Red paperBribery Act 2010Protect your organisation by acting nowReleased april 2010
IntroductionThe Bribery Act 2010 gained Royal Assent on 8 April 2010 and represents the most significantchange in the UK g...
Bribery Act 2010The Bribery Act reforms the criminal law to provide a new, modern and comprehensivescheme of bribery offen...
Geographic reach of the Bribery Act 2010                                           The geographic reach of the Bribery Act...
Check your company’s anti-corruption procedures	 Board responsibility for the anti-corruptionprogramme                org...
How to spot bribery and corruption?                                              Bribery and corruption adopts many guises...
Origins of the Bribery Act 2010                                                The Bribery Act 2010 is the outcome of a le...
The need for comprehensive risk and compliance tools is clear. But manual processes and                                   ...
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Protect your organisation against bribery

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The Bribery Act 2010 gained Royal Assent on 8 April 2010 and represents the most significant change in the UK government’s approach to tackling bribery and corruption for over 100 years. The Bribery Act 2010 replaces outdated legislation, bringing the UK in line with the OECD AntiBribery Convention and aims to make the UK a better place for conducting business.

The primary focus for companies is the new offence of failure by a commercial organisation to prevent bribery. All offences carry a maximum prison sentence of 10 years, with the exception of the offence relating to failure to prevent bribery, which carries an unlimited fine.
Where a director is convicted of bribery, they may also be disqualified from holding a director position for up to 15 years

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Protect your organisation against bribery

  1. 1. Red paperBribery Act 2010Protect your organisation by acting nowReleased april 2010
  2. 2. IntroductionThe Bribery Act 2010 gained Royal Assent on 8 April 2010 and represents the most significantchange in the UK government’s approach to tackling bribery and corruption for over 100 years.The Bribery Act 2010 replaces outdated legislation, bringing the UK in line with the OECD Anti-Bribery Convention and aims to make the UK a better place for conducting business.The primary focus for companies is the new offence of failure by a commercial organisa-tion to prevent bribery. All offences carry a maximum prison sentence of 10 years, with theexception of the offence relating to failure to prevent bribery, which carries an unlimited fine.Where a director is convicted of bribery, they may also be disqualified from holding a directorposition for up to 15 years.The defence for a company is to be able to demonstrate that adequate procedures are inplace to prevent bribery. This puts companies’ operational procedures under the spotlightand businesses may want to consider on a risksensitive basis what processes and controlsare implemented to mitigate bribery and corruption within their firm.Despite a spate of recent bribery and corruption cases both in the UK and overseas, manycompanies are unprepared for the Bribery Act 2010 and need to act on this as the highestpriority.Key InfluencersTransparency International Serious Fraud Officewww.transparency.org.uk www.sfo.gov.ukOrganisation for Economic Co-operation Ministry of Justiceand Development (OECD) www.justice.gov.ukwww.oecd.org BIS: Department for Business, InnovationUnited Nations Convention and Skillswww.unodc.org www.bis.gov.ukUS Department of Justicewww.justice.gov LexisNexis® Bribery Act 2010
  3. 3. Bribery Act 2010The Bribery Act reforms the criminal law to provide a new, modern and comprehensivescheme of bribery offences that will enable courts and prosecutors to respond more ef-fectively to bribery at home or abroad.The Act will:• provide a more effective legal framework to combat bribery in the public or private sectors• replace the fragmented and complex offences at common law and in the Prevention of Corruption Acts 1889-1916• create two general offences covering the offering, promising or giving of an advantage, and requesting, agreeing to receive or accepting of an advantage• create a discrete offence of bribery of a foreign public official• create a new offence of failure by a commercial organisation to prevent a bribe being paid for or on its behalf (it will be a defence if the organisation has adequate procedures in place to prevent bribery)• require the Secretary of State to publish guidance about procedures that relevant com- mercial organisations can put in place to prevent bribery on their behalf• help tackle the threat that bribery poses to economic progress and development around the world.The Bill was published in draft on 25 March 2009 for pre-legislative scrutiny by a Joint Com-mittee of both Houses of Parliament. The Bill received Royal Assent on 8 April 2010.Source: Ministry of JusticePenaltiesCommitting an offence under the Bribery Act 2010 can result in severe penalties.An individual guilty of bribing another person, receiving a bribe or found to be bribing a foreignofficial faces a maximum prison sentence of 10 years and/or an unlimited fine.A company found guilty of failing to prevent bribery will be subject to an unlimited fine. Direc-tors and senior executives will also be personally liable if it is found that they were directlyassociated with an offence committed by their company. Where a director is convicted ofbribery, they may also be disqualified from holding a director position for up to 15 years.Companies may also find themselves debarred from EU and US procurement lists.The defence for a company is being able to demonstrate that adequate procedures are inplace to prevent bribery. LexisNexis® Bribery Act 2010
