Bribery Act 2010
The recruitment industry is a people business which involves a lot of networking. Contracts can also have a significant financial value. Therefore it is important for recruitment businesses to know what they can and cannot do when meeting clients and candidates and what is acceptable hospitality versus downright bribery. This section will tell you what you need to know. Corporate members can also access a Model Anti-Bribery and Corruption policy.
What is the Act all about?
The Bribery Act 2010 (the Act) came into force on 1 July 2011 and repealed, replaced and consolidated common law bribery offences and anti-corruption legislation dating from 1889, 1906 and 1916. The Act extends to England, Wales, Scotland and Northern Ireland and applies to both the public and private sectors.
The Act has a global reach, which means that:
- any individual ordinarily resident in the UK (whether or not a British national) can be prosecuted for bribery offences committed anywhere in the world; and
- any partnership or corporate body (whether incorporated in the UK or elsewhere) can be prosecuted if it does business in the UK (e.g. through a permanent establishment, subsidiary or other operation), even if the offence was committed outside the UK.
What are the principal offences under Act?
The Act creates four statutory offences:
Offence 1: Bribing another person (section 1 of the Act)
A person is guilty of an offence if s/he (directly or through a third party) offers, promises or gives a financial or other advantage to another:
- with the intention of inducing or rewarding improper performance of a relevant function or activity; or
- with knowledge or belief that acceptance of the advantage would in itself constitute improper performance of a relevant function or activity.
“Relevant function or activity” is defined under section 3 of the Act to include any function of a public nature or activity connected with a business or performed in the course of a person’s employment or by/on behalf of a body of persons (corporate or unincorporated).
“Improper performance” is defined under section 4 of the Act to mean performance (or non-performance) in breach of a relevant expectation that the function or activity be performed in good faith, impartially or in accordance with a position of trust. The relevant expectation is based on what a reasonable person in the UK would expect in relation to the performance of the type of function or activity concerned.
Offence 2: Receiving a bribe (section 2 of the Act):
A person is guilty of an offence if s/he (directly or through a third party) requests, agrees to receive or accepts a financial or other advantage, and:
- with the intention that the advantage will induce the improper performance of a relevant function or activity (by him/herself or another); or
- the request, agreement or acceptance itself constitutes the improper performance by the person of a relevant function or activity; or
- the advantage is a reward for the improper performance (by him/herself or another person) of a relevant function or activity; or
- a relevant function or activity is performed improperly (by him/herself or by another person at his/her request of with his/her assent or acquiescence) in anticipation of, or in consequence of, requesting, agreeing to receive or accepting a financial or other advantage (directly or through a third party).
In (2), (3) and (4), it is irrelevant whether or not the person knows or believes that the performance is improper.
Offence 3: Bribing a foreign public official (section 6 of the Act):
A person is guilty of an offence if s/he offers, promises or gives any advantage to a foreign public official (directly or via a third party) intending to influence the official in his capacity as a foreign public official and with the intention of obtaining or retaining a business or an advantage in the conduct of business. Local customs and practices of bribery of officials will be disregarded unless they are permitted by the written law applicable to the official.
The offence will also be committed if the bribe is offered to someone other than the official if it is at the request or with the assent/acquiescence of the official.
“Foreign public official” includes an individual who:
- holds a legislative, administrative or judicial position of any kind (whether appointed or elected) of a country/territory outside the UK;
- exercises a public function;
- is an official or agent of a public international organisation.
“Offences under sections 1, 2 and 6 by bodies corporate etc.”
Under section 14 of the Act, if a senior officer of a commercial organisation, or a person purporting to act in such a capacity, consents to (is aware and agrees) or connives in (turns a blind eye to) the commission of any of the above bribery offences, that senior officer or person is also guilty of the offence. The senior officer or person must have a connection with the UK, e.g. be a British citizen or ordinarily resident in the UK.
Offence 4: Failure to prevent bribery by a relevant commercial organisation (Section 7 of the Act):
A relevant commercial organisation is guilty of an offence under section 7 of the Act if a person associated with the organisation bribes another intending to obtain or retain business for the organisation or to retain an advantage in the conduct of business for the organisation.
