The Act imposes strict liability on a company for the acts of its employees and gives UK enforcement authorities broad jurisdictional reach covering the failure to prevent bribery by anyone associated with the company anywhere in the world.
Penalties are severe, with up to 10 years imprisonment for individuals convicted of the new offences and unlimited fines for corporate entities that fail to prevent bribery. A company's only defence will be to show it had in place 'adequate procedures' to prevent bribery
The Act will come into force on 1 July 2011 and the guidance states that reasonable and proportionate corporate hospitality is permitted, where it seeks to cement relationships or showcase products or services. For example, taking a client to a sporting event, or paying for a foreign public official to travel abroad for a site visit and then providing a meal and entertainment, would not breach the Act if that were reasonable and proportionate for the business.
There is no exemption for facilitation payments, which, in common with the vast majority of legal international systems, will amount to a bribe.
But a survey of 800 business executives carried out online at the end of 2010 by Kroll Ontrack Legal Technologies, found fewer than half (47%) of employers surveyed are confident they have the controls in place to prevent bribery at all levels of the operation and 16% of respondents are sure that this is not the case.
Sam Eastwood, head of the business ethics and anti-corruption group at law firm Norton Rose, said: "Whether or not a company's activities come within the scope of the UK Act, strict bribery laws are becoming more commonplace around the world. For instance, China has recently introduced measures to combat the bribery of foreign public officials. A further incentive for all companies to address their bribery risks is that, for their own protection and reputation, their business partners may wish to see evidence that they have adequate procedures to prevent bribery.
"With just more than three months to go before the law comes into force, businesses should be focused on conducting a risk assessment, implementing proportionate policies and procedures, training their staff and getting reporting structures ready and implemented."
Helen Hall, a partner in law firm DLA Piper's employment practice, added: "While the Government envisages a sensible approach and the published guidance envisages proportionality, only the courts can decide on what is 'adequate'. This could mean a significant hurdle for employers, despite Government intentions."
