The Bribery Act 2010 came into force on 1 July 2011. At the end of March the government published its guidelines on the effects of the Act. Separate guidelines were published by the Serious Fraud Office on the matters which will be taken into account in deciding whether to prosecute. Hospitality and promotional expenditure is the area which appears to be of principal concern to many employers.
Under the Act a commercial organisation is guilty of an offence if a person associated with it bribes another person, intending to obtain or retain business or a business advantage for the organisation. In essence, bribing is defined as offering or giving a financial advantage to another person with the intention of bringing about or rewarding the performance of a business function in a way which is not in good faith or impartial or is in breach of trust.
Organisations will have a defence if they can show that they had in place adequate procedures designed to prevent bribery. A person associated with a commercial organisation will include an employee or agent but could also include a sub-contractor with whom the organisation has no direct contractual relationship. In order to address this risk, organisations may need to consider imposing anti-bribery conditions in contracts with their contractors and requiring that similar conditions should be incorporated in contracts with sub-contractors.
The government’s guidance states that hospitality and promotional expenditure that is reasonable, proportionate and made in good faith is an established and important part of doing business and that the Act does not seek to penalise it. However, hospitality and promotional expenditure could still form the basis of the offences under the Act. There would need to be an element of improper intent. The Guidance suggests that when the hospitality or expenditure is more lavish and beyond what might be the reasonable standards in the particular circumstances, there is more likely to be an inference that the elements of an offence under the Act are present. Other factors that might point to bribery are whether the hospitality or expenditure was not clearly connected with legitimate business activity or was concealed.
Employers are developing policies and procedures aimed at providing themselves with a defence. It is likely that policies and examples of acceptable and unacceptable conduct will vary as between employers depending in particular on the nature of their hospitality and promotional practices, as norms may differ between commercial sectors. Disciplinary rules will need to be amended to refer to any new rules that are introduced to prevent bribery. Whistleblowing policies may also need to be reviewed to ensure that employees who have concerns about possible breaches of the anti-bribery legislation follow the employer’s procedures for reporting such concerns.
This update is for guidance only and is not intended to be a substitute for legal advice on specific facts.
