The new UK Bribery Act 2010 and its “actual” impact

Neill BlundellEversheds LLP

5th July 2011 – CFO Event, Celtic Manor

Overview

• The new law and its impact on you

• Adequate Procedures defence– what is it?

• Practical implications

• Questions

The Bribery Act – timetable update

• Royal Assent on 8 April 2010

• Guidance published on 30 March 2011

• It is now law (1 July 2011)

• Act is not retrospective

4 Key Offences

• Active bribery (includes facilitation payments and commercial to commercial bribery)

• Passive bribery

• Bribing a foreign public official

• Failing to prevent bribery

Extra territorial application of Act

Individuals • If “closely connected” to the UK; or• British citizen/ordinarily resident in the UK

Corporations• Incorporated in the UK; or• Incorporated outside UK but carries on business in UK

Senior Officers• Consent or connivance

A company will commit an offence of failing to prevent bribery where an associated person carries out active bribery or bribes a Foreign Public Official

Unless it can show it had adequate procedures

Failure to prevent bribery

“The objective of the Act is not to bring the full force of the criminal law to bear upon well run commercial organisations that experience an isolated incident of bribery on their behalf”(MoJ Guidance)

Associated person?

Third parties used by you:• Agents • Contractors• Suppliers and supply chains

Other third parties:• Joint Ventures

- Contract- Separate Legal Entity

• Subsidiaries – inter company services?

The “adequate procedures” defence and the Guidance

• UK Government suggested procedures and principles

• But leave it up to the organisation to decide what is appropriate

• Burden on a company to prove it had adequate procedures

• Robust and effective anti-bribery systems and controls

• Proportionate to the risks

The Six Principles

1. Proportionate Procedures2. Top Level Commitment3. Risk Assessment4. Due Diligence5. Communication (including training)6. Monitoring and Review

1. Proportionate Procedures

• Proportionate to bribery risks a company faces, and to the nature, scale and complexity of its activities

• Clear, practical, accessible, effectively implemented and enforced

• Can be standalone or not- Tender process- recruitment

1. Proportionate Procedures

• High risk example: use of agent in foreign country to negotiate with public officials

• Existing associated persons

• Whistle blowing procedures

2. Top Level Commitment

• Culture that bribery is never acceptable

• Well publicised statement of consequences for employees and business partners

• Board level responsibility

2. Top Level Commitment

• Make a senior manager actively responsible for the programme

• Repetition

• Protection and procedures for whistle blowing

• Internal and external

3. Risk Assessment

• Periodic, well informed and documented

• Proportionate to organisation’s size, nature and location of its business

• Can this be a purely desktop exercise?

3. Risk Assessment

• Internal Risks : remuneration structure, hospitality policy, financial controls

• External Risks :- Country- Sector- Type of transaction- Business opportunity- Business partner eg third parties

4. Due Diligence

• Proportionate to the identified risk

• Know your business relationships eg third parties used by a company

• Check : - the local risks and relevant laws- reputations- partner’s own internal measures

4. Due Diligence

• Local law/convention requiring use of intermediaries

• Mergers and acquisitions

• Recruitment

5. Communication (including training)

• Policies and procedures embedded and understood

• “Tone from the Top”• Cover all levels from board of directors down• Cover “associated persons”• Clear procedure on the response to incidents

of bribery• “Speak up” procedures

6. Monitoring and Review

• Identify issues as they arise

• Improve where necessary

• Report results of review to the Board

• Possible external verification of effectiveness

Difficult Issues

• Consider self-reporting to the SFO to obtain a negotiated civil settlement– retain control over investigation and its outcome– management of issues & publicity– mandatory EU disbarment provisions not

applicable– POCA requirements may make this inevitable

Self Reporting to SFO

Questions?