The Bribery Act 2010 HandbookProviding advice on anti-bribery compliance
Contents             Overview of the Bribery Act 2010                                                   04             Ris...
ForewordThe Bribery Act 2010 is one of the most draconian and far-reaching pieces ofanti-corruption legislation in the wor...
Overview of the Bribery Act 2010             The Bribery Act 2010 came into force on 1 July 2011. Its aim is to update ant...
Bribery Act 2010 – Key TermsAdvantage                       An “advantage” can be anything of value or                    ...
Sanctions             A corporate found guilty of one of the above offences may face an unlimited fine. An             ind...
Because the test is so wide, it is not only employees and intermediaries who can be“associated persons” and make the compa...
Guidance on adequate procedures             The Ministry of Justice issued statutory guidance in March 2011 to assist busi...
f)          Monitoring and reviewBusinesses should be vigilant about their anti-bribery procedures as risks may change ove...
Risk assessments             The Guidance prescribes the Risk Assessment as follows:                       The commercial ...
Internal and external risksOrganisations have far greater control over internal risks, and it should be possible toelimina...
Business opportunity risk: The Guidance sweeps various risks into this category, such as             involvement in projec...
Corruption risk assessmentThe Ministry of Justice do not prescribe a methodology for undertaking a bribery andcorruption r...
Due diligence of business partners             As outlined above, an “associated person” could cover a wide range of your ...
Due diligence questionnaireBelow is a list of questions designed that you could use to form the basis of a duediligence ex...
Compliance                 Details of your anti-bribery procedures/policies (if any)                                     ...
Due diligence checklistBelow is a checklist of actions to be undertaken as part of a due diligence process. Theseactions a...
Review/audit                 Ensure that the business partner has the requisite                                          ...
Best practiceDue diligenceAs explained in the previous chapter, the process of due diligence is a mechanism toexpose any b...
In the case of your business, you may need to have an anti-bribery policy that you can             show to your prospectiv...
Gifts and hospitalityLegitimate and reasonable business hospitality to build relationships with customers is animportant a...
Gifts and hospitality (continued)             There is some benefit and simplicity associated with setting limits/threshol...
SponsorshipSponsorship, while a legitimate part of business activity (both in terms of marketing andalso in giving back to...
Effective implementation of bribery prevention measures             Developing a risk register and producing clear policie...
Training (continued)Where risks are highest, training may benefit from being specific to the application ofspecific briber...
Sanctions and consequences of a corruption conviction under the             Bribery Act 2010             Legal consequence...
Reputational and commercial consequences      Regardless of a conviction, the mere investigation into a suspected offence...
Company:            Company Director Julian Messent (Insurance Broker) – PWS                                     Internati...
Case scenariosThese are example case scenarios intended to assist members in considering issues whichmay affect their busi...
Case Scenario 2: Hospitality and Entertainment (see also section on ‘Gifts and hospitality’)             You invite a cont...
Case Scenario 4: Gifts and sales practices     You decide to offer a ‘free gift’, such as a digital camera or tablet, to ...
Case Scenario 6: Due Diligence of agents (see also ’Due Diligence of Business Partners’ and             Case Scenario 6: D...
AnnexThe Bribery Act 2010http://www.legislation.gov.uk/ukpga/2010/23/pdfs/ukpga_20100023_en.pdfThe Bribery Act 2010: Guida...
Contributors             Intellect would like to acknowledge their thanks to those that contributed to the working        ...
CMS is the leading European provider of legal and tax services.                                     CMS Cameron McKenna is...
About Intellect                                     Intellect, the trade association for the UK technology industry, provi...
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Bribery Act Handbook

  1. 1. The Bribery Act 2010 HandbookProviding advice on anti-bribery compliance
  2. 2. Contents Overview of the Bribery Act 2010 04 Risk assessments 10 Due diligence of business partners 14 Best practice 19 Effective implementation of bribery prevention measures 24 Sanctions and consequences of a corruption conviction 26 under the Bribery Act 2010 Case scenarios 29 Annex 33 Contributors 34 Acknowledgements Intellect would like to acknowledge our thanks to those that contributed to the working group that developed this handbook. Members of the working group were: Philip Somarakis Blake Lapthorn Lara Robson Blake Lapthorn Hazel Grant Bristows Sacha Wilson Bristows David Duvall Chantrey Vellacott DFK LLP Omar Qureshi CMS Cameron McKenna LLP Andrew Daniels Deloitte Kate Hughes Osborne Clarke Dawn Troman Osborne Clarke Michael Dufton QinetiQ Group Stephen Critchley Collyer Bristow LLP02 The Bribery Act 2010 Handbook
  3. 3. ForewordThe Bribery Act 2010 is one of the most draconian and far-reaching pieces ofanti-corruption legislation in the world as it fosters a ‘zero tolerance’ culture towardscorruption in businesses, stretching from the CEO to extended partner networks in the UKand abroad.Bribery and corruption not only raises the costs of doing business but also hindersdevelopment and growth around the world. According to UKTI a significant number ofUK companies have lost business to a bribing competitor or turned down overseasopportunities due to corrupt practices in market.While the technology industry may have a lower risk profile than others; it has its ownissues. For example UK companies doing business overseas, interact with foreign officials,whether in seeking regulatory approvals, supplying products for information-technologyprojects sponsored by foreign governments, or selling directly to governments. Moreover,technology companies’ heavy reliance on distributors, resellers, sales representatives,agents and consultants adds to the potential risk of bribery violations.Thus, there will be a continuing need for our sector to collaborate closely and share bestpractice and experiences to remove bribery and corruption risks and create a level, ethicalplaying field.Intellect remains committed to supporting its members in their ongoing efforts to complywith the Act. We believe that this handbook will prove to be a useful tool to ourmembers providing them with advice about anti-bribery compliance. However, thisguidance is not exhaustive and will be reviewed from time to time in the light ofexperience and any relevant case law.We are grateful to Intellect’s Bribery Act Working Group without whose knowledge andprofessional expertise the production of this anti-bribery handbook would not have beenpossible. We would also like to thank the Serious Fraud Office, Transparency InternationalUK and the Ministry of Justice, who have helped shape our thinking in this area.Charles WardChief Operating Officer, Intellect The Bribery Act 2010 Handbook 03
  4. 4. Overview of the Bribery Act 2010 The Bribery Act 2010 came into force on 1 July 2011. Its aim is to update antiquated bribery laws and to engender a culture within UK business that does not tolerate corruption on any scale. In doing so, the government has enacted one of the strictest and most far-reaching anti-bribery regimes in the world. Its provisions will affect all commercial organisations carrying on businesses in the UK. All must be prepared for it, particularly in respect of their efforts to prevent bribery (offence 2 (d) below). Criminal offences under the Act a) Offering or paying bribes (s.1) Offering, promising or giving an “advantage” with the intention of inducing a person ‘improperly’ to perform a ‘relevant function or activity’ or to reward that person for doing so. b) Requesting or receiving bribes (s.2) Requesting, accepting or receiving an “advantage” intending that a ‘relevant function or activity’ should be performed ‘improperly’ as a result, or as a reward for its improper performance. c) Bribery of a foreign public official (s.6) Offering or giving an “advantage” to a foreign public official with the intention of (i) influencing the foreign public official and (ii) obtaining or retaining business or a business advantage, UNLESS the written law of the country of the official permits it. d) Failure of a commercial organisation to prevent bribery (s.7) This offence (which will be referred to throughout this guide as the Corporate Offence) can be committed only by commercial organisations (companies and partnerships) that are based in the UK or carry on at least part of their business in the UK. It is committed where:  a person performing services for the relevant commercial organisation anywhere in the world (which may include not only employees, but also agents and external third parties or even subsidiaries or joint ventures in appropriate cases) bribes another person in order to obtain or retain business or a business advantage for the relevant commercial organisation unless the organisation can show on the balance of probabilities that it had adequate procedures in place designed to prevent such bribes.04 The Bribery Act 2010 Handbook
