The newspapers tend to focus on the rich and famous and the cases with salacious details. Bernie Ecclestone’s trial, the award of the World Cup to Qatar and the GSK allegations in China have all caught the headlines. Many bribery investigations are resolved without the glare of media attention, thanks to effective dialogue with prosecutors, but businesses and directors who gain a reputation for condoning, encouraging or participating in bribery will be shunned by their peers, will lose contract tenders and will face scrutiny of their activities from zealous investigators.
Inducement, hospitality or bribe?
Bribery comes in many different forms and some are more easy to recognise than others. In the 21st century, brown paper envelopes stuffed with cash are rare. Bribes change hands in more sophisticated ways. Yet, in business, many of the rewards paid out for a commercial advantage are not viewed as bribes, in the criminal sense, and (instead) are widely seen as costs of sale or just the ordinary course of business.
Compare and contrast with the corporate hospitality offered by businesses to their customers and contacts – in the eyes of the law, genuine networking with business associates is highly unlikely (of itself) to give rise to a criminal offence. Many businesses regulate hospitality with strict policies and guidelines, even though the risk of committing a criminal act is probably far less than the associated guilt of taking a day off work to enjoy oneself whilst buttering up a new customer.
Making payments to facilitate, to encourage someone to do business with your company might be viewed in the same light as offering an introductory discount or shaving a little off the price. The cost to your business may be the same. No person within your business has benefited as an individual, they have not even skived off work for a day to play golf. What is there to feel guilty about?
What does the law say?
Under the Bribery Act, a criminal offence is committed where a person gives, offers to give, asks for or receives a financial or non-financial advantage as a reward for doing something improperly. The criminal law does not distinguish between noble-cause bribery (where the benefit is winning new business for your company) and personal gain bribery (where the person paying the bribe benefits.) In fact, the Bribery Act now makes it a criminal offence to fail to prevent noble cause bribery. The direct consequences of being found guilty of a bribery offence are serious (a maximum of 10 years imprisonment and unlimited fines.) The indirect outcome may be worse – proceeds of crime recovery, tax investigations, public tendering ban, other companies not wanting to do business with a company that taints them with bribery, etc.
Can I insure against bribery?
Insurance against the commission of bribery offences is nigh on impossible to take out. The only safe course is to implement and maintain a programme of ‘adequate procedures’ which satisfy the Ministry of Justice Guidance and the Bribery Act itself.
Most businesses now have policies in place to combat bribery, but far fewer keep these up to date and maintain the requisite degree of diligence to ensure that their programmes will provide a defence if the need arises. It will not be a defence to rely on policies and procedures which fail the test of ‘adequacy’.
Adequate procedures must:
- be proportionate
- demonstrate a tone from the top
- be based on a current risk assessment
- provide for due diligence
- include a communications programme
- be maintained so that they are current.
The key question
A key question for all businesses connected with the UK should be: what is our budget for Bribery Act compliance? The answer should provide a clear indication how seriously your organisation takes anti-bribery measures. Consider what your answer might be if this question is posed by the prosecution in the Crown Court. The follow-up examination from the barrister prosecuting may focus on the adequacy of your budget by reference to the money spent on corporate hospitality each year. As a rule of thumb, many businesses spend much more entertaining customers than they do on legal compliance.
For those businesses who might feel the balance between entertaining and compliance is out of kilter, they should review their programme of adequate procedures to prevent bribery, ensuring that they can then enjoy the comfort of the available defence to the criminal offence of bribery.