The Bribery Act What your business needs

The Bribery Act

What your business needs to know
Effective from 1 July 2011, the Bribery Act 2010 means that businesses need to ensure that they have adequate procedures in place to prevent acts of bribery and, should the worst happen, protect themselves in a legal dispute.
While the Act will affect some firms more than others, all organisations should review their existing policies and take action if required – failure to do so could result in a substantial fine or even imprisonment.
What is the Bribery Act?
Introduced towards the end of the last Parliament, the Bribery Act 2010 replaces the existing anti-corruption statute and common law. It covers bribery which takes place in the UK and overseas, by employees and third parties employed by the organisation.
The Act outlines four offences of bribery and introduces a new corporate offence of bribery. It also makes it easier to prosecute offenders. In summary, it provides:
a general offence of active bribery, which prohibits giving someone a financial or other advantage to induce them to perform their duty improperly
a general offence of passive bribery, which prohibits requesting, receiving or accepting a bribe
an offence of bribing a foreign public official in order to win business, keep business or gain a business advantage for the organisation
an offence relating to failure by a business to prevent a person associated with it from committing the above offences on its behalf in order to win business, keep business or gain a business advantage for the organisation
According to the Act, a person is guilty of bribery ‘if he offers or gives a financial or other incentive to someone with the intention of getting that person or a third party to perform a function or activity improperly or as a reward for an improper act’. He or she is also guilty if they know or believe that the offer or payment itself constitutes an improper performance of a relevant function or activity.
This factsheet provides a general overview. If you would like more detail, the Ministry of Justice (MoJ) has released comprehensive guidance on the Act, including advice for businesses on the new offence of corporate bribery. Copies can be found in the ‘Guidance’ section on the MoJ website: http://www.justice.gov.uk.
Some key terms
Relevant commercial organisation – The MoJ guidance defines a ‘relevant commercial organisation’ as a body or partnership incorporated or formed in the UK irrespective of where it carries on a business. It may also be an incorporated body or partnership which carries on a business or part of a business in the UK irrespective of the place of incorporation or formation.
Persons associated – The Act provides a partial definition of an ‘associated person’ which includes an employee, agent or subsidiary but the definition would also extend to a joint venture partner.
Improper performance – ‘Improper performance’ covers any act or omission that breaches an expectation that a person will act in good faith or impartially, or is in a position of trust and fails to do so. It is determined through an objective test based on what a ‘reasonable person’ in the UK would expect in relation to the relevant activity.
The penalties
Those found guilty of an offence face significant penalties. From 1 July the maximum penalty for bribery rises from seven to 10 years imprisonment and/ or an unlimited fine. Disqualification from acting as a director for a substantial period of time may also arise in some cases.
Corporate hospitality
One of the areas of concern highlighted by businesses relates to the provision and receipt of corporate hospitality, promotional and other such business expenditure. Under the strict rules of the Act, it would appear that these activities may constitute bribery offences.

The MoJ has attempted to clarify this issue, stating that it is not the intention of the Act to criminalise bona fide, proportionate and reasonable hospitality and promotional expenditure…

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