England: Bribery Act 2010 to be implemented on 1 July 2011
More than a year after it received Royal Assent on 8 April 2010 - and following weeks of speculation as to when the unimplemented provisions of the Bribery Act 2010 (the "Act") will come into force - the Ministry of Justice ("MoJ") announced yesterday that the remainder of the Act will have effect from 1 July 2011.
Following extensive consultation, the nervously awaited guidance required to be provided by the Secretary of State under section 9 of the Act was finally published yesterday. The "Guidance about procedures which relevant commercial organisations can put into place to prevent persons associated with them from bribing" (the "Guidance") is intended to inform businesses of the safeguards they will need to put into place to avoid falling foul of the provisions of the Act. The MoJ has kept its promise that following publication of the Guidance there will be a "three-month notice period" before the Act comes into force, in order to give businesses time to ensure compliance.
Businesses are reminded that a breach of the Act may result in a maximum prison sentence of 10 years. Offences include a person committing bribery, receiving bribes and failure of a business to prevent bribery being carried out by an "associated person" of the business, as well as a separate offence of bribery of a foreign public official.
As well as providing general information on the policy shaping the Act, the Guidance focuses on the new offence created by section 7 of the Act - committed where businesses fail to prevent persons associated with them from committing bribery on their behalf. In order to encourage businesses to be proactive in preventing such bribery, a complete defence is provided where the business can show that it put in place procedures to prevent persons associated with it from bribing. The Guidance sets out the key principles that businesses should take into account when implementing policies to avoid the commission of an offence (the "Six Principles") and it is intended that this will ease some of the concern and confusion felt by businesses in relation to this offence. It is likely that, in the event a business finds itself having to establish a defence, being able to demonstrate that the principles within the Guidance were followed by the business will assist greatly. As always, however, the Government makes it clear that the Guidance is prescriptive only and successful defence of a prosecution will ultimately depend on the circumstances.
The Six Principles
The Six Principles are, in our view, somewhat overlapping and focus on three main overarching principles:
- implementing procedures that are proportionate to the level of risks facing the business, including risk assessments and due diligence;
- ensuring adequate communication within the business of the anti-bribery policies stemming from a strong commitment at the top level of the business to preventing bribery; and
- ongoing monitoring and review of the processes in place. Detailed commentary on each of the principles is provided in the Guidance.
In order to provide further direction as to the application of the Six Principles, 11 case studies illustrate the application in certain situations for different size businesses with varying degrees of usefulness.
The Guidance is clear that the intention is not to require businesses to take disproportionate actions in relation to compliance with the Act and that prosecution will be subject to a public interest test. However, the offences are in place and the MoJ is not clear that compliance with the provisions of the Guidance will prevent prosecution.
The Guidance provides useful clarification of the scope of the offence under section 7, plainly demonstrating that the concept of persons associated with a business is intended to be broad. For example, it will include contractors who perform services for or on behalf of a business, and may infer liability on a holding company to the act of a subsidiary company if there was an intention to obtain a business advantage for the whole group.
Usefully, the Guidance also clarifies that hospitality will not be prohibited, although the circumstances will be more tightly controlled. Bona fide hospitality and business expenditure that is reasonable and proportionate and which seeks to improve the image of the business, better to present products and services or to establish cordial relations will be permitted. Kenneth Clarke reassures businesses in his foreword to the Guidance that "no one wants to stop firms getting to know their clients by taking them to events like Wimbledon or the Grand Prix".
The Director of Public Prosecutions and the Director of the Serious Fraud Office have set out their approach to deciding whether to bring a prosecution under the Act in joint guidance for prosecutors. This includes further information on the application of the Act. We must now wait and see whether the Government's emphasis on proportionality and the workability of the requirements of the Act is remembered when the first prosecutions occur, and whether the Government's aim of not "unduly burdening the vast majority of decent law-abiding firms" has been achieved.
For further information contact Ashfords LLP at www.ashfords.co.uk
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