The government has finally issued its latest guidance on the application of the UK Bribery Act, set to come into force on 1 July. On the face of it the guidance appears to have provided some clarity, addressing businesses’ complaints that the previous guidelines were confusing regarding corporate hospitality and what constituted having “adequate procedures” to prevent bribery taking place should a company fall foul of the act.
There is more clarity in the guidance concerning what might constitute acceptable hospitality and promotional expenditures, and businesses can rest assured that taking clients to events such as those at Twickenham, Wimbledon, or the Grand Prix will not leave them facing prosecution.
“Reasonable hospitality to meet, network and improve relationships with customers is a normal part of business,” said justice secretary Ken Clarke.
The guidance also clarifies what is meant by adequate procedures, adding that a proportionate, risk-based approach would be considered, based on the size and complexity of the businesses. Basically, using a bit of common sense about the risks your business faces should be enough.
According to the guidance, small organisations are unlikely to need procedures that are as extensive as those of a multi-national organisation. For example, a very small business may be able to rely heavily on periodic oral briefings to communicate its policies to its employees while a large one may need to rely on extensive written communication.
In lower-risk situations, you may decide that there is no need to conduct much in the way of due diligence – something which the guidance suggests is acceptable. But the guidance is just that, guidance. It will be up to the courts and prosecutors to decide how to interpret the act. Which raises the question: if you do not carry out due diligence, judging your company to be low risk, could you still face prosecution?
One of the problems with the latest guidance is that, as with many government statements, much of it is couched in vague terms. And in some instances the guidance issued by the Ministry of Justice appears to be at odds with the Serious Fraud Office (SFO).
This is the case when it comes to whether or not foreign companies listed in London could be exempt from the act. According to Clarke, “mere” listing on the London Stock Exchange, or just having a UK incorporated subsidiary, would not necessarily mean that the act applies.
However, statements made by Richard Alderman, head of the SFO, suggest the organisation will pursue UK-listed foreign companies if they engage in bribery.
“I think this exclusion is very limited and it is right for us to probe whether that exemption is satisfied. I would say companies should not rely on over-technical interpretations of the act,” Alderman told the Telegraph.
- Based on the latest guidance issued on the Bribery Act on what constitutes having adequate procedures to prevent bribery taking place, what actions will you be taking? Vote in the Financial Director question here.