  4. 4. Geographic reach of the Bribery Act 2010 The geographic reach of the Bribery Act 2010 has serious implications for companies. The corporate offence of failing to prevent bribery is applicable across the globe to any UK regis- tered company or equivalent foreign company that has business operations within the UK. This means that a company may be found guilty of an offence even if the offence was com- mitted by an employee, foreign subsidiary, joint venture partner, agent or other third-party intermediary acting on the company’s behalf overseas.The business impact of non-complianceThe business impact of non-compliance often does not stop when the fine has been paid:Immediate impact Further actions• Impact on share price of negative publicity • Systems and controls require review Association with bribery and corruption can send share price Rewriting policies and enacting companywide staff training plummeting • Procedures for working with third-parties need to be re-• Company image is one of an organisation exposed to un- viewed ethical business practice Implementing effective due diligence, ongoing monitoring Public relations / corporate communications expenditure and audit controls required to fix broken reputations • Organisation is subject to further scrutiny of consultants,• Impact on sales and business development regulators and enforcement agencies Customers and business partners do not want to be associ- Stigma and costs of facilitating additional internal investiga- ated with tarnished brands tions and audits What does this mean for UK companies? Under the new offence of failure to prevent bribery, the defence for companies is to imple- ment ‘adequate procedures’. The Ministry of Justice is expected to publish guidance in June or July covering suggested procedures that companies can consider to prevent bribery. However, this guidance is likely to be broad ranging and unlikely to reflect the different degrees of risk faced by companies large and small and the changing demands of the specific industry sectors in which they operate. Prior to the publication of government guidance, the GC100 Group of senior legal officers from selected FTSE 100 companies issued the following useful guidance which companies may want to consider: LexisNexis® Bribery Act 2010
  5. 5. Check your company’s anti-corruption procedures Board responsibility for the anti-corruptionprogramme organisation should carry out due diligence on the country in The board of directors should take responsibility for the which the business is to be conducted, on its potential busi- effective implementation of the company’s anti-corruption ness partners, agents used and on the proposed project or programme. The board should take steps to ensure that business transaction in order to identify as far as reasonably senior management is aware of its policy in respect of corrup- possible the risk of corruption. tion, and accepts the programme. The Chief Executive should  Anti-corruption contract terms make a clear statement about the expected culture and the Consideration should be given to the contracts which are consequences of breaching these ideals. entered into between the company and its business partners Compliance function to contain anti-corruption contract terms, and whether or A senior officer should be made responsible for oversight of not they should provide express contractual obligations and the anti-corruption programme. They should be provided penalties in relation to corruption. Particular care should be with proper authority to implement and monitor all pro- taken when agents are being used. gramme activities.  Decision-making process Anti-corruption code An organisation should formalise its decision-making proc- Commercial organisations should have a clear and unam- esses, so that where a greater risk of corruption is perceived biguous code of conduct which includes an anticorruption to exist, the decision is taken by a suitably senior individual element, should publicise this code adequately internally, and within the organisation. should publish the code on its website.  Financial controls Risk management An organisation should ensure that it puts in place financial Procedures should be established to assess the likely risks of controls to minimise the risk of the company committing a cor- corruption arising in an organisation’s business. rupt act against another individual or organisation (e.g. employ- Employment procedures ees, clients, business partners, sub-contractors or suppliers), Whilst not appropriate for all organisations, wherever possible: or of any corrupt act being committed against the company by a) employees should be vetted before they are employed another individual or organisation. This can be done through an to ascertain as far as is reasonable that they are the type of organisation’s internal audit function, if one exists. person who is likely to comply with the company’s ethical  Commercial controls policies; An organisation should ensure that its commercial controls b) employment contracts should include express contractual minimise the risk of the company committing a corrupt act obligations and penalties in relation to corruption; against another individual or organisation (e.g. employees, c) disciplinary procedures should be in place which, where clients, business partners, sub-contractors or suppliers), or appropriate, entitle the company to take suitable disciplinary of any corrupt act being committed against the company by action against an employee who commits a corrupt act. another individual or organisation. Gifts and hospitality policy  Supply chain management A commercial organisation should develop and implement Wherever possible, an organisation should use procurement a gifts and hospitality policy whereby it provides guidance to and contract management procedures which minimise the employees on its policies in relation to the giving and receiv- opportunity for corruption by sub-contractors and suppliers ing of gifts and entertainment, and puts in place measures to against the company. monitor this activity.  Reporting and investigation procedures Training An organisation should develop and implement procedures It is important for commercial organisations to ensure that (“whistleblowing”) for reporting corruption which enable em- their codes of conduct and other policies are properly em- ployees to report corruption in a safe and confidential manner bedded throughout their businesses. Anti-corruption training to a responsible senior officer of the company. Similarly, should therefore be provided, with reminders on a regular organisations should ensure that all allegations of corruption basis, to all relevant employees to make them aware of the are properly investigated by properly qualified individuals, and, types of corruption, the risks of engaging in corrupt activity, where appropriate, the results of those investigations are re- the organisation’s anti-corruption code, and how they may ported back to the individual who made the original complaint. report corruption. Due diligence Source: GC100: Guidance for Assessing Whether Adequate Pro- Before entering into any business relationship or project, the cedures Are in Place to Combat Bribery and Corruption LexisNexis® Bribery Act 2010
  6. 6. How to spot bribery and corruption? Bribery and corruption adopts many guises and often companies are unaware that common business practices within a firm’s day to day operations may expose them to the risks of be- coming a victim of bribery and corruption. Worse still, are those companies who may be una- ware that they operate within a business culture that may be perceived to promote bribery and corruption. All of these factors put a firm at risk of penalties under the Bribery Act 2010. The Serious Fraud Office has issued a useful set of corruption indicators which firms should consider as part of their approach to identifying and tackling the risks of bribery and corruption.Corruption IndicatorsThis list is not exhaustive and the ingenuity of those involved in corruption knows no bounds! You should beware of:• Abnormal cash payments • Missing documents or records regarding meetings or deci-• Abnormally high commission percentage being paid to sions a particular agency. This may be split into 2 accounts for • Payments being made through 3rd party country, i.e. goods same agent often in different jurisdictions or services supplied to country A but payment is being• Abusing decision process or delegated powers in specific made, usually to shell company in country B cases • Pressure exerted for payments to be made urgently or• Agreeing contracts not favourable to the organisation ahead of schedule either with terms or time period • Private meetings with public contractors or companies• Avoidance of independent checks on tendering or con- hoping to tender for contracts tracting processes • Raising barriers around specific roles or departments which• Bypassing normal tendering / contractors procedure are key in the tendering / contracting process• Company procedures or guidelines not being followed • Unexplained preference for certain contractors during• Individual never takes time off even if ill, or holidays, or tendering period insists on dealing with specific contractors him/herself • Unusually smooth process of cases where individual does• Invoices being agreed in excess of contract without reason- not have the expected level of knowledge or expertise able cause • The payment of, or making funds available for high value• Lavish gifts being received expenses or school fees etc on behalf of others• Making unexpected or illogical decisions accepting projects or contracts Source: Serious Fraud Office Summary The Bribery Act 2010 requires companies to prevent bribery in their organisation, including intermediaries and other third party agents used by companies overseas. The defence within this part of the Act is for companies to have in place “adequate procedures” to mitigate the risks of bribery within their business. Guidance indicates that implementing effective systems and controls for conduct- ing third-party due diligence and monitoring helps your business to comply with the requirements of the Bribery Act 2010. The LexisNexis third-party due diligence solution provides comprehensive informa- tion to enable you to conduct the checks that can identify corrupt behaviour. LexisNexis® Bribery Act 2010
  7. 7. Origins of the Bribery Act 2010 The Bribery Act 2010 is the outcome of a lengthy legislative process covering a series of initiatives to tackle bribery and corruption within the UK and involving the participation of leading international bodies: the Organisation for Economic Co-operation and Development (OECD) and Transparency International.December 1997 March 2007UK signs the OECD Anti-Bribery Convention, committing all Following strong criticism by the OECD Working Group on Brib-parties to criminalise the payment of bribes to foreign public ery, the Government asks the Law Commission to undertake aofficials. The Government claims that existing UK laws were further review and make proposals for a new lawcompliant with the Convention; but has consistently failed eachofficial review of compliance by the OECD peer review process October 2008 OECD Working Group on Bribery issues a report that was1998 strongly critical of the UK’s continued failure to adopt modernLaw Commission submits its first review on the law of corruption, anti-bribery legislation that would make it fully compliant withrecommending that existing law is out of date, confusing and re- the OECD Conventionquired wholesale reform and replacement with a new Bill, whichit annexes to its report 20 November 2008 Law Commission’s proposals, including a new draft Bribery Bill,June 2000 are publishedJack Straw MP, as Home Secretary, promises to introduce a lawto criminalise foreign bribery in order to comply with the 1997 25 March 2009OECD Convention Ministry of Justice publishes a draft Bribery Bill for joint scrutinyNovember 2001 28 July 2009New section added to the Anti-Terrorism, Crime and Security Joint Committee of Parliament takes extensive evidence on theAct whereby existing law on bribery is expressly extended to draft Bill and publishes its report on 28 July 2009foreign public officials 19 November 20092003 Government’s revised Bribery Bill is introduced in the House ofGovernment introduces an anti-corruption Bill. This was strongly Lords by Lord Bach; and on 20 November 2009, the Govern-criticised by the Joint Parliamentary Committee that scrutinized ment publishes its response to the Joint Committee’s reportthe Bill. The Government rejects the Committee’s recommenda-tions; but no further action is taken on the Bill February 2010 The Bribery Bill passes the House of Lords on 8 February and has2005 its First Reading (no debate) in the House of Commons onHome Office embarks on a further public consultation on cor- 9 Februaryruption law and only publishes its response in 2007 8 April 20102006 The Bill receives Royal AssentA private members bill drafted by Transparency International-UK is introduced and passed in the House of Lords. This was todemonstrate that it was possible to draft a simple but effectiveanti-corruption Bill Source: Transparency International LexisNexis® Bribery Act 2010
  8. 8. The need for comprehensive risk and compliance tools is clear. But manual processes and disparate policies open security gaps that leave organizations exposed. In response to client needs, LexisNexis has assembled Integrity Solutions, an integrated compliance management platform that gives enterprises greater control over their ethical responsibilities, their regula- tory requirements and their overall reputations. LexisNexis Integrity Solutions includes: • ID Verification • Lexis Diligence • Company Dossier • Bridger Insight • Risk Monitor • eReputation Services About LexisNexis® For more than 30 years, the LexisNexis group of Reed Elsevier has provided online informa- tion news services covering media, legal and business information. Active in more than 60 countries on six continents, LexisNexis draws upon more than 35,000 renowned sources worldwide to deliver information targeted to user workflows for job-specific and enterprise- wide needs. Its Integrity Solutions serve global investment banks, top accounting and legal firms, and leading multinational companies seeking reliable, automated and cost-effective means for fulfilling screening, security and compliance responsibilities. LexisNexis UK, London T +44 (0)20 7400 29 84 E risk@lexisnexis.co.uk W www.lexisnexis.co.uk/risk LexisNexis Benelux, Amsterdam T +31 (0)20 485 34 56 E servicedesk@lexisnexis.nl W www.lexisnexis.nlLexisNexis and the Knowledge Burst logo are registered trademarks of Reed Elsevier Properties Inc., used under license, © 2011 LexisNexis, a division of ReedElsevier Inc. All rights reserved.

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