Examines the origins, aims and framework of corporate governance as it exists in the UK
The Bribery Act 2010 brought together various pieces of law relating to bribery. It introduced four offences, including the corporate offence, which occurs when an organisation fails to stop people operating on its behalf from being involved in bribery.
This factsheet sets out the four offences contained in the Act and the potential defences that an organisation could use if it receives a sanction. It briefly examines how an organisation can self-report if an offence is committed and the recent prosecutions brought under the Act. Finally, a number of recommendations on the action that organisations can take to comply with the Act are highlighted.
Actions to be taken by organisations
Named person responsible for anti-bribery actions
It is recommended that an organisation has a named person responsible for overseeing all anti-bribery actions. This should be a member of the senior management team.
The organisation should promote a culture whereby bribery is never acceptable. This culture should be promoted and lead by senior management.
All organisations should ensure that they have an anti-bribery policy that is communicated to all employees.
It is recommended that a review is undertaken of the levels of signature required for different levels of transaction and that multiple authorisation is required for significant transactions.
Review of due diligence procedures
It is recommended that organisations review their due diligence procedures to ensure that they address any potential activities that could amount to bribery.
Training on anti-bribery
Training should be given to all employees who may potentially be involved in situations where bribery could occur. This training should make clear to employees what is and what is not acceptable and how to act if caught in a situation where bribery is attempted.
It is recommended that organisations review their whistleblowing procedures to ensure that there is specific mention of situations involving corruption and bribery.
Gifts and hospitality procedures
It is recommended that organisations review their gift and hospitality procedures and consider whether the controls that have been put in place are sufficient to prevent bribery from occurring.
Contracts of employment
Whilst it is never possible to list all potential examples of gross misconduct it is recommended that specific mention should be made of corruption and bribery situations in disciplinary procedures. A specific clause relevant to bribery and anti-corruption should be included in contracts of employment where appropriate.
Risk assessments of situations where bribery could occur should be carried out. The named senior employee responsible for anti-corruption should review these risk assessments and identify actions that should be taken.
Monitoring and review
There should be a process in place to monitor anti-bribery procedures and training, and to make any amendments that are appropriate.
Background to the Bribery Act 2010
The Bribery Act 2010 was given Royal Assent in April 2010. Prior to the Act the law relating to bribery was contained in a number of different pieces of legislation, resulting in a rather confusing approach. The various pieces of law, some over 100 years old, were brought together in this one Act.
It was originally planned to introduce the Act in April 2011. However, the Government had committed to producing guidelines for the Act and there was a delay in producing these which resulted in a delay in the introduction of the Act. The guidelines were published by the Ministry of Justice and the Act was eventually introduced on 1 July 2011. Guidance was also published by the Serious FraudOffice (SFO) setting out the Directors' approach to deciding whether to bring a prosecution under the Act (this does not apply to Scotland or Northern Ireland, although the Lord Advocate and the Director of Public Prosecutions for Northern Ireland were consulted during its development).
In October 2012 the SFO issued revised policy statements in relation to facilitation payments, business expenditure and self-reporting which are highlighted below.
For the purposes of this Act bribery is defined as the giving or taking of a reward in return for acting dishonestly and/or in breach of the law.
Possible defences - the six guiding principles
If the corporate offence does result in an organisation receiving sanction as a result of the activities of an individual (or individuals), there is a potential defence that the organisation can use. The defence would require an organisation to demonstrate that it had adequate procedures in place to stop any bribery from occurring.
There are six guiding principles setting out the approach that organisations should use to prevent bribery occurring in their organisation. These six guiding principles are:
An organisation should put procedures in place that prevent bribery by people who are associated with the organisation. The procedures should be proportionate to the bribery risks that are faced and the nature, scale and complexity of the activities of the organisation. The procedures should be clear, practical, accessible, effectively implemented and enforced.
Top level commitment
The top level management of an organisation must be committed to preventing bribery by all people associated with the organisation. They must promote a culture where bribery is seen as unacceptable by all. This can be achieved by involvement in creating procedures, in training and in communicating the organisation’s stance on bribery (the detailed involvement of senior management will partly depend on the size of the organisation). Senior management should be seen to be involved in any critical decisions that impact on allegations or prevention of bribery.
The organisation should assess the risk that bribery poses to the organisation. This assessment includes the consideration of the nature and extent of its exposure to potential external and internal risks of bribery. The assessment should be carried out on a regular basis, should be informed (by reference to fact) and should be documented. The government guidance suggests that risks can be divided into five broad categories:
country – is there a culture of corruption in a particular country, or no anti-bribery legislation?
sector – is the organisation operating in a sector where bribery is more common?
transaction – is the transaction one where bribery is more common?
business opportunity – is the activity one of particularly high value, or involving a lot of different groups?
business partnership – are there a number of intermediaries involved in the transaction?
