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Part 2: The Guidance

Part 2: The Guidance

JUNE 4, 2012

If you are having trouble deciphering the UK Bribery Act, you have come to the right place! To try and clarify things for us mere mortals the UK Ministry of justice (loosely the UK equivalent of the DOJ) found it necessary to provide us all with “Guidance” to help all understand and implement the Act. I will do my best to break down their advice for you.

The Guidance contains six core Principles (“Principles”) that the Ministry of justice considers commercial organizations should assess when putting in place their own “adequate procedures” to prevent bribery being committed by a person associated with the organization …however, there is no “one size fits all” approach.

The Six Principles

1.  Proportionate Procedures
A commercial organization’s procedures to prevent bribery by persons associated with it are proportionate to the bribery risks it faces and to the nature, scale and complexity of the commercial organization’s activities. They are also clear, practical, accessible, effectively implemented and enforced

2. Top level commitment
The top-level management of a commercial organization (be it a board of directors, the owners or any other equivalent body or person) are committed to preventing bribery by persons associated with it. They foster a culture within the organization in which bribery is never acceptable

3. Risk Assessment
The commercial organization assesses the nature and extent of its exposure to potentiaI external and internal risks of bribery on its behalf by persons associated with it. The assessment  is periodic, informed and documented.

4. Due Diligence
The commercial organization applies due diligence procedures, taking a proportionate and risk based approach, in respect of persons who perform or wiII perform services for or on behalf of the organization, m order to mitigate identified bribery risks.

5. Communications
The commercial organization seeks to ensure that its bribery prevention policies and procedures are embedded and understood throughout the organization through internal and external communication, including training that is proportionate to the risks it faces.

6. Monitoring & Review
The commercial organization monitors and reviews procedures designed to prevent bribery by persons associated with it and makes improvements where necessary

The Where, Who and What can we do?

The Guidance also answers where, who and what can we do. The following three elements of the Act will I am sure leave food for thought for all U.S., and for that matter global, businesses:

1.  Extraterritorial Reach
2.  Associated Persons
3.  Corporate Hospitality

Let’s take a closer look …

1. Extraterritorial  Reach

The Act impacts any commercial organization that carries on business or part of a business in the UK and where it or a person associated with the organization commits a bribery offence anywhere In the world.

Thus the Act has significant extraterritorial reach. However, the Guidance clarifies the applicability- the organization needs to have a “demonstrable business presence in the UK.” Hence, a non-UK organization will not be considered to be within UK jurisdiction simply because it has a UK subsidiary since “a subsidiary may act independently of its parent:

2. Associated Persons

The definition of an “associated person” is someone whom “performs services” for a business. This clearly is open to vast interpretation. Once again the Guidance adds clarification stating that an organization is only liable for the actions of its associated person if the bribe was intended (by the associated person) to benefit the organization directly.

3. Corporate Hospitality

The simple, straightforward wording of the Act raised concerns that if simply read it inferred all forms of corporate hospitality and entertaining would be viewed as bribery, and would therefore be an offence under the Act. The Guidance again offers clarity and states that in the spirit of the Act, the Act “does not seek to penalize …hospitality or promotional expenditure which is reasonable, proportionate and made in good faith”.

Thus it appears that organizations can still entertain clients and contacts with dinners or entertainment at sporting events, BUT only where this is normal and proportionate for the relevant business sector they are operating in.

 

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