Bribery Act 2010 Guidance

8/13/2019 Bribery Act 2010 Guidance

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THE

BRIBERYACT2010

Guidanceabout procedures which relevant commercialorganisations can put into place to prevent

persons associated with them from bribing(section 9 of the Bribery Act 2010)


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THE

BRIBERYACT2010

Guidanceabout procedures which relevant commercialorganisations can put into place to prevent

persons associated with them from bribing(section 9 of the Bribery Act 2010)


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The Bribery Act 2010 Guidance

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Foreword

Bribery blights lives. Its immediate victims include firms thatlose out unfairly. The wider victims are government and society,undermined by a weakened rule of law and damaged social andeconomic development. At stake is the principle of free and faircompetition, which stands diminished by each bribe offered oraccepted.

Tackling this scourge is a priority for anyonewho cares about the future of business, thedeveloping world or international trade. Thatis why the entry into force of the BriberyAct on 1 July 2011 is an important stepforward for both the UK and UK plc. In linewith the Acts statutory requirements, I ampublishing this guidance to help organisations

understand the legislation and deal with therisks of bribery. My aim is that it offers clarityon how the law will operate.

Readers of this document will be awarethat the Act creates offences of offering orreceiving bribes, bribery of foreign publicofficials and of failure to prevent a bribebeing paid on an organisations behalf.These are certainly tough rules. But readersshould understand too that they are directedat making life difficult for the mavericksresponsible for corruption, not undulyburdening the vast majority of decent,law-abiding firms.

I have listened carefully to businessrepresentatives to ensure the Act isimplemented in a workable way especiallyfor small firms that have limited resources.And, as I hope this guidance shows,combating the risks of bribery is largelyabout common sense, not burdensomeprocedures. The core principle it sets out

is proportionality. It also offers case studyexamples that help illuminate the applicationof the Act. Rest assured no one wants tostop firms getting to know their clients bytaking them to events like Wimbledon orthe Grand Prix. Separately, we are publishingnon-statutory quick start guidance.I encourage small businesses to turn to thisfor a concise introduction to how they canmeet the requirements of the law.

Ultimately, the Bribery Act matters for Britainbecause our existing legislation is out of date.In updating our rules, I say to our internationalpartners that the UK wants to play a leading


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role in stamping out corruption and supportingtrade-led international development. ButI would argue too that the Act is directlybeneficial for business. Thats because itcreates clarity and a level playing field,helping to align trading nations around decentstandards. It also establishes a statutorydefence: organisations which have adequate

procedures in place to prevent bribery are ina stronger position if isolated incidents haveoccurred in spite of their efforts.

Some have asked whether business canafford this legislation especially at a time ofeconomic recovery. But the choice is a falseone. We dont have to decide between tacklingcorruption and supporting growth. Addressingbribery is good for business because it createsthe conditions for free markets to flourish.

Everyone agrees bribery is wrong and thatrules need reform. In implementing this Act,we are striking a blow for the rule of law and

growth of trade. I commend this guidanceto you as a helping hand in doing businesscompetitively and fairly.

Kenneth ClarkeSecretary of State for JusticeMarch 2011


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Contents

Introduction 6

Government policy and Section 7 of the Bribery Act 8

Section 1 Offences of bribing another person 10

Section 6 Bribery of a foreign official 11

Section 7 Failure of commercial organisations to prevent bribery 15

The six principles 20

Appendix A: Bribery Act 2010 case studies 32


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Introduction

1 The Bribery Act 2010 received RoyalAssent on 8 April 2010. A full copy ofthe Act and its Explanatory Notes canbe accessed at: www.opsi.gov.uk/acts/acts2010/ukpga_20100023_en_1

The Act creates a new offence undersection 7 which can be committed bycommercial organisations1which fail to

prevent persons associated with themfrom committing bribery on their behalf.It is a full defence for an organisationto prove that despite a particular caseof bribery it nevertheless had adequateprocedures in place to prevent personsassociated with it from bribing. Section 9of the Act requires the Secretary of Stateto publish guidance about procedureswhich commercial organisations can put in

place to prevent persons associated withthem from bribing. This document setsout that guidance.

2 The Act extends to England & Wales,Scotland and Northern Ireland. Thisguidance is for use in all parts of theUnited Kingdom. In accordance withsection 9(3) of the Act, the ScottishMinisters have been consulted regardingthe content of this guidance. TheNorthern Ireland Assembly has also beenconsulted.

3 This guidance explains the policybehind section 7 and is intended to helpcommercial organisations of all sizesand sectors understand what sorts ofprocedures they can put in place to preventbribery as mentioned in section 7(1).

4 The guidance is designed to be of general

application and is formulated aroundsix guiding principles, each followed bycommentary and examples. The guidanceis not prescriptive and is not a one-size-fits-all document. The question ofwhether an organisation had adequateprocedures in place to prevent bribery inthe context of a particular prosecution isa matter that can only be resolved by thecourts taking into account the particular

facts and circumstances of the case. Theonus will remain on the organisation, inany case where it seeks to rely on thedefence, to prove that it had adequateprocedures in place to prevent bribery.However, departures from the suggestedprocedures contained within theguidance will not of itself give rise to apresumption that an organisation doesnot have adequate procedures.

