There is no doubt that this will be one of the biggest global investigations ever seen and the investigation and case is merely at the beginning. Over the coming days, weeks or months, details of the indictment (charges) brought will be revealed. Initially, Federal Officials will be seeking to bring those suspected of the offences to the United States using extradition rules.
The investigation has been brought by the United States Legal Departments’ Prosecution Teams. It highlights the importance of complying fully with corporate regulatory responsibilities when any business or individual engages in commercial practices.
In England and Wales, the law on procedure surrounding financial conduct is extensive and prosecutions are routinely brought by the Crown Prosecution Service, Financial Conduct Authority, Her Majesty’s Revenue and Customs and others to enforce any criminality involving financial crime. One area of governing legislation is the Bribery Act which came into force on the 1st July 2011.
The Act makes it an offence for a United Kingdom (UK) citizen or resident to pay or receive a bribe, either directly or indirectly, and provides for transactions that take place in the UK and abroad in both the public and private sectors. It is also illegal for companies or partnerships to have had a bribe paid on their behalf or has been received and includes all agents and other persons providing services on behalf of the corporate entity.
The three main offences that the act creates are:
- Bribing a person to induce or reward them to perform a relevant function improperly
- Requesting, accepting or receiving a bribe as a reward for performing a relevant function improperly
- Using a bribe to influence a foreign official to gain a business advantage
A person would be guilty of an offence if they offer, promise or give an advantage to another person intending that the person (or someone else on their behalf) is rewarded for, or induced to, perform a relevant function improperly. It is important to know that there must be an intention to induce. A person would also be guilty of an offence where they offered or promised to give an advantage to a person knowing or believing that acceptance would in itself amount to improper performance of a relevant function. The relevant function is any function of a public nature, any activity connected to the business, trade or profession, any activity carried out in the course of employment, any activity carried out on behalf of the body or of persons (corporate or unincorporated), any relevant function is one that is performed with one or more of the following expectations:
- It will be performed in good faith
- It will be performed with impartiality
- That by virtue of performing the activity the person doing so is in a position of trust
The function does not have to be connected to the UK or be performed in the UK for it to be relevant. It is an offence to attempt to influence a person acting in the capacity as a foreign official by offering, promising or giving financial or other reward to gain or retain a business advantage.
It is important for any corporation to analyse areas of risk, to ensure that there is sufficient oversight of staff in relation to anti-corruption issues and where necessary to include contract terms making it clear that checks will be made on individuals and that offering or accepting bribes could lead to termination of contracts.
Having an anti-bribery programme within your business is a matter to always consider and for a programme of transparency to be clear.
One area that can cause lots of confusion is that concerning gifts and entertainment. There can be risks around gifts, entertainment and expenses in relation to infringing the Bribery Act. It is understood that gifts and hospitality are often part of the business culture. Care must always be given as to whether those gifts or hospitality might influence or be perceived to influence a business decision. Adequate systems must be in place. It is not sufficient as a Director to say they didn’t know what another was doing.
For more information go to the Bribery Act 2010 at this link (www.legislation.gov.uk/ukpga/2010/23/contents) or speak to a member of the Woodfines Regulatory Team if you have any questions or wish to discuss a anti-bribery/corruption policy.
*******
Need advice?
To discuss this or for further information, please get in touch with Tim Ridyard on 01223 411421 (tridyard@woodfines.co.uk).
______________________________________