There must be effective due diligence procedures in place that take a proportionate and risk based approach in respect of those involved in the organisation or those carrying out services on behalf of the organisation. Due diligence should be carried out to mitigate identified bribery risks.The SFO initially gave the assurance that organisations that self-report corruption or bribery would be dealt with through the use of civil penalties rather than criminal penalties. However, the revised policy statements published in October 2012 removed this reassurance.
Communication (including training)
The organisation’s stance on bribery should be clearly communicated to all employees, and to all those carrying out services on behalf of the organisation. This should include appropriate training which educates individuals about how to address situations where bribery might occur and emphasis on the anti-bribery culture within the organisation.
Monitoring and review
There should be an ongoing monitoring process of the anti-bribery procedures with regular reviews taking place. Any issues that are identified should be addressed and remedial action should be taken.The SFO initially gave the assurance that organisations that self-report corruption or bribery would be dealt with through the use of civil penalties rather than criminal penalties. However, the revised policy statements issued by the SFOin October 2012 removed this reassurance.
The first prosecution under the Bribery Act 2010 was R v Patel (unreported,  EWCA Crim 1243 18 November 2011, CA)An administrative officer working at a magistrates court was accused of accepting a bribe of £500 to make a speeding offence ‘disappear’. He admitted the offence and asked for seven other offences to be taken into account. It is thought that he had probably committed as many as 53 offences over a one year period. He was sentenced to three years’ imprisonment for the offences relating to the Act and six years’ (later reduced to four years) imprisonment for offences relating to misconduct in a public office. The two sentences ran concurrently.
In December 2014 the first case brought by the Serious Fraud Office resulted in a successful prosecution. Three former directors of Sustainable AgroEnergy were imprisoned for a period of between 6 and 15 years for accepting and making bribes for financial advantage. The company had gone into administration in 2012 and therefore no proceedings were brought against it.
There has also been the first disposal of a case under the civil recovery scheme (rather than criminal prosecution) involving a company which had self-reported under the corporate offence of failing to prevent bribery by a third party. Through an internal review, the company became aware that an installer of its cabling was offering bribes to customers and self-reported to the Crown Office admitting that it had failed to prevent the bribery occurring. £212,800 was recovered – a figure which was based on the company's gross profit related to the bribery.
If an organisation is aware that bribery has occurred it can decide to report itself. The Serious Fraud Office states that self-reporting is no guarantee that there will be no prosecution, but it will be taken into consideration as set out in its Guidance on corporate prosecutions. The guidance explains that for self-reporting to be taken into consideration as a factor against prosecution it must form part of a ‘genuinely proactive approach adopted by the corporate management team when the offending is brought to their notice’.
The four offences
Under the Bribery Act 2010 there are four possible offences.
Bribing another person
The offering, promising or giving of a reward to induce a person to perform a relevant function or activity improperly.
For this offence to be committed there needs to be evidence that the act under consideration was carried out with the purpose of inducing a person to act improperly. Initially the Government guidance suggested that an act of hospitality is unlikely to be seen as a bribe because the purpose is not to induce improper behaviour. However, this does not mean that all hospitality and gifts will be exempt from being classed as bribery. In the revised policy statements issued in October 2012 the SFO stated that the nature of hospitality that is offered needs to be considered, with care being taken to ensure that it is not masking some inappropriate activity.
The accepting of, agreeing to accept or requesting of a reward in return for performing a relevant function or activity improperly.
A ‘relevant function or activity’ includes any activity of a public nature or any activity connected to a business. ‘Acting improperly’ will be any breach of what a reasonable person in the UK would expect in relation to the performing of the function or activity. However, note that the offences apply even if the function or activity is not taking place in the UK.
The revised policy statements published by the SFO in October 2012 added some guidance on possible prosecution under the offences of Bribing another person and Being bribed. Prosecution will be more likely when a conviction is likely to attract a significant sentence, the offences are pre-meditated and include an element of corruption, the offences have been committed to allow a more serious offence to take place or those involved in the bribery are in a position of trust and have taken advantage of this. Prosecution is less likely when conviction is likely to result in a small sanction, the matter was minor and there has been a pro-active approach in terms of self-reporting and addressing the issue.
Bribing a foreign public official
This is a specific offence of trying to influence a foreign public official with the intention of obtaining or retaining business in a situation where the public official was not permitted or required by law to be influenced.