  5. 5. Bribery Act 2010 – Key TermsAdvantage An “advantage” can be anything of value or perceived value – it need not be money or anything tangible.Relevant function or activity Any function of a public nature and any activity connected with a business. It is only a “relevant” function if a reasonable person in the UK would expect it to be performed in good faith or impartially or that the person performing it was in a position of trust.Improper performance When one breaches the above-referenced expectation of a reasonable person in the UK.Associated persons An “associated person” is anyone performing services for your company. It is presumed to include employees, but could also cover a wide range of your business partners, including your agents, advisers, consultants, distributors, suppliers, contractors, and sub-contractors (if they in fact perform services for you rather than simply acting as the seller of goods). It is also possible that your foreign subsidiaries and potential joint-venture partners could be deemed associated persons, to the extent they perform services for you, even if they themselves are not prosecuted for the bribery. The key question is: are they performing services for you? If so, then to that extent, they are your ‘associated person’.Adequate procedures Policies and procedures designed to prevent bribery, adopting a reasonable and proportionate approach to mitigating the bribery risks faced by the corporate. The Bribery Act 2010 Handbook 05
  6. 6. Sanctions A corporate found guilty of one of the above offences may face an unlimited fine. An individual found guilty may face imprisonment for up to ten years, an unlimited fine, or both. For more information see ‘Sanctions and consequences of a corruption conviction under the Bribery Act 2010’ on page 26. The Bribery Act 2010 - Interpretation All of the offences have extra-territorial application to a greater or lesser degree. This means that even where the acts relating to a bribery offence occur entirely outside the UK, they can in some circumstances still be prosecuted in the UK. In particular, the Corporate Offence can apply to companies and partnerships that are not even UK registered. All that matters is that they have a business presence in the UK in some way for them to be subject to the Act in relation to all of their business operations around the world. These definitions and offences are complex and were deliberately widely drafted. Therefore, there is a potential risk that they unintentionally could catch certain types of normal business conduct. However, prosecutors should exercise their discretion whether to prosecute any given case adopting a commonsense approach, in light of their obligation only to prosecute where it is in the public interest to do so. Ultimately, these offences will be interpreted by the Courts and clarification of their full scope will only become clear after the first cases have been decided. At the time of writing this guide, only one case has been decided by the Courts under the Bribery Act. As such, the guide refers to earlier cases to demonstrate the type of conduct which will be caught under the Bribery Act and the penalties which have been imposed over recent years for bribery and corruption related offences. For more information see ‘Sanctions and consequences of a corruption conviction under the Bribery Act 2010’, on page 26. Impact on businesses The main impact of the Bribery Act on businesses in the UK is likely to be from Corporate Offence (d), page 04, which is the most controversial element of the legislation. This offence is intended to reverse the current rules under which a company could be guilty of a bribery offence only if its senior management is involved. Under the Corporate Offence, the company or partnership may be guilty even if no one within it knew of the bribery. So long as someone acting for the company bribes on its behalf anywhere in the world, the company will be guilty unless it can show that it had put in place ‘adequate procedures’ designed to prevent bribery from occurring.06 The Bribery Act 2010 Handbook
  7. 7. Because the test is so wide, it is not only employees and intermediaries who can be“associated persons” and make the company liable. What matters is not how theassociate is described but whether they are actually performing services for the companythat has a UK business presence. So, it will be possible for a subsidiary, when it is actingfor its parent in any particular context, to make the parent liable for any bribe thesubsidiary offers in that regard – even if the subsidiary itself is unable to be prosecuted forit in the UK. Similarly, a joint venture, distributor, franchisee or any other businessrelationship could result in liability for a company with a UK business presence. Company: IInnospec Limited (Chemical and fuel company) (R v Innospec [2010]) Offence: 2002 – 2006 -Bribing employees of an Indonesian state owned refinery and other Government Officials to secure sales. Penalties: $12.7 million fine payable to the SFO. Note: The use of agents outside of the UK to facilitate bribery (the agents acted under the instruction of Innospec and the payments were authorised by Innospec). As Innospec’s parent company, Innospec Inc, is listed on the NASDAQ and regulated in the US, Innospec Inc also had to settle a civil complaint filed in the US ($37m fine in the US).It is important to understand that businesses are not required by the legislation to haveadequate procedures in place to prevent bribery. However, if they do not do so and ifsomebody performing services on their behalf bribes, then the company will beautomatically liable for that wrongdoing without any hope of a defence. Further, thefailure by a company to take steps to improve its anti-bribery controls may result inprosecutors viewing the company more harshly, on the basis that it had a poor corporateculture. Therefore, the advice to all businesses should be to develop appropriateprocedures to monitor the activities of any of their employees, contractors or agents whomay be in a position to gain work in a way that could be interpreted (however remotely)as bribery. The Bribery Act 2010 Handbook 07
  8. 8. Guidance on adequate procedures The Ministry of Justice issued statutory guidance in March 2011 to assist businesses in understanding how they may put in place such adequate procedures. The guidance is not prescriptive; what counts as adequate will depend on the size of the company and the extent of the bribery risks it faces, given the jurisdictions, sectors and nature of business it conducts. For example, the risk of bribery may be lower where the business is undertaken wholly in the UK, compared to certain countries where there is a more tolerant culture of corruption. The guidance sets out six principles for designing and implementing adequate procedures: a) Proportionality Businesses should take a reasonable and proportionate approach to assessing and mitigating the bribery risks they face. Therefore, the larger and more complex the business, the more needs to be done to prevent bribery, in terms of both identified risks and unethical conduct by associates. For more information see ‘Risk Assessments’, page 10. b) Top level commitment Those at the top of a business are in the best position to ensure that their organisation conducts its business without bribery, by engendering an ethical business culture through their words and deeds and by taking charge of the process of developing the company’s ‘adequate procedures’. c) Risk assessment Businesses should assess the bribery risks that they are exposed to both, external (country, industry sector, type of transaction, business opportunity and business partnership) or internal (employees, bonus culture, lack of clear policies, lack of financial controls, and lack of anti-bribery message from management). For more information see ‘Risk Assessments,’ page 10. d) Due diligence Businesses should carry out appropriate checks on business partners to ensure that they are appropriate people to work with and do not expose the business to undue risk. The extent of these depends on the nature, location and complexity of the transactions concerned. For more information see ‘Due Diligence of Business Partners’, page 14. e) Communication In order to implement the procedures effectively and to inculcate the right culture, communication across the company will be required so that all employees have a consistently good understanding of the risks and indicators relating to bribery and know what is expected of them when an issue arises. For more information see ‘Effective Implementation of Bribery Prevention Measures’, page 24.08 The Bribery Act 2010 Handbook
  9. 9. f) Monitoring and reviewBusinesses should be vigilant about their anti-bribery procedures as risks may change overtime, for example because of changes in the business itself, focusing on new or differentmarkets, or possibly because of changes in the law. The guidance suggests that there is awide range of internal and external review mechanisms which could be considered.It is not possible in this guidance for us to tell our members what procedures they shouldput in place as these will depend on the nature and complexity of each business but theymay include some or all of the following: an anti-corruption code of conduct or policy, with procedures to implement the policy; this might include a policy for gifts and corporate hospitality. For more information see ‘Best Practice’, page 19  a documented review of the business and the bribery risks it faces, which may be different in the different parts of the business training on bribery risks and the policies and procedures for all key staff screening processes for new customers and suppliers, including service providers a review of financial risks and controls a confidential whistle-blowing procedure a code of enforcement, detailing disciplinary procedures for breach.1 The guidance states that the government does not intend to prohibit ‘reasonable and proportionate’ hospitality. The Bribery Act 2010 Handbook 09
  10. 10. Risk assessments The Guidance prescribes the Risk Assessment as follows: The commercial organisation assesses the nature and extent of its exposure to potential external and internal risks of bribery on its behalf by persons associated with it. The assessment is periodic, informed and documented. A Risk Assessment should form one of the first steps in developing a company’s anti-bribery procedures. It will inform everything else the company does in this regard as it will identify the bribery risks to which it is subject, so that it may develop procedures tailored to those risks. However, the guidance does not explain how a company should do this in practice. In this chapter, Intellect sets out some methods that our members can consider adopting to conduct their Risk Assessment. The extent and appropriateness of these suggestions will vary from company to company. While the Risk Assessment should be the first step in developing adequate procedures, it should not be a one-time-only exercise, as risks can change. Intellect recommends a cyclical approach:  the initial Risk Assessment shapes the procedure; but  one aspect of the procedure may be that there should be a Risk Assessment review; either triggered by defined events (such as entering a new geographical market), or just periodically.  the result of that review may, in turn, feed back into amended procedures. It is important to get the Risk Assessment right as, no matter how perfectly aligned the procedures are to the Assessment, they may be inadequate if the Assessment did not identify all the relevant risks. On the other hand, an overly cautious Risk Assessment has the drawback that it might lead to unnecessarily rigorous procedures putting the company at a competitive disadvantage. A proportionate approach is all that is needed. Principle 1 of the Government’s guidance is proportionality, divided into two categories. a) Proportionality - Bribery Risk: An organisation’s procedures should be proportionate to the bribery risks it faces. It is the Risk Assessment that should ascertain this. b) Proportionality - Nature, Scale and Complexity: An organisation’s procedures should be proportionate to the organisation’s size, resources and structure, but that is not the same as saying the Assessment should per se capture information about size, resources and structure. Intellect suggests information about the nature, scale and complexity should be captured in the Assessment.10 The Bribery Act 2010 Handbook
  11. 11. Internal and external risksOrganisations have far greater control over internal risks, and it should be possible toeliminate many of them with the cyclical approach mentioned above. For example, theinternal risks suggested by the Guidance are: a bonus culture that rewards excessive risk-taking deficiencies in employee vetting, training, skills and knowledge a lack of clear financial controls a lack of a clear anti-bribery message from the top-level management a lack of clarity in the company’s policies on, and procedures for, hospitality and promotional expenditure, and political or charitable contributionsTo these we would add: a lack of management and reporting of corruption issues a lack of support or structure for reporting concerns a lack of awareness of, or inadequate dealing with, historical issues or problems in this areaExternal risks are harder to control, and the Guidance divides them into categories:Transaction risk: The Guidance notes that certain transactions are higher risk than others,such as those involving charitable or political contributions, or requiring licences andpermits. Of specific relevance to some Intellect members will be the fact that: contracting for the performance of IT services is identified in the Guidance as perhaps carrying a low risk; but transactions relating to public procurement (including, one assumes, IT procurement) has a high transactional riskSectoral risk: Some sectors are inherently at higher risk of bribery, including the extractiveindustries and the large scale infrastructure sector. However, helpfully, as explained in theintroduction, the business of our members is generally considered to be less high risk thanthose. For example, the non-governmental organisation Transparency Internationalproduces a study every few years, called the Bribe Payers Index, which looks at bribery riskon a sectoral basis and ranks business sectors between higher and lower risk. In the mostrecent 2011 Bribe Payers Index, the Information Technology sector ranked 3rd, while thetelecommunications sector ranked 8th out of 19 sectors, where the sector ranked 1st isthe least likely to bribe. Therefore, the sectors relevant to our membership are relativelylow to medium risk.Country risk: Some countries are perceived to have high levels of corruption and anabsence of effective anti-bribery legislation. A useful tool in the external Risk Assessmentof any organisation involved in business overseas is Transparency International’sCorruption Perceptions Index, which ranks all countries in this regard. As a very generalrule of thumb, countries scoring less than 5.1 on this index may be considered “high risk”jurisdictions, for example. The Bribery Act 2010 Handbook 11
  12. 12. Business opportunity risk: The Guidance sweeps various risks into this category, such as involvement in projects which are not apparently undertaken at market prices, or which do not have a clear legitimate objective, or - perhaps of most relevance to Intellect members, who may be involved in large IT or communications projects - high value projects or those involving many contractors or intermediaries. Business partnership risk: The Guidance cites various high-risk relationships, such as intermediaries in transactions with foreign public officials, as well as, and consortia or joint ventures. Periodic, informed and documented assessment While the sources you can use to contribute to an informed assessment will vary from case to case, it is likely that the appropriate sources for your business will become obvious as the Assessment is conducted. For example:  if an organisation is conducting business overseas, then Transparency International’s Corruption Perceptions Index should be considered  if parts of your business use intermediaries to sell products or services, then due diligence on those business partners will be required. This might involve looking at the partner company’s history and, especially if it was recently incorporated, the histories of other companies the principals were involved in, and perhaps even further background checks on those individuals, depending on what you find. Thus, it is likely that an informed Assessment will require the review of documents, and the Assessment should be documented - i.e. the organisation should retain those documents along with documents generated by it in the Assessment process. The Section 7 offence is one of strict liability so, if an organisation’s anti-bribery procedures are inadequate, the existence of extensive documentation will not be a defence in itself. However, the evidence in the documents may make a finding of inadequacy less likely, and in any event should be relevant as mitigation in the setting of any penalty.12 The Bribery Act 2010 Handbook
  13. 13. Corruption risk assessmentThe Ministry of Justice do not prescribe a methodology for undertaking a bribery andcorruption risk assessment but there are a number of principle features and factors thatcompanies should consider when planning and undertaking their risk assessment.Principle features of the Factors to consider Reflections to applyprocess Sponsored by and  Nature and size of  Has your risk assessment engagement from senior operations and business concluded that the risks management. activities. are only associated with your employees being Involves a broad range of  Routes to market and bribed? This may be personnel from your level of control over correct, but ask yourself business. these. again if you have properly probed the interactions Consistency of approach  Incentives to commit an your employees or any organisation wide. act of bribery other associated person (e.g. Remuneration/ has with respect to Embedded in existing risk reward structures). winning or retaining management processes. business.  Location of operations/  Have you got to the heart Supported by data. activities. of the matter? Risks that are not granular cannot Considers black swan  Interactions with be easily mitigated e.g. if risks i.e. events that are a public officials. your risk assessment surprise and have a major concludes that your risks impact, yet after the fact,  Relative significance to are related to high risk the event can be your business. locations you are not rationalised by hindsight. likely to develop  Existing controls/ meaningful mitigation Revisited in instances prevention measures, actions, if you can where the risk profile of monitoring and assurance pinpoint exactly where/ the company changes activities and past issues. how the risk may (e.g. an acquisition or manifest itself you will expansion into new  Communication, tone have a much better markets). and awareness. chance of defining a set of controls that will Re-assessed periodically.  Resources mitigate that risk. (manpower/ financial) to  Do you understand how conduct the you will use the risk assessment. assessment outcome to guide the development of controls, the content and recipients of training and the messaging by leadership?  Can you demonstrate the risk assessment process that you have undertaken, if necessary? The Bribery Act 2010 Handbook 13
  14. 14. Due diligence of business partners As outlined above, an “associated person” could cover a wide range of your business partners, including your agents, advisers, consultants, distributors, suppliers, contractors, and sub-contractors (if they perform services for you rather than simply acting as the seller of goods). It is also possible that your subsidiaries and potential joint-venture partners could be deemed associated persons in certain circumstances. The conduct of due diligence in relation to the selection and monitoring of current and prospective business partners is an important element of the implementation of any anti-bribery procedures. As with the more general Risk Assessment, it is also important to ensure that your due diligence exercise is properly documented to provide evidence in the event of an investigation. Due diligence may involve research, investigation, questioning, and monitoring of business partners. The goal of the due diligence exercise is to expose any bribery risks associated with a particular business partner. This will enable you to make an informed decision as to whether it is safe to continue or enter into that business relationship (and possibly even whether it is necessary and justified to do so) and, if so, what steps and controls ought to be taken to mitigate the identified risks. Your risk assessment will determine the scope and extent of the necessary due diligence to be carried out on your business partners. For example, it could be disproportionate to carry out an extensive due diligence exercise in relation to certain low risk associated persons. The extent of due diligence required may also be influenced by the financial value of the business relationship and how much is already known about the particular business partner in question (perhaps as a result of due diligence conducted in the past). Company: MMW Kellogg Ltd (Construction company) (settlement with SFO) Offence: Pre 2009 - Receipt of funds generated by share dividends payable from profits and revenues generated by contracts obtained by bribery and corruption. Note: This demonstrates the importance of due diligence on suppliers, sub-contractors, third parties; MW Kellogg played no part in the criminal activity that generated the funds.14 The Bribery Act 2010 Handbook
  15. 15. Due diligence questionnaireBelow is a list of questions designed that you could use to form the basis of a duediligence exercise in relation to business partners. The list contains a broad range ofquestions grouped by headings and is by no means exhaustive. It will be important toconsider which questions are appropriate for a particular business partner. For example,certain questions may only be applicable if the business partner is a corporate entity (asopposed to an individual) or of a certain size. If a proposed business partner refuses or isunable to answer any questions without good reason, this in itself could be considered awarning sign. It is advisable to inform the business partner at the outset of therelationship that you intend to ask the below questions and conduct the verificationreferred to below. It will also be unnecessary to ask any questions which you already askas part of your existing procurement processes, but you should refer to the answers giventhere in conducting your due diligence assessment. You should also ensure that anypersonal data collected and stored as part of the due diligence process is done inaccordance with data protection legislation. Due diligence questionnaire Please provideCorporate  Details of your corporate/ownership structure (including details of shareholders) and a brief history of your company.  Details regarding the composition of your board, and the names, and locations of your senior officers and key personnel (including details of any other directorships held).  Company registration details for your parent company and any holding companies.Financial  Audited financial statements for the previous two years or if no audited financial statements are available please provide unaudited accounts certified by senior management.Personnel  Details of the background, expertise and business experience of the individuals who will be performing the relevant services. The Bribery Act 2010 Handbook 15
  16. 16. Compliance  Details of your anti-bribery procedures/policies (if any) and any vetting processes you carry out on your staff and sub-contractors.  Details of any past bribery/corruption issues, including any relevant judicial and/or regulatory warnings, investigations (past and/or ongoing) and/or findings against you. If you have had any relevant judicial and/or regulatory findings against you, please provide details of the remedial action and/or procedures you have implemented (if any). Services specific  Details of the resources/capabilities you have to perform the required services.  Details of any sub-contractors/intermediaries you use and/or intend to use.  Details regarding the necessity of any sub-contractors and/or intermediaries. General  Details of existing partnerships and third party relationships. Do you interact with or have a close connection to any public officials (including any foreign public officials and/or ruling families)? Are any of your staff, officers or shareholders public officials or public bodies?  Details of your other clients.  Appropriate business references.16 The Bribery Act 2010 Handbook
  17. 17. Due diligence checklistBelow is a checklist of actions to be undertaken as part of a due diligence process. Theseactions are designed to supplement the enquiries made from the business partner basedon the questionnaire on page 15. The list below contains a broad range of actionsgrouped by headings and is by no means exhaustive, nor will it always be necessaryto conduct all of these checks. It will be important to consider which actions areappropriate. Due diligence checklistIndependent verification  Follow up references provided by the business partner.  Conduct general internet searches on the business partner and every person identified as having control over the business partner’s affairs if a corporate entity.  Enquire about the business partner with local chambers of commerce, local embassies, local authorities, business associations and business contacts.  Conduct a credit rating of the business partner.Compliance/contractual  Require or encourage the business partner to comply with your anti-bribery policies and/or to implement its own anti-bribery procedures/policies.  Invite the business partner to participate in your internal anti-bribery training.  Assess the business partner’s willingness to sign-up to anti-bribery contractual clauses (with a right to terminate in the event the business partner breaches). The Bribery Act 2010 Handbook 17
  18. 18. Review/audit  Ensure that the business partner has the requisite experience and expertise to perform the services.  Periodically refresh your diligence questions and audit your contract with the business partner to ensure it remains valid and applicable.  If the business partner operates abroad, periodically travel to that country (or employ a specialist firm) to review the business partner’s working practices.  Ensure that your contract with the business partner requires it to keep proper books/records and contains a right of access to the records and any other data you may want/need as part of an investigation, as well as requiring co-operation in investigations. Commercial/benchmarking  Compare local market rates with rates quoted by the business partner and assess whether the fees quoted by the business partner are reasonable and commercial.  Ensure that there is a valid internal business case for the appointment of the business partner.  Assess whether the business partner’s standard terms of business (if any) are significantly inconsistent with other local business terms and conditions. Do they contain the protections you need? Should you use your terms or bespoke provisions instead? Internal procedures  Maintain a register of business partners and document all due diligence enquiries made.  Terminate any intermediaries who are not essential to the project or for the performance of the services.  Obtain applicable internal authorisations prior to the engagement of the business partner.  Ensure that any/all payments to the business partner are accurately documented, on the basis of detailed invoices confirming the products and/or services provided, and approved by the relevant officers.  Seek to ensure payments are made only after receipt of goods/services and paid directly into the counterparty’s agreed bank account. Seek to limit (if possible) the extent to which the partner is remunerated on a commission basis.  Attend any meetings between the business partner and public officials.18 The Bribery Act 2010 Handbook