“Relevant commercial organisation” is defined to include:
- a body incorporated under UK law and carrying on business either in the UK or elsewhere;
- any other body corporate, wherever incorporated and carrying on business, or part of a business in the UK;
- a partnership formed in the UK and carrying on business either in the UK or elsewhere; or
- any other partnership wherever formed and carrying on business, or part of a business in the UK.
A partnership means a partnership formed under the Partnership Acts or a firm or similar entity formed outside of the UK. Finally, a business includes a trade or profession. Thus the definition of “relevant commercial organisation” is extremely wide-ranging and potentially includes anyone carrying on any business anywhere in the world. The courts will ultimately use a common sense approach, taking into account the facts of the particular circumstances as to whether an organisation is carrying on business in the UK. The Guidance published by the Ministry of Justice states that mere listing on the London Stock Exchange for example, does not automatically mean that the company will be considered to be carrying on business or part of a business in the UK as required under the Act.
“Associated person” is defined in section 8 as a person who performs services for or on behalf of the commercial organisation. The capacity in which the associated person performs those services is irrelevant and can include an employee, agent or subsidiary. There needs to be a degree of control over the associated person in order for liability to be triggered. Look at whether the person is performing services for or on behalf of the organisation.
The section 7 offence is a strict liability offence, meaning that it can be committed without knowledge or intent.
The offence will be committed where the organisation cannot show that there were adequate procedures in place to prevent bribery.
Are there any defences contained within the Act?
An organisation charged with the section 7 offence (failure to prevent bribery being committed by associate persons) can use the “adequate procedures” defence. Only a court can decide looking at all the evidence whether an organisation had adequate procedures in place to prevent bribery and the onus is on the organisation relying on the defence to show that it did have adequate procedures in place to prevent bribery, The Ministry of Justice (MOJ) has produced guidance on the “adequate procedures” defence.
The six principles of “adequate procedures:"
The MOJ Guidance is based on six principles. These principles are not prescriptive but must be tailored to the risks faced by the particular business - the key to implementation of the principles is that each organisation takes a risk based approach to managing bribery risks, and anti-bribery procedures should be proportionate to those risks.
Principle 1: Proportionate procedures
The anti-bribery procedures implemented by any organisation should be proportionate to the risks faced by that organisation when taking into account the nature, scale and complexity of the activities undertaken. As a starting point, an organisation should have an anti-bribery policy which sets out its commitment to bribery prevention, its general approach to mitigation of bribery risks and an overview of its strategy to implement its bribery prevention policy. The policy will be supplemented by anti-bribery procedures which need to be clear, practical, accessible and implemented and enforced effectively.
Principle 2: Top-level commitment
Senior management should adopt and embed a zero tolerance commitment to bribery and “foster a culture within the organisation in which bribery is never acceptable.” Whatever the size, structure or market of a commercial organisation, top-level management involvement is likely to include:
- communication of the organisation’s zero tolerance commitment to all associated persons periodically (the policy should be readily available e.g. via a statement/policy on an intranet or internet site);
- an appropriate degree of involvement in developing bribery prevention procedures e.g. larger companies may have compliance and risk managers who develop the policy dictated by top level management, whereas smaller companies often do not have dedicated risk management resources.
Principle 3: Risk assessment
The organisation should assess the nature and extent of risks of bribery on a periodic basis. The organisation should then adopt and promote anti-bribery procedures that are proportionate to the size and structure, and to the nature, scale and location of the activities undertaken. The organisation will also need to consider risks associated with the particular sectors they operate in. The Guidance identifies a number of external and internal risk factors including:
External:
- country risk (operating abroad – on page 32 the Guidance states that bribery risks associated with foreign markets are generally higher than those associated with the domestic market);
- sectoral risk (e.g. large scale construction projects);
- transaction risk (e.g. charitable or political contributions or public procurement);
- business opportunity risk (e.g. on high value projects), and business partnership risk (e.g. working via intermediaries or within consortia);
Internal:
- lack of employee training;
- skills and knowledge;
- a bonus culture which rewards excessive risk;
- lack of clarity of anti-bribery policy and top-level management commitment;
- lack of clear financial controls.
Principle 4: Due diligence
Organisations should carry out effective due diligence regarding persons who will potentially be performing business for or on behalf of the organisation. This due diligence should be proportionate to the risks identified and relevant to the post – they could include background checks such as bankruptcy checks, criminal records checks and additional references.
