.

Anti-corruption compliance assessmentWehelpprovideanti-corruptioncomplianceassessments for companies taking proactive measures to understand their risks. We review company operations, consultant and agency relationships, cash transactions, marketing and sales practices, and accounting records to help identify potential violations.

Forensic due diligenceUK-basedcompaniesacquiringIndianoperationsmust conduct UKBA due diligence. We conduct UKBA risk assessment and investigation to help companies understand the risks and implement corrective action.

InvestigationsWe investigate allegations of bribery and corruption and attempt to conceal such activity. Our work ranges from isolated incidents involving a few employees to more pervasive misconduct involving companies in multiple locations.

Our experience

Customization and implementation of global anti-bribery and anti-corruption policies

We assisted the Indian subsidiary of a global multi-billion-dollarautomobilecompanytounderstand the key requirements of the company’s global policies, provided input for its compliance with Indian law, suggested changes to its local guidelines, and prepared an implementation and monitoringframeworkwithdefinedactivities and responsibilities.

We also developed templates for multiple areas, including employee communications, whistle blowing and approval for payments, among others. In addition, we developed a training module for its management and employees.

Implementation of effective anti corruption compliance and monitoring program

WeassistedaUSlistedmulti-billion-dollar,IndianITCompanytoundertakeanentitylevelanti-corruption compliance risk assessment, review the existing elements of the compliance program and provided recommendations.

In addition, we also conducted assessment ofanti-fraudprogramsandcontrols(codeofconduct, ethics policy, whistleblower mechanism, monitoring process, etc).

Implementation of effective anti corruption compliance and monitoring program

We assisted the management of a Indian pharma major, listed on the US stock exchange, with implementationofanti-corruptioncomplianceprogram. Along with the program, we also developedacknowledgement/approval/disclosuretemplates for multiple fraud risk prone areas, like charitable and political contributions, entertainment expenses, amongst others. In addition, we developed a training module and conducted training session for the senior managementoncompliancewithanti- corruption policies.

Anti-corruption policies and procedures

Wewereappointedtoassistalargeconstruction/real estate company as well as by a large pharmaceutical major to develop procedures for anti-briberyoranti-corruptioncompliance.

Pre-merger forensic due diligence

Aspartofthepre-acquisitionduediligenceprocess,theclientretainedustoundertakeanti-corruptiondue diligence of a target company in India. The scope of the engagement included a preliminary assessmentoftheapplicabilityofanti-corruptionlaws at the target company, undertaking a detailed testingofpaymentsforcompliancewithanti-corruption laws and assisting in the development andimplementationofanti-corruption-compliantpolicies,proceduresandthecompliance-monitoringframework of the target company. Throughout this project, the team worked closely with senior attorneys that the company had appointed.

Anti-corruption investigation

Amulti-billion-pound,UK-basedbankingandfinancialservicescompanyappointedustoundertakeananti-corruptioninvestigationacrossselect locations at one of its Indian subsidiaries. The scope included a detailed investigation of the alleged receipt of bribes by the procurement team (directly/throughintermediaries)forthepurposeofplacingorders/contractsonvendors.

Anti-corruption remediation plan

The world’s leading service provider of print and related services appointed us to assist in updating theiranti-briberypolicyanddevelopingregionalcompliance policy guidelines, implementing correctiveactionforidentifiedgapsandrisks,communicatinganti-briberypolicies,managingemployee expectations, assigning resources to its critical compliance operations, and developing training programs that include an effective compliancemonitoring/auditingprogram.

About Ernst & Young

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This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Neither Ernst & Young Pvt. Ltd. nor any other member of the global Ernst & Young organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor.

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Arpinder Singh Partner and Head – India and Emerging Markets Direct: +91 12 4443 0330 Email: arpinder.singh@in.ey.com

Sandeep Baldava Partner Direct:+91 22 6192 0817Email: sandeep.baldava@in.ey.com

Vivek Aggarwal PartnerDirect:+911244644551Email: vivek.aggarwal@in.ey.com

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