Bribery Act will not target ‘bona fide’ practices

Business managers have been urged to be more careful in scrutinising job candidates and cautious of agreeing to hospitality packages in preparation for the introduction of the Bribery Act.

The warning from lawyers who represent small and medium-sized enterprises (SMEs) follows the release of guidance to the Act, which will come into effect on 1 July. After a two-month delay in announcing the guidelines, Justice Secretary Kenneth Clarke has attempted to reassure businesses, which raised concerns about the breadth of the laws, that legitimate business practices will not be targeted.

As part of the Bribery Act 2011 legislation, a corporate offence will be introduced that makes it a crime if a business fails to prevent bribery by staff members; however, a business can avoid conviction if it can show that it has adequate procedures in place to prevent bribery.

Also, it will make it a criminal offence to give, promise or offer a bribe and to request, agree to receive or accept a bribe either at home or abroad. The measures cover bribery of a foreign public official. The maximum penalty for bribery will increase from seven to ten years’ imprisonment with an unlimited fine.

Many business owners raised objections to the legislation when it was passed by Parliament in April last year, fearing a host of corporate hospitality practices, such as client dinners and sporting event ticket giveaways would be made illegal. However, Clarke says ‘bona fide hospitality’ will not fall under the laws.

Despite the assurances, law firms have warned businesses, particularly smaller sized companies, that they may inadvertently fall foul of the Bribery Act legislation if they don’t scrutinise current practises.

Simon Streat, SME managing director for Experian UK and Ireland, comments, ‘Small firms certainly need to gain a basic level of understanding about the Bribery Act, as it carries the threat of criminal conviction for directors that fail to carry out sufficient background checks on employees found guilty of fraud.

‘While a criminal conviction is very serious, what many small firms fail to realise is that it can also impact on their business’ credit scores and affect their ability to secure new business or finance. It is, therefore, really important that directors ensure they have robust internal procedures when it comes to recruitment.’

Richard Beavan, a partner in the corporate team at Boodle Hatfield, adds, ‘The new guidance should go quite some way to dispel this myth that corporate entertaining would no longer be allowed. The guidance is quite clear saying that as ‘’a general rule hospitality or promotional expenditure which is proportionate and reasonable given the sort of business you do is very unlikely to engage the Act’’.

‘The giving of tickets to sporting events, taking clients to dinner, offering gifts, or paying travelling expenses are all unlikely to fall foul of the Act. Businesses regularly engaged in this corporate entertaining should have nothing to fear.’

Beavan explains the guidance has offered a ‘useful clarification’ on payments made to speed up processes, particularly overseas, and the defence procedures if businesses face prosecution.

He continues, ‘Isolated incidents of paying officials small amounts of money to do something routine, such as stamping a passport, are unlikely to result in a prosecution. The guidance lists some practical steps SMEs can take to assess the bribery risks of, for example, expanding its sales into various emerging markets.

‘Most SME businesses will have nothing to worry about from this piece of legislation. The Act is really geared at larger businesses and those who consistently breach the rules.’

See also: The global bribery crackdown

Nick Britton

Nick Britton

Nick was the Managing Editor for when it was owned by Vitesse Media, before moving on to become Head of Investment Group and Editor at What Investment and thence to Head of Intermediary...

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