  19. 19. Best practiceDue diligenceAs explained in the previous chapter, the process of due diligence is a mechanism toexpose any bribery risks associated with a particular business partner. In essence, theprocess is about gathering information on a person or business and evaluating it (using asimple risk assessment tool) before entering into a business relationship with them, thenature of which can then be tailored to try to mitigate the risks identified (assuming youare satisfied that it is safe and appropriate to enter into the relationship at all).The scope and extent of the necessary due diligence to be carried out on any associatedperson will vary according to certain risk factors including but not limited to: the proposed role of the associated person and the nature of the service provided the financial value of the business relationship existing knowledge of the associated person in question (and his/her pedigree) the country or location of the associated personIf the due diligence process throws up issues such as brushes with the law, late filing ofaccounts etc., these are indicators or ‘red flags’ that there may be trouble ahead. It willbe important to consider whether you want to enter into a partnership with a high-riskbusiness partner, particularly if the same services could be provided competitively bysomeone else with less risk.Contract adviceContractual protections should include: a warranty that the business partner did not bribe in order to win his contract with you, a prohibition on bribery in connection with performance of the contract, an obligation of the partner to complying with all applicable anti-bribery (and anti-money laundering) laws an obligation of the partner to upholding the principles in your anti-corruption policies and to making sure that those are properly implemented in their business a right of termination where there is a breach of any of these provisions.You may also consider requiring the partner: (i) to inform you where it becomes aware ofa possible breach or where it is subject to any extortive demand by a public official inconnection with performing the contract; and (ii) to certify on a regular basis that itremains in compliance with these provisions. As mentioned above, in higher risk or moresignificant business relationships, it would also be advisable to insist on wide-ranging auditrights and investigation co-operation obligations. The Bribery Act 2010 Handbook 19
  20. 20. In the case of your business, you may need to have an anti-bribery policy that you can show to your prospective partners as being the base for them adopting something similar. You should be prepared to formally commit to anti-corruption measures so that in turn you can insist on those in your dealings with third parties. If your partners are willing to adopt or comply with your policies and procedures in this regard, you should also be prepared to commit the time and resource to helping them understand what is expected of them, including by training them on the requirements similarly to how you would train your own staff. Talking about these issues upfront early on in the relationship will enable you to gauge the reaction of the respective partner and to gain some understanding of their appreciation and respect for these principles. Contractual protection will help you mitigate financial or reputational risks in the event of allegations of fraud, bribery or corruption and help you to investigate them and deal with the consequences. Whistleblowing Communicating the message that your business has zero tolerance to bribery to all your staff is essential. Indeed, communication is one of the six principles the Ministry of Justice set out for designing and implementing adequate procedures. Whistleblowing or reporting procedures that enable your staff to report their suspicions about possible bribery should, therefore, be considered as part of your communication strategy. It is vital that your employees know that there is a mechanism in place to report any unfavourable or damaging actions of fellow employees. The size of your business will be an important factor in deciding how best to structure a whistleblowing/reporting policy. In small businesses with few workers it may not be practicable to provide an anonymous service, but it should always be possible for staff to report concerns outside the normal line management chain and, in larger organisations, it is recommended that workers:  should be able to report concerns anonymously and with little difficulty (subject to any legal restrictions on this in particular countries)  have trust in the process and the confidence that their concerns will be taken seriously  are assured that they will not face reprisals20 The Bribery Act 2010 Handbook
  21. 21. Gifts and hospitalityLegitimate and reasonable business hospitality to build relationships with customers is animportant and accepted part of doing business and is not intended to be outlawed by theAct. However, if you offer gifts or hospitality which are clearly over the top orinappropriate in the circumstances, then you run the risk that others will perceive it tohave an improper motive. The trick is getting the right balance. The government hasprovided examples within the Guidance to assist you, but there is no agreed “spend”below which it would always be deemed acceptable or above which it would always bedeemed a bribe.It is advisable to set parameters for gifts and hospitality that you consider appropriate foryour business; these parameters must be communicated to staff. Some of this will becommon sense – inviting a contact to the rugby and taking him/her to dinner afterwards isunlikely to give rise to any concerns whereas paying for a contact to go on an all expensespaid 5 star holiday with his/her family may well suggest an improper motive – howeverthere are many levels in between and drawing up guidance on these should be a key partof any procedures to prevent bribery. In addition, what may be acceptable hospitality insome circumstances may be less acceptable in others – e.g. when tendering for a project,you should consider whether it is appropriate to invite the potential customer’sprocurement manager to the rugby and dinner, even though that may be acceptable wereyou not in the process of tendering.Factors that should be considered when deciding whether to offer or accept a gift orhospitality include... Does the offer offend our good business practice and ethics? Is there a legitimate business aim in making the offer? Is it reasonable bearing in mind the seniority and status of the recipient? Is the timing of it sensitive? For instance, if we are awaiting a pending business decision Is it isolated and does it form part of a series of benefits which if taken together, would offend our policy? Will it create an expectation of reciprocation of business?  Is it made openly or is there any suggestion of secrecy?  Does it comply with not only our policy and procedures but also those of the recipient’s organisation (if known)?  If the gift or hospitality is offered abroad, would it be considered reasonable and proportionate if it had been offered in the UK? The test under the Act is against UK practice not against local practice.If any gifts or hospitality are offered to people who fall within the definition of a ‘ForeignPublic Official’ then extra care should be taken because any gift or hospitality which couldbe seen to influence the FPO in his/her actions (whether properly or improperly) could fallfoul of the Act. The Bribery Act 2010 Handbook 21
  22. 22. Gifts and hospitality (continued) There is some benefit and simplicity associated with setting limits/thresholds for gift-giving and hospitality, both as a giver and a recipient. These limits can relate not only to when the hospitality or gift can be given/received, but also when it must be recorded in the company’s register for such things. The benefit of taking this approach is that, assuming the parameters are followed and enforced; the corporate will have certainty of a consistent approach and will not be left to rely on the subjective judgment or discretion of staff at the coalface. Arguably, this represents a more robust process for mitigating bribery risk than to leave these matters to individual judgment. Further, by keeping a record of all such offers (to or from your people), or at least those above a certain minimum threshold to avoid overly burdensome administration, you will be able to monitor what is actually happening and feed this into your review of performance and risk. For example, you may decide that there should be no gifts, or only of a nominal value. In some cases, it may be appropriate to exceed these parameters. However, we recommend that such a decision is referred to a senior manager. It is good practice to have a gifts and hospitality policy and in drafting one up you ought to consider the points referred to above as well as:  where and how gifts and hospitality are to be recorded and who will monitor the records  providing a copy of the policy, and requiring compliance with it, to your agents, suppliers and associated third parties as well as employees  how the organisation will ensure compliance with the policy and monitor its implementation. Case study In March 2011 Company X reached a settlement with the US authorities under which it paid $10 million in respect of alleged breaches of the US anti- bribery legislation. A subsidiary of Company X was alleged to have paid cash bribes and provided improper gifts and payments of travel and entertainment expenses to various government officials in South Korea in order to secure the sale of Company X’s products. Another subsidiary of Company X was alleged to have engaged in a widespread practice of providing overseas trips, entertainment, and improper gifts to Chinese government officials. The settlement was reached with no admission of liability by Company X.22 The Bribery Act 2010 Handbook
  23. 23. SponsorshipSponsorship, while a legitimate part of business activity (both in terms of marketing andalso in giving back to the community) can also amount to a form of bribery, because it canfall within the definition of a “financial advantage” and so should be considered from arisk perspective before engaging in it. The approach a business takes to the issue ofsponsorship, should be the same as it would take to corporate entertainment. The valueof the sponsorship, the intended recipient, the intention behind it and timing are allrelevant considerations. The business should be able to justify that the sponsorship wasreasonable. Most companies have at some point been approached by a customer whowants to be sponsored because they are undertaking some fund-raising activity, or by alocal sports team needing a new kit. Donating a reasonable amount, provided that thecustomers organisation would allow for it, should be acceptable. Donating theequivalent of that persons fund-raising target is, however, likely to raise a suspicion.Dealing with foreign public officialsAs already mentioned the Bribery Act creates a specific offence of bribing overseasofficials and the definition of such persons will be widely construed. Entertaining suchpersons or paying routine grease or facilitation payments are prohibited unless these arepermitted by the written laws of that country.The governments intention is to stop not only the overt payment of large bribes tooverseas officials to win contracts, but also low level routine payments which are designedsimply to “grease the wheels”. If you only trade within the UK then this risk may notarise, for the purposes of the overseas officials offence, but there is still a risk of briberywhere UK officials seek similar grease payments.However, if for example, you export goods or services abroad then bribes may berequested by overseas officials and you need a plan to avoid having to pay them. TheSerious Fraud Office, which will take the lead in prosecuting offending businesses, willhave little sympathy for those that routinely pay such bribes as part of the cost of doingbusiness and who are unable to demonstrate they have made any efforts to avoid them.Intellect recommends: you conduct a risk assessment to establish if such payments will be (or have been) demanded in parts of your business you have a clear policy regarding such payments you provide written guidance and/or training to staff and carry out checks to ensure this is being followed all payments (and possibly even all demands) made are recorded you take steps to inform the authorities in those countries that payments are being demanded you look at practical steps to curtail the making of such payments The Bribery Act 2010 Handbook 23
  24. 24. Effective implementation of bribery prevention measures Developing a risk register and producing clear policies and procedures to address bribery risks are important steps in the development of bribery prevention measures. There are, however, equally important efforts to be spent on ensuring that those risks are understood and that employees and other associated persons know what actions they are expected to undertake in applying those policies and procedures in the day to day business context. The Ministry of Justice rightly identify that communication and training are necessary activities and the role of leadership in delivering a tone from the top is important in embedding bribery prevention measures throughout the organisation. There are intricate details to consider when seeking effectively to implement bribery prevention measures. Communication In delivering communication the delivery method is often as important as who is delivering the message. For example, an email from an MD or CEO may be less effective than where it is coupled with a face to face brief from a line manager where an organisation does not habitually use email as a communication method; or where there is an over-reliance on email being used such that the importance of the message is not appreciated by the recipient. The key point is that the effectiveness of communication is dependent upon the preferences of the transmitter and the preferences of the recipient of the message. In some organisations there may be the possibility for more highly tailored communications methods due to scale or geographic considerations not being a constraint. A further point on communication is that consideration should be given as to how best to re-enforce it. Delivering a one off message is less likely to take root with the intended recipient than a repeated message, possibly through different methods. There could be opportunities to involve the wider leadership team and/or mid level managers in the efforts to convey the expectations on employees and associated persons. Training Some training is likely to be appropriate to help staff understand what the company’s policies are, how they are to be applied and also how to spot the issues that will engage them. However, different levels and types of training may be appropriate for different organisations with differing risk levels; it is important that the correct method of training is applied. E-learning is a commonly applied, and in many instances effective, training method. For higher risk organisations, interactive/facilitated sessions where participants can explore issues may be more appropriate.24 The Bribery Act 2010 Handbook
  25. 25. Training (continued)Where risks are highest, training may benefit from being specific to the application ofspecific bribery controls that employees and other associated persons are expected toapply, thus delivering practical assistance to those who will be most likely to encounterbribery risk. It may be appropriate to test the understanding of staff at the end of thetraining and require a minimum level of performance in the test, failing which the trainingmust be re-taken.In all cases, in order to be able to demonstrate that the training occurred and all relevantstaff undertook it, we recommend that records are kept of all attendees and when theyattended, together with copies of the training they undertook and, if they are to be testedon what they learned, copies of the test performance results.Upholding standardsIt is important for an organisation that is intent on effectively implementing its briberyprevention measures to be seen to uphold its own standards. Therefore, if an instance ofmisconduct is indentified, the company should enforce its own policies and procedures todemonstrate to all staff that the company stands by its processes and will not toleratebreaches. Failing to do so would undermine the importance that leadership subscribe tobribery prevention.Monitoring effectivenessOnce bribery prevention measures have been introduced, it will be necessary over time totest the effectiveness of those controls. Without doing so, how can the company’sleadership take comfort in their suitability to achieve the aims of bribery prevention?This can be done through the application of internal governance in the course ofoperations, e.g. embedding the review of the application of bribery prevention measuresat key points in business decision-making and putting bribery risk on an equal footing tofinancial or programme risk. Additionally, or alternatively, independent testing potentiallyby internal audit or external specialists of the application of bribery prevention controlscan be undertaken, or a mixture of both at different times, as appropriate.Through this process not only can an organisation develop an understanding of how far ithas achieved the embedding of bribery prevention measures in the day to day operationsof the business, but also the extent to which those responsible for applying briberyprevention measures have understood what is expected of them.Furthermore, opportunities to enhance the bribery prevention measures can be identifiedboth from the perspective of better mitigating bribery risk and from the perspective ofstreamlining controls application. The Bribery Act 2010 Handbook 25
  26. 26. Sanctions and consequences of a corruption conviction under the Bribery Act 2010 Legal consequences Individuals  An individual may be imprisoned for up to 10 years and may be subject to an unlimited fine in the discretion of the court.  If the individual is a director, they may be disqualified from being a company director and may be held personally liable for consenting or conniving in any bribery committed by the company. Companies  A company convicted under the Bribery Act is liable to an unlimited fine. Recent case-law suggests that the courts will impose stiff penalties where a company is found guilty: “the level of fines in cartel cases is… measured in tens of millions. It is self-evident that corruption is much more serious” (Thomas LJ in R v Innospec (2010)).  The company may also be debarred from tendering for EU public contracts in future (companies can also be debarred where they have board members/senior officers who have previously been convicted of a corruption offence). Other offences  Apart from the offences and penalties under the Bribery Act itself, acts of bribery often involve the commission of other offences which carry additional penalties.  In particular, false accounting and fraud offences often go hand-in-hand with bribery offences and can result in separate charges. For example, under the Companies Act 2006, a person may be guilty of a false accounting offence for failing to keep adequate records and for knowingly or recklessly approving accounts that do not give a true view of a company’s financial position. Offences may also be committed where someone dishonestly destroys or falsifies accounts, or produces misleading accounts.  Invariably, bribery offences will also entail money laundering (and money laundering offences may occur even if a bribery conviction cannot be made out), which carries severe custodial and financial sanctions of its own.  Even where no other offences occur, the prosecuting authorities have a number of tools available to them to increase the financial sanctions resulting from a bribery conviction. In particular, where any benefit has been obtained through bribery, the Court may confiscate property of the defendant that represents that benefit. Depending on the circumstances, the Court can sometimes treat all the defendant’s assets as the proceeds of crime unless the defendant can prove (on the balance of probabilities) that they came from a legitimate source. In the most extreme cases, the entire revenue of a business going back six years can be confiscated in this way, in addition to any fine levied under the Bribery Act itself.26 The Bribery Act 2010 Handbook
  27. 27. Reputational and commercial consequences Regardless of a conviction, the mere investigation into a suspected offence can be onerous, lengthy and intrusive. Investigations invariably take up considerable management time and are stressful for everyone involved, which can impact on general morale within the business. Responding to, and dealing with, an investigation is also expensive, not just in terms of time and distraction from core activities, but also in legal and other expenses all of which harm the company’s profitability and success. The prosecuting authorities increasingly use the media as one of their tools to promote their crime prevention activities. Companies and individuals investigated by the authorities may suffer reputational damage associated with it – whether or not any charge is ever brought. This can impact on a company’s ability to do business by undermining the trust and confidence of the company’s existing and potential customers and other stakeholders. Those who have suffered damage or lost business as a result of bribery (including competitors) may even seek compensation for that damage through legal proceedings, which will increase the cost and management burden and reputational fall-out from the underlying allegations. Company: Mabey and Johnson Ltd (Construction company) (R v Mabey and Johnson [2010]) Offence: Pleaded guilty in 2009 to providing kick-backs to the Iraqi government under Saddam Hussein (inflating the contract price for the supply of steel bridges to disguise illegal payments) following self-reporting the issue to the SFO. Penalties: Former managing director imprisoned for 21 months and former sales director imprisoned for 8 months. Company fined £6.6m. Note: In sentencing, the judge stated that “When a director of a major company plays even a small part, he can expect to receive a custodial sentence.” Further, in January 2012 the Serious Fraud Office obtained an Order requiring the company’s parent company to pay back dividends of over £130,000 gained through contracts won as a result of unlawful conduct. The Bribery Act 2010 Handbook 27
  28. 28. Company: Company Director Julian Messent (Insurance Broker) – PWS International Limited (R v Messent [2011]). Offence: 1999 – 2002 - Making or authorising payments of almost $2m to Costa Rican officials. Penalties: 21 months imprisonment. Ordered to pay £100,000 compensation to the Republic of Costa Rica within 28 days of sentencing or serve an additional 12 months imprisonment. Director was disqualified from acting as a company director for five years. Note: In passing sentence the judge stated “It is no mitigation to say others do it [pay bribes] or that it is the way of doing business.” SFO Director, Richard Alderman stated, “This case shows how determined we are to pursue businessmen who bribe.”28 The Bribery Act 2010 Handbook
  29. 29. Case scenariosThese are example case scenarios intended to assist members in considering issues whichmay affect their business. They are illustrative only. The considerations they contain arenot comprehensive or conclusive of what would amount to “adequate procedures” toprevent bribery as in reality each case will turn on its facts. Further case studies can befound in the appendix to the Ministry of Justices Bribery Act Guidance and membersshould consider seeking legal advice where appropriate.Case Scenario 1: Hospitality and Entertainment (see section on ’Gifts and hospitality’)You maintain a programme of social business events, including entertainment andattendance at sporting events, to thank your long standing business partners.You could consider the following: conducting a bribery risk assessment in relation to your dealings with those attending, in particular in relation to the provision of hospitality. publishing a policy statement about your position on bribery and corruption, including that you are committed to providing only proportionate and reasonable hospitality. issuing internal guidance about the provision (and acceptance) of hospitality. This might include:  The acceptable reasons for hospitality (hospitality should reflect a desire to cement good relations and should not make the recipient feel that they are under an obligation to give you work or any business advantage).  The criteria to be applied when deciding appropriate levels of hospitality (for example, it may be prudent to apply financial caps on the amount of hospitality which can be given to any one person/company over a period of time).  The appropriate and inappropriate timing of hospitality (for example, it may be inappropriate to invite a customer to an event while you are tendering to renew your contract with them).  A requirement for sign off by management.  The need for your employees to attend the events to which you invite contacts (in general terms, you should only offer hospitality for an event at which people from your organisation will be present). keeping adequate written records of the hospitality given, including accounting information. monitoring the implementation of your internal hospitality procedures. The Bribery Act 2010 Handbook 29
  30. 30. Case Scenario 2: Hospitality and Entertainment (see also section on ‘Gifts and hospitality’) You invite a contact to the UK to visit your business operations and to discuss how you can be of assistance to his/her business. Whilst he/she is in the UK you want to take him/ her out to dinner. Is this acceptable?  You could consider referring to your policy on gifts and hospitality to check what it provides. You should also consider the facts surrounding the dinner (including the reason for it, the role of your contact within his/her business and the type of dinner to be given) and adopt a common sense point of view. Taking a contact out to dinner to discuss working together will generally be acceptable, provided that this is reasonable and proportionate to your relationship. In general terms, the more senior a person is, the less likely it is that he/she will behave improperly as the result of being bought dinner but in any event the less lavish the dinner, the less likely it is to be considered a bribe.  If your contact is a foreign public official, you should take extra care in case your conduct might amount to bribery of a foreign public official (this bribery offence does not require an intention to make the recipient behave improperly).  If your contact asked to bring his/her family over to the UK and to the meal, paid for by your business, then this is less likely to be reasonable and proportionate and may amount to a bribe. Case Scenario 3: Gifts (see also section on ‘Gifts and hospitality’) You are sent a modest gift at Christmas (for example a bottle of alcohol) by a supplier with whom you have worked during the year. Should you accept the gift or return it? You could consider the following:  checking what your bribery/gifts policy provides in relation to accepting gifts.  assessing the value of the gift and any other gifts from the supplier. (In general terms it will permissible to accept a modest gift if it will not improperly influence your dealings with the supplier on an ongoing basis (e.g. to choose them over another supplier). Whereas if it is extravagant or one of many gifts regularly made to you by the same supplier then it may not be appropriate to accept it). You should always consider the purpose behind a gift before giving or receiving it.30 The Bribery Act 2010 Handbook