Principle 5: Communication (including training)
The anti-corruption policies and procedures should be effectively communicated internally to an organisation’s employees as well as any temporary workers or contractors. They should also be communicated to third parties performing services for the organisation such as agents or intermediaries. Individuals also need to know where or to whom they can safely raise concerns about bribery, request advice or make suggestions for improvement of policies and procedures – the MOJ Guidance states that “speak up” or whistleblowing policies are a particularly helpful management tool (page 29). It is important that anyone who uses these procedures is adequately protected by the organisation.
The organisation may wish to incorporate anti-bribery training into the induction procedure for new employees, temporary workers or contractors. Ensure that the programme is properly implemented and that there is continuous communication at every stage – it will not be enough merely to have policies which are never adhered to. There should be a comprehensive local training programme for all employees, not just head office, compliance or legal staff.
Principle 6: Monitoring and review
An organisation may face new or different risks over time, e.g. when working in new foreign markets or in a new sector. Therefore it is important for organisations to monitor and review its procedures and policies periodically and to update them if necessary to the changes in the business or if incidents occur.
It should be clear from these six principles that it will not be enough for any commercial organisation merely to have anti-corruption and bribery policies and procedures on paper. The organisation needs to ensure that such policies and procedures are implemented and periodically reviewed to ensure they remain fit for purpose.
The key is to implement policies and procedures that are proportionate to the risks faced by your business. Consider what competitors and others in your industry are doing. REC Legal has produced a Model Anti-Bribery and Corruption policy which corporate members can tailor for use by their business.
Case studies:
There are 11 case studies in Appendix A of the MOJ Guidance - these do not form part of the Guidance but are intended to illustrate how the six principles work. Given that the risks are greater when working outside of the UK, 10 of these case studies deal with overseas business.
What about gifts and hospitality?
Recruitment businesses, just as any other commercial organisation, use corporate hospitality and promotional expenditure to promote their business. The guidance published by the Ministry of Justice states that gifts and hospitality given to improve business relations and to network will not be considered to be a bribe under the Act if they are reasonable and proportionate, are given for a bona fide business reason and are not intended to influence improper performance of a function or activity. In para 26 the Guidance states that:
“the Government does not intend for the Act to prohibit reasonable and proportionate hospitality and promotional or other similar business expenditure intended for these purposes”. In para 29, the Guidance states that “the standards or norms applying in a particular sector may [… ] be relevant, [though] simply providing hospitality or promotional, or other similar business expenditure which is not commensurate with such norms is not, of itself, evidence that no bribe was paid if there is evidence to the contrary; particularly if the norms in question are extravagant.” At para 30 the Guidance states: “Levels of expenditure will not, therefore, be the only consideration in determining whether a section 6 offence has been committed. But in the absence of any further evidence demonstrating the required connection, it is unlikely, for example, that incidental provision of a routine business courtesy will raise the inference that it was intended to have a direct impact on decision making, particularly where such hospitality is commensurate with the reasonable and proportionate norms for the particular industry; e.g. the provision of airport to hotel transfer services to facilitate an on-site visit, or dining and tickets to an event.”
See paras 26 to 32 of the MOJ Guidance for further information and Case Study 4 on page 36.
Examples of breaches and penalties
In a Scottish case, Braid Logistics reached a £2m settlement with the Crown Office after self-reporting incidents of bribery involving several ex-employees and one employee from a client company. The settlement was reached after Braid discovered activities - which were potentially dishonest – in relation to two contracts in 2012. An internal investigation then followed which revealed breaches of the Bribery Act 2010.
The first offence involved a company account which was used to pay expenses incurred by the customer’s employee, including personal travel holidays, gifts, hotels and car hire. All of which was not authorised. The second offence related to a profit sharing agreement between Braid and the director of a customer company.
Braid subsequently terminated the employment of those involved in the incidents and also voluntarily self-reported to the Crown Office. This meant that the case was dealt with on a civil basis rather than a criminal basis. Since the incidents, employees of Braid will take part in anti-bribery training. In addition, the company has introduced more stringent policies in relation to client gifts and expenses.
Disclaimer
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.