The Ministry of Justice guidance makes specific comment about situations that can occur when seeking tenders for publicly funded contracts. In such situations governments often permit those tendering for the contract to offer some kind of additional investment in the local economy, or to carry out some act that would be of benefit to the local community. If relevant written law permits or requires an official to be influenced by such an arrangement then this will fall outside of the offence. If the additional investment would amount to an advantage to the foreign public official and there is no reference in local law as to whether this is permitted, then prosecution is possible – consideration would be given to the public interest in prosecuting.
The revised policy statements published by the SFO in October 2012 added some guidance to this aspect of the Act. Facilitation payments which are unofficial payments made to speed up the process, or to secure a required action, remain illegal. Prosecution is more likely to follow if the sums were large, the payments appear to have been pre-meditated, there is an indication that there was some corruption of the official involved or the company policies have not been followed. Prosecution is less likely if the amounts were small, the payments came to light as a result of self-reporting, the company policies have been followed or the payer was placed in a particularly vulnerable position.
Failure to prevent bribery
This - the 'corporate offence' - occurs when an organisation fails to stop people who are operating on its behalf from being involved in bribery. It is the ‘corporate offence’ that organisations need to pay particular attention to. This offence could occur as a result of the activities of a range of people working on behalf of the organisation – an employee, consultant or agent, for example – if those individuals were involved in accepting or receiving a bribe which resulted in the organisation gaining or retaining business. This is a change to the previous approach to the law where only bribery involving senior managers was likely to result in legal action. Note that the offence of bribery relevant to this Act could be committed in the UK or overseas. Specifically offences may be prosecuted if:
- committed by a British national or corporate or individual who is ordinarily resident in the UK regardless of where the offence was committed, and/or
- any act or omission which forms part of the act is committed in the UK.
In addition the corporate criminal offence will apply to commercial organisations with a business presence in the UK regardless of whether or not the bribe is paid in the UK or the procedures are controlled from the UK. If the ‘corporate offence’ is committed, then both the organisation and its directors can receive sanction including unlimited fines. The possible sanction for an individual involved in bribery is up to ten years in jail.
Useful contacts and further reading
Bribery Act 2010. (2011) London: HMSO.
INSTITUTE OF BUSINESS ETHICS. (2012) The ethics of gifts and hospitality. London: Institute of Business Ethics.
MINISTRY OF JUSTICE. (2011) The Bribery Act 2010:Guidance about procedures which relevant commercial organisations can put into place to prevent persons associated with them from bribing. London: Ministry of Justice.
MINISTRY OF JUSTICE. (2011) The Bribery Act 2010: quick start guide. London: Ministry of Justice.
O'SHEA, E. (2011) The Bribery Act 2010: a practical guide. Bristol: Jordans.
SERIOUS FRAUD OFFICE and CROWN PROSECUTION SERVICE. (2011) Bribery Act 2010: joint prosecution guidance of the Director of the Serious Fraud Office and the Director of Public Prosecutions. London: Serious Fraud Office.
SERIOUS FRAUD OFFICE. (n.d) Guidance on corporate prosecutions. London: Serious Fraud Office.
SHADA, R; SALLON, C. and TATE, Sam. (2014) Bribery - a compliance handbook. London: Bloomsbury Professional.
WARREN, R; LARGE, A. and TWEDDLE, Mark. (2015) Insight into awareness and impact of the Bribery Act 2010 among small and medium-sized enterprises (SMEs). London: Ministry of Justice and Department for Business, Innovation and Skills.
CHARLTON, J. (2011) Bribery Act 2010: honesty is the best policy. Employers' Law. June. pp12-13.
DOGRA, S. and LARNER, J. (2011) Adequate procedures guidance. Company Secretary's Review. Vol 35, No 3, May. pp22-23.
JACKSON, C. and RHODES, N. (2011) Beating bribery and corruption: the role of human resource directors. Benefits and Compensation International. Vol 41, No 2, September 2011. pp8-12.
Meeting anti-bribery obligations. (2011) Employers' Law. July/August. pp20-21.
SULLIVAN, N. (2011) Party's over. Employee Benefits. June. pp22-26.
This factsheet was written by Kathy Daniels, FCIPD. It is for general information only and is not intended to apply to specific circumstances or to provide legal advice. If you have a particular problem, you are advised to seek specific legal advice.
Explore our related content
An overview of the benefits of HR policies and how they can be implemented and communicated effectively throughout an organisation
Episode 108: Should HR be the conscience of the organisation? In the wake of the Volkswagen emissions scandal, this roundtable explores the role HR should play in developing and enforcing business ethics in their organisation.
Explores the evidence for the importance of culture within organisations and at board level