  31. 31. Case Scenario 4: Gifts and sales practices You decide to offer a ‘free gift’, such as a digital camera or tablet, to any/a customer who signs up to your service/purchases certain goods from you.You could consider the following: checking what your gift policy provides (this is a gift which should be considered in accordance with your gifts policy). assessing the rationale for the gift: is the gift generally available to all customers, or has it only been offered to a particular customer to get them to sign up? The former is likely to be more acceptable, in the usual ‘loss leader’ way. the gift should be for the ultimate customer – if the customer is a business this means that the gift should be given to the business as part of the commercial deal and not to the sales person personally. The former is more likely to be viewed as part of the commercial deal, the latter as an inducement to the sales person to pick your companys services and/or goods. At very least, it would be advisable to ensure that the gift is transparent to the sales person’s employer (see below). if it is part of a commercial deal then it should be reflected in the deal that the gift was included, to ensure visibility for you and the other party. is the value of the gift proportionate to the commercial deal proposed? is the gift being offered at an ‘inappropriate’ time? For example are you simultaneously tendering for unconnected business opportunities with the organisation or organisations that may qualify to receive the gift?Case Scenario 5: Facilitation paymentsYou are informed that goods you are exporting to a foreign customer have arrived at theoverseas port, but in order to be released for shipment on, you are required to pay a sumof money to the local customs official.You could consider the following: communication of your policy on non-payment of facilitation payments. seeking legal advice as to whether the payment is one required under local written law of the country in which the goods are being held. If it is not, to make such a payment would be a “facilitation payment” which is prohibited by the Bribery Act. questioning the legitimacy of the demand. requesting receipts and identification details of the official. requesting to speak to the official’s superior. trying to avoid paying the fee (if not properly due) in cash to the custom’s official, including by informing those demanding payment of the bribery offences under UK law. The Bribery Act 2010 Handbook 31
  32. 32. Case Scenario 6: Due Diligence of agents (see also ’Due Diligence of Business Partners’ and Case Scenario 6: Due Diligence of agents section ‘due diligence’) You are a SME and are considering using a local distributor of whom you have no experience in a foreign emerging market in which you have not previously worked. You could consider the following:  Conducting due diligence and background checks that are proportionate and may include:  compiling a questionnaire for the potential distributor requiring for example, details of ownership, references for individuals which would perform services for you, existing partnerships and judicial decisions against the company.  undertaking independent research into the company, including internet searches of the company and potentially those individuals with control over the company.  making enquiring with local authorities to check that the information provided by the company in its questionnaire is correct and obtaining copies of references.  requesting a copy of the company’s anti-bribery policies.  Looking for a different distributor if you are unhappy with any of the information you obtain in relation to this company.  If you decide to work with the company further points to consider may include:  providing your bribery policies to the company.  including bribery provisions into any contract you enter into with the company.  thinking how best to work with the company, including being clear about how the company will be remunerated.  repeating due diligence checks on the company (including making visits in person to the company).32 The Bribery Act 2010 Handbook
  33. 33. AnnexThe Bribery Act 2010http://www.legislation.gov.uk/ukpga/2010/23/pdfs/ukpga_20100023_en.pdfThe Bribery Act 2010: Guidance about procedures which relevant commercialorganisations can put in place to prevent persons associated with them from bribinghttp://www.justice.gov.uk/downloads/legislation/bribery-act-2010-guidance.pdfThe Bribery 2010: Quick Start Guidehttp://www2.erewash.gov.uk/moderngov/mgConvert2PDF.aspx?ID=8836Transparency International’s Bribery Pays Index 2011http://bpi.transparency.org/Bribery Act joint prosecution guidancehttp://www.sfo.gov.uk/press-room/latest-press-releases/press-releases-2011/bribery-act-prosecution-guidance-published.aspx The Bribery Act 2010 Handbook 33
  34. 34. Contributors Intellect would like to acknowledge their thanks to those that contributed to the working group that developed this Handbook. Members of the working group were: Blake Lapthorn is one of the UK’s leading full-service law firms, providing the full range of legal services needed by companies and organisations, with an industry-focused approach through its specialist sector groups. The firm also provides key services for individuals and families. More than 350 lawyers and other specialists deliver these services, based across key locations in London and Southern England. Combining legal expertise with a strong commercial approach, the firm delivers results for its clients, whether they are multinational companies, owner-managed businesses, Government agencies, charities or private individuals. Lara Robson | Philip Somarakis www.bllaw.co.uk Bristows is a dynamic and globally recognised law firm based in London with a client base that comes from a wide range of industries and includes some of the world’s leading companies. We are particularly well known for representing organisations with significant IP and technology assets and have been recognised for groundbreaking and complex work. We offer an unusually deep knowledge of the industries our clients represent. A high proportion of our people have specialist backgrounds, including technical degrees, PhDs and time spent working in industries such as IT, telecoms and pharmaceuticals. This extra dimension sets Bristows apart and gives us a rare insight into how the law relates to our clients businesses. Hazel Grant, Partner | Sacha Wilson, Associate www.bristows.com CMS Cameron McKenna’s regulatory and investigations group advise on all aspects of bribery and corruption law and related risks issues. Our skilled professionals have specialist, in-depth experience of advising on and conducting complex internal and external investigations and in dealing with regulators and prosecutors where problems are identified. We assist clients in developing procedures to meet the requirements of the Bribery Act 2010, as well as other regulatory obligations, and can help implement improvements to systems in any areas where risks have been identified. We work with our clients to understand and manage risk, protect reputation, and put robust procedures in place.34 The Bribery Act 2010 Handbook
  35. 35. CMS is the leading European provider of legal and tax services. CMS Cameron McKenna is the UK-headquartered member of CMS with 13 offices in the UK, Central and Eastern Europe and beyond. Through CMS, we offer seamless, integrated multi-jurisdictional advice where necessary, coordinated through a single contact. The firm offers an online “Anti-corruption Zone”, a one-stop shop for information on bribery and corruption law, policy trends and cases, which can be accessed at www.law-now.com/anticorruptionzone. You can also sign-up to the firm’s Law-Now service, to receive tailored reports on legal developments of relevance to them. Omar Qureshi, Partner www.law-now.com Collyer Bristow is a full-service solicitors’ firm with over 33 partners and a commercial client base. The firm has a dedicated IT, E-commerce & Communications Group. The Group specialises in negotiating and drafting agreements such as for outsourcing, software procurement or licensing, and e-commerce. It has expertise in resolved disputes relating to such agreements, and also those relating to telephony interconnect and competition law, and disputes with communications regulator such as Ofcom and PP+. Collyer Bristow has a particularly strong reputation for its intellectual property work. Stephen Critchley, Associate Solicitor www.collyerbristow.com As one of Europes most respected and dynamic law firms, Osborne Clarke advises high performing organisations on their European and international legal needs from our City, National and European offices, and the Osborne Clarke Alliance. With 1,000 people in 17 locations, our size and reach means we have the knowledge and resources to deliver the broad range of services our clients demand and our specialist client teams combine a range of legal disciplines with sector expertise. Our technology team represents both young, ambitious company and well-established larger technology organisations. We act for software and hardware suppliers, providers of innovative technologies and other service providers as well as major corporate users. Osborne Clarke is widely regarded as having one of Europe’s leading technology and communication law practices and have extensive experience in advising suppliers and users on national and international transactions in the technology sector. Areas of expertise include e-business, interactive entertainment, biotechnology, data protection and sales channels, as well as electronic payment systems and outsourcing. Kate Hughes, Senior Solicitor | Dawn Troman, Senior Associate www.osborneclarke.comThe Bribery Act 2010 Handbook 35
  36. 36. About Intellect Intellect, the trade association for the UK technology industry, provides a collective voice to over 850 member companies ranging from SMEs to multinationals. Intellect works with this community to:  develop the UK’s capability to support a globally competitive, innovative and sustainable economy led by a strong technology sector  help member companies improve their business performance by  engaging with government and regulators to create the most favourable environment for growth and employment  providing insights into markets and supply chains  constructively influencing market development  maintaining the industry’s reputation, championing its strategic importance  promoting best practice through the Business Professional CertificateIntellect Russell Square House 10-12 Russell Square London WC1B 5EET 020 7331 2000 F 020 7331 2040 E communications@intellectuk.org W www.intellectuk.org© Intellect May 2012The information in this paper is for use and dissemination on the condition that Intellect is referenced accordingly.

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