MOJ publishes draft guidance on adequate procedures defence
The Ministry of Justice (MOJ) has launched an 8 week consultation on the "adequate procedures" guidance under the Bribery Act 2010.
As set out in our client briefing in June 2010, one of the most controversial provisions of the new Act is that section 7 provides that a "commercial organisation" will commit a strict liability corporate offence of failing to prevent bribery if anyone performing services on the organisation's behalf (whether in the UK or internationally) commits bribery. This could extend to agents, joint venture partners, franchisees, introducers or subsidiaries. This is punishable by an unlimited fine. The only defence is for the organisation to prove it had adequate procedures in place designed to prevent bribery being committed by those performing services on its behalf (section 9). The burden of proof is on the organisation to demonstrate this. Given the strict liability nature of this offence, the definition of adequate procedures is key. The Act provides that the Secretary of State must publish guidance on what will constitute "adequate procedures" before bringing the corporate offence into effect.
As part of the consultation process launched on 14th September, the government has published draft guidance and has prepared a questionnaire to enable anyone with an interest to provide feedback on the draft. The deadline for responses is 5pm on 8th November. The draft guidance sets out six principles for bribery prevention as follows:
- Risk Assessment – this is about knowing and keeping up to date with the bribery risks you face in your sector and market;
- Top level commitment – this concerns establishing a culture across the organisation in which bribery is unacceptable. If your business is small or medium sized this may not require much sophistication but the theme is making the message clear, unambiguous and regularly made to all staff and business partners;
- Due diligence – this is about knowing who you do business with; knowing why, when and to whom you are releasing funds and seeking reciprocal anti-bribery agreements ; and being in a position to feel confident that business relationships are transparent and ethical;
- Clear, Practical and Accessible Policies and Procedures – this concerns applying them to everyone you employ and business partners under your effective control and covering all relevant risks such as political and charitable contributions, gifts and hospitality, promotional expenses, and responding to demands for facilitation demands or when an allegation of bribery comes to light.
- Effective implementation – this is about going beyond 'paper compliance' to embedding anti-bribery in your organisation's internal controls, recruitment and remuneration policies, operations, communications and training on practical business issues.
- Monitoring and review – this relates to auditing and financial controls that are sensitive to bribery and are transparent, considering how regularly you need to review your policies and procedures, and whether external verification would help.
Each of these general principles is followed by more detailed commentary. The guidance does not set out detailed policies and procedures which organisations should implement – rather it states that organisations should tailor their own policies to suit their individual circumstances but that these policies should be informed by the principles.
The guidance also contains a number of "illustrative scenarios" – these are examples which look at how the six principles might apply to a number of problems scenarios which hypothetical organisations might encounter. These examples are helpful although the consultation states, somewhat surprisingly, that they will not form part of the guidance itself. Whilst the guidance will not be finalised until the end of the consultation process, it remains to be seen whether any feedback received will significantly change the draft. With that in mind, prudent businesses would be advised to begin reviewing their procedures having regard to the current draft guidance, rather than waiting until the final version is published next year.
A link to a copy of the consultation paper and the full draft guidance is set out below.
http://www.justice.gov.uk/consultations/docs/bribery-act-guidance-consultation1.pdf
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
