The new Bribery Act 2010 is expected to come into force in the autumn of this year. The act clarifies and toughens the law with regard to what is considered bribery either in the UK or by a UK citizen or resident acting abroad. It is an offence to offer a bribe or to accept one and there is also a new corporate offence of failing to prevent bribery.
Corporate hospitality
For the first time corporate hospitality is specifically mentioned as a possible offence in the act. Whilst it is recognised that some level of corporate hospitality is an accepted business practice, excessive levels of entertainment are seen as effectively being bribes.
Lord Tunnicliffe wrote the following guidance for the House of Lords when they were debating the issue: ‘We recognise that corporate hospitality is an accepted part of modern business practice and the
Government is not seeking to penalise expenditure on corporate hospitality for legitimate commercial purposes. But lavish corporate hospitality can also be used as a bribe to secure advantages and the offences in the Bill must therefore be capable of penalising those who use it for such purposes.’
Incentive schemes
Although not specifically mentioned in the act, incentive schemes could also potentially fall foul of the new law, as they offer an advantage to employees of the firm being incentivised to choose or recommend one firm's products over another's for personal gain and could breach the "reasonable expectation" of a customer of that firm that the employee would recommend the best product for their needs rather than the one that has the best incentive scheme.
Penalties
The penalties for breaking the new law are up to 10 years in gaol and/or an unlimited fine for individuals, including corporate officers and unlimited fines for companies.
Establish corporate guidelines
It is a good idea for all companies to put in place some corporate guidelines on bribery and corruption. The law allows the defence that a company had adequate procedures to prevent bribery and corruption but that a rogue employee breached them. Precisely what is meant by "adequate" is still to be clarified but the government did state that "it was not [their] intention to drag well run companies before the courts for every infraction". A couple of good summaries of the situation are available from QEB Hollis Whiteman Barristers and PriceWaterhouseCoopers.