5 If your organisation is small or mediumsized the application of the principlesis likely to suggest procedures that aredifferent from those that may be right fora large multinational organisation. Theguidance suggests certain procedures, butthey may not all be applicable to yourcircumstances. Sometimes, you may havealternatives in place that are also adequate.

1 See paragraph 35 below on the definition of the phrase commercial organisation.


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6 As the principles make clear commercialorganisations should adopt a risk-basedapproach to managing bribery risks.Procedures should be proportionate tothe risks faced by an organisation. Nopolicies or procedures are capable ofdetecting and preventing all bribery.A risk-based approach will, however,

serve to focus the effort where it isneeded and will have most impact. Arisk-based approach recognises that thebribery threat to organisations variesacross jurisdictions, business sectors,business partners and transactions.

7 The language used in this guidancereflects its non-prescriptive nature.The six principles are intended to be of

general application and are thereforeexpressed in neutral but affirmativelanguage. The commentary followingeach of the principles is expressed morebroadly.

8 All terms used in this guidance havethe same meaning as in the Bribery Act2010. Any examples of particular typesof conduct are provided for illustrativepurposes only and do not constituteexhaustive lists of relevant conduct.


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Government policy andSection 7 of the Bribery Act

9 Bribery undermines democracy andthe rule of law and poses very seriousthreats to sustained economic progress indeveloping and emerging economies andto the proper operation of free marketsmore generally. The Bribery Act 2010is intended to respond to these threatsand to the extremely broad range of

ways that bribery can be committed. Itdoes this by providing robust offences,enhanced sentencing powers for thecourts (raising the maximum sentence forbribery committed by an individual from7 to 10 years imprisonment) and widejurisdictional powers (see paragraphs 15and 16 on page 9).

10 The Act contains two general offences

covering the offering, promising orgiving of a bribe (active bribery) andthe requesting, agreeing to receive oraccepting of a bribe (passive bribery)at sections 1 and 2 respectively. It alsosets out two further offences whichspecifically address commercial bribery.Section 6 of the Act creates an offencerelating to bribery of a foreign publicofficial in order to obtain or retainbusiness or an advantage in the conductof business2, and section 7 creates a newform of corporate liability for failing toprevent bribery on behalf of a commercialorganisation. More detail about thesections 1, 6 and 7 offences is providedunder the separate headings below.

11 The objective of the Act is not to bringthe full force of the criminal law to bearupon well run commercial organisationsthat experience an isolated incident ofbribery on their behalf. So in order toachieve an appropriate balance, section7 provides a full defence. This is inrecognition of the fact that no bribery

prevention regime will be capable ofpreventing bribery at all times. However,the defence is also included in order toencourage commercial organisationsto put procedures in place to preventbribery by persons associated with them.

12 The application of bribery preventionprocedures by commercial organisationsis of significant interest to those

investigating bribery and is relevantif an organisation wishes to report anincident of bribery to the prosecutionauthorities for example to the SeriousFraud Office (SFO) which operatesa policy in England and Wales andNorthern Ireland of co-operation withcommercial organisations that self-referincidents of bribery (see Approach of theSFO to dealing with overseas corruptionon the SFO website). The commercialorganisations willingness to co-operatewith an investigation under the BriberyAct and to make a full disclosure will alsobe taken into account in any decision asto whether it is appropriate to commencecriminal proceedings.

2 Conduct amounting to bribery of a foreign public official could also be charged under section 1 of the Act. It will be forprosecutors to select the most appropriate charge.


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13 In order to be liable under section 7 acommercial organisation must havefailed to prevent conduct that wouldamount to the commission of an offenceunder sections 1 or 6, but it is irrelevantwhether a person has been convicted ofsuch an offence. Where the prosecutioncannot prove beyond reasonable doubt

that a sections 1 or 6 offence has beencommitted the section 7 offence will notbe triggered.

14 The section 7 offence is in addition to,and does not displace, liability whichmight arise under sections 1 or 6 of theAct where the commercial organisationitself commits an offence by virtue of thecommon law identification principle.3

Jurisdiction15 Section 12 of the Act provides that the

courts will have jurisdiction over thesections 1, 24or 6 offences committedin the UK, but they will also havejurisdiction over offences committedoutside the UK where the personcommitting them has a close connection

with the UK by virtue of being a Britishnational or ordinarily resident in the UK, abody incorporated in the UK or a Scottishpartnership.

16 However, as regards section 7, therequirement of a close connectionwith the UK does not apply. Section7(3) makes clear that a commercialorganisation can be liable for conduct

amounting to a section 1 or 6 offenceon the part of a person who is neithera UK national or resident in the UK, nora body incorporated or formed in theUK. In addition, section 12(5) providesthat it does not matter whether theacts or omissions which form part of thesection 7 offence take part in the UK orelsewhere. So, provided the organisationis incorporated or formed in the UK,or that the organisation carries on abusiness or part of a business in theUK (wherever in the world it may beincorporated or formed) then UK courtswill have jurisdiction (see more on this atparagraphs 34 to 36).

3 See section 5 and Schedule 1 to the Interpretation Act 1978 which provides that the word person where used in an Act includes bodiescorporate and unincorporate. