The Bulletin’s Guide to Bribery and Corruption

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This week, Cheryl Dyer-Ballard examines the issue of bribery and corruption in the workplace.  What constitutes corruption or a corrupt act, or can a seemingly innocent act be twisted into something more sinister?

When does a gift become a bribe, or  a simple lunch become a very awkward encounter with HR and possible dismissal? Cheryl investigates…

Introduction

An anti-bribery policy could be the best way to help you protect your business if there is a risk of your staff being offered, promised, given, requested, agreed, to receive or accept bribes. Under the Bribery Act 2010, this form of practice would be considered illegal.

If you have someone who works for you who may be potentially a risk, no matter how small that risk could be, you should have an anti-bribery policy put in place.

So What Is A Definition Of A Bribe?

Under the Bribery Act 2010, a bribe is a financial or other form of advantage that is offered or requested with the:

• Intention of inducing or rewarding the improper performance of a function or activity; or,
• Knowledge or belief that accepting such a reward would constitute the improper performance of such a function or activity.

A relevant function or activity includes public, state or business activities, or any activity performed in the course of a person’s employment, or on behalf of another company or individual, where the person performing that activity is expected to perform it in good faith with impartiality, or in accordance with a position of trust.

A criminal offence will be committed under the Bribery Act 2010 if:

• An employee or associated person acting for, or on behalf of, the company offers, promises, gives, requests, received or agrees to receive bribes; or,
• An employee or associated person acting for, or on behalf of, the company offers, promises or gives a bribe to a foreign public official with the intention of influencing that official in the performance of his/her duties (where local law does not permit or require such influence); and,
• The company does not have the defence that it has adequate procedures in place to prevent bribery by its employees or associated persons.

What should your policy include?

The anti-bribery policy that your business puts in place should be appropriate to the level of risk that your business could face, and should include details of:

• Your approach to reducing and controlling the risks of bribery,
• The rules that your business has regarding the receiving of gifts, hospitality and donations,
• Clear guidelines need to be put in place with regards to conducting your terms of business and the negotiations of contracts, and,
• Guidance notes with relation to rules and regulations on avoiding or stopping conflicts of interest.

Policy Guidelines

Employees, employers and associated persons are prohibited from offering, promising, giving, soliciting or accepting any bribe. The bribe might be cash, or a gift or other inducement to or from, any person or company, regardless of whether the employee, employer or associated person is situated in the UK or overseas. The bribe may also be made to ensure that a person or company does not perform their duties or functions (for example, by not acting in accordance with their positions of trust) to gain commercial, contractual or regulatory advantage for the company in either obtaining or maintaining, company business, or to gain any personal advantage, financial or otherwise, for the individual or anyone connected with that individual.

This prohibition also applies to indirect contributions, payments or gifts made in any manner as an inducement or reward for improper performance. For example, contributions received through the use of consultants, contractors, or sub-contractors, agents or sub-agents, sponsors or sub-sponsors, joint-venture partners, advisors, customers, suppliers or other third parties.

Maintaining Company Records To Prevent Bribery

Where applicable, any associated persons within businesses are required to take care to ensure that all company records are accurately maintained in relation to any contracts or business activities, including financial invoices and all payment transactions with clients, suppliers and public officials.

Extra attention should be undertaken by employers, employees and associated persons before entering any contract, arrangement or relationship with a potential supplier of services, agency representative or consultant.

It is the employers, employees and associated persons responsibility to ensure that accurate, details and up-to-date records of all corporate hospitality, entertainment or gifts accepted or offered are kept.

Working overseas

If you have persons conducting business on behalf of the company outside of the UK, they may be at greater risk of being exposed to bribery or unethical business conduct. It is therefore important that when conducting business abroad, any company representative has a duty to your company to be extra vigilant.

Employers, employees or associated persons are required to report any suspicions of bribery to their superiors, whether they be conducting business abroad or within the UK. Should any suspicious business practice arise, it should be reported immediately. These would include:  

• Close family, personal or business ties that a prospective agent, representative or joint-venture partner may have with government or corporate officials, directors or employees,
• Requests for cash payments,
• Requests for unusual payment arrangements, for example via a third party,
• Requests for imbursements of unsubstantiated or unusual expenses; or,
• A lack of standard invoices and proper financial practices.

Basically, the rules and regulations state, “If in doubt report it!”

Facilitation Payments

Payments made to government officials for speeding up routine procedures are classed as “Facilitation Payments”.  However, these are more common overseas. Facilitation payments are distinct from official, publicly available fast-tracked processes. Facilitation payments, or offers of such payments, can constitute a criminal offence by both the individual concerned and the company under the Bribery Act of 2010, even when such payments are made or requested overseas.

Where a public official has requested a payment, further details of the purpose and nature of the payment should be required in writing. If the public official refuses this, he should be immediately reported to a senior member of staff within your company or association.

Should the public official agree, and provides written details then it is the discretion of the employer or associate to consider the nature of the payment, and local legal advice could be sought before a decision is finally made.

If it is concluded that the payment is a legitimate fee, for example part of a genuine fast-track process, or is permitted locally, the company can then authorise the payment.

Should management consider that a request for a facilitation payment has been made, the payment will be refused, and it is then the company’s responsibility to report it to the local UK Embassy. Once this has happened, a full investigation will take place, before any decision is made as to whether the matter is referred for prosecution.

When is it right to receive gifts?

Some companies permit corporate entertainment, gifts, hospitality and promotional expenditure for the following reasons:

• For the purpose of establishing or maintaining good business relationships,
• To improve the image and reputation of the company, or,
• To present the companies goods / services effectively,

And the proviso here is that it is:

• Arranged in good faith,
• Not offered, promised or accepted to secure an advantage for the Company or influence any of the company’s employees or associates.

It is a general rule that any requests for any proposed hospitality or promotional expenditure are made to superiors with the following details outlined:

• The objective of the proposed client entertainment or expenditure,
• The identity of those who will be attending,
• The organisation that they represent and,
• Details and rationale of the proposed activity.

Only if the proposals demonstrate a clear business objective and are appropriate for the nature of the business relationship, proposals are usually agreed. If a company believes that a conflict of interest may arise, or where it could be perceived that undue influence or a business benefit was being sought (for example prior to a tendering exercise) then approval may not be met.

As a general rule, small tokens of appreciation such as flowers, bottles of wine and chocolates may be retained at the discretion of the management, as usually this is follows good company procedures and customers/clients are offering their thanks rather than having ulterior motives.

Charitable and Political Donations

Considerations can be made for charitable and political donations as this can be a good precedent to the wider community. Many companies have connections with local or national charities.

Reporting Suspected Bribery

Companies depend greatly on the honesty and integrity of their employees or any associated persons to ensure that the highest standards of ethical conduct are maintained in all its business dealings. It is the employer’s responsibility to ensure that all employees and associates receive the correct amount of training, and to be vigilant in preventing, detecting and reporting bribery.

If an employee or associated person has witnessed any of the following examples then it should be reported when they suspect that:

• Any suspected or actual attempts at bribery is or has been conducted, 
• Concerns that other employees or associated persons may be being bribed; or,
• Concerns that other employees or associated persons may be bribing third parties, such as clients or government officials.

It is the responsibility of employers to ensure that employees or associated persons are supported during any investigation, especially as they were acting in good faith for the company in the first instance. Members of staff should be made aware that any detrimental effect following an initial report will be treated as a disciplinary offence.

It should be re-iterated to employees that an instruction to cover up any wrong doing within a company is a disciplinary offence alone. Employees or associated persons should not be forced to remain silent if they feel have witnessed any wrong doing.

Summary

It is in every company’s interest to ensure that all staff read and fully understand the terminologies throughout your policy. The policy should be monitored and reviewed regularly to ensure that practices are being adhered to always, and that no loopholes can be found.

Further reading

Legislation.gov.uk – The Bribery Act of 2010

thebriberyact.com – What is The Bribery Act?

Norton Rose Fulbright – When an associate can land you in hot water

The Bulletin’s guide to Brexit for small businesses

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