As we all know, the 2017 general election did not result in a majority Conservative government. As a result, Teresa May struck a deal with the Democratic Unionist Party (DUP) in order to form the next government. The arrangement resulted in the DUP gaining a £1 billion aid package for Northern Ireland.
This deal is set to face judicial challenge in court within the next few weeks on the basis that it breaches the Good Friday agreement as well as the Bribery Act 2010. Ciaran McClean, a Green party activist, is leading the crowdfunded campaign and claims that the arrangement is “no more and no less than the purchase by the government of votes in parliament using public money“.
The Bribery Act
There have been relatively few cases involving breaches of the Bribery Act, so following this high profile example it seems appropriate to provide a refresher on a company’s obligations under the Act.
The Act introduced four bribery offences: an offence of bribing; an offence of being bribed; an offence of bribery of foreign public officials; and a corporate offence of failing to prevent bribery.
Following its introduction, companies began to worry about the impact of the Act on corporate hospitality and whether this would now be deemed a step too far under the Act. The Ministry of Justice was quick to ease these concerns by confirming that “reasonable, proportionate and bona fide corporate hospitality is an integral part of doing business and nobody wants to stop businesses from getting to know their clients“. However, in extreme circumstances hospitality can be bribery, depending on the underlying aim of the gesture.
The corporate offence
The new corporate offence of failing to prevent bribery was, and still is, significant for any commercial organisation. Should a company fail to prevent a person associated with it from bribing another person with the intention of obtaining or retaining business or an advantage in the conduct of business for that company, the company may be liable under the Act.
This offence is wide reaching. Prior to its introduction a company would only be guilty of a bribery offence if a member of very senior management committed the offence. Now, if an ‘associated person’ commits a bribery offence, the company can be liable, even if nobody within the company was aware of the bribe. There is only one defence to the corporate offence – taking ‘adequate procedures’.
A person is ‘associated’ with a company if he/she performs services for, or on behalf of, the company. Obvious examples would include employees, agents and subsidiaries that perform services for their parent company. However, contractors, sub-contractors and suppliers also fall within the definition and therefore could commit bribery for which the company may be found liable.
An associated person does not have to be connected with the UK or have carried out the act in the UK for the offence to be committed.
The government was quick to issue guidance setting out what amounts to ‘adequate procedures’. The company must prove that it had procedures in place designed to prevent persons who are associated with it from committing bribery. The guidance outlines six key principles, but any departure from these will not automatically give rise to a presumption that the company has not implemented adequate procedures.
Companies are advised to adopt a risk based approach which is tailored to the nature, size and reach of their business.
The six principles are listed below:
- Proportionate procedures – any procedures introduced by a company should be proportionate to the bribery risks faced, based on the nature, scale and complexity of the company. Procedures should demonstrate a commitment to bribery prevention, outline the company’s approach and give an overview of its implementation strategy.
- Top level commitment – directors and senior management should set the tone for tackling bribery by issuing a statement of commitment which can filter down through the company.
- Risk assessment – prior to introducing an anti-bribery policy and relevant procedures, a risk assessment should be undertaken in order to identify key areas of concern within the business.
- Due diligence – due diligence should be undertaken on those who might perform services for the company, or on its behalf.
- Communication – this involves training and the monitoring of compliance with policies and procedures, as well as a clear statement of the penalties for breach.
- Monitoring and review – policies should be reviewed and updated to ensure they remain fit for purpose, despite any internal or external changes. A robust system of monitoring will also help to prove ‘adequate procedures’.
A prosecution under the Act will depend on whether there is enough evidence and, if so, is a prosecution in the public interest. This is perhaps why there have been very few high profile prosecutions under the Bribery Act. It is not in the public interest to bring prosecutions against generally upstanding, well-managed companies in relation to minor, one-off, rogue acts of bribery.
However, the potential risks for a company should not be underestimated. A company found to have failed to prevent bribery could face an unlimited fine.
It remains to be seen whether the government’s deal with the DUP will be found to have breached the Bribery Act. The main argument in the legal challenge is that the government effectively ‘bought’ the DUP’s votes with the £1 billion aid package.
This ‘buying of votes’ would be difficult to establish given that a political party is entitled to vote in whichever way they wish and voting the same way as the Conservative government is unlikely to be enough to satisfy this test. It seems doubtful that the court will see anything improper in the government’s actions.
This blog post was written by Elliot Gibson. For further information, please contact:
Sophie Brookes, partner, Corporate
T: 0161 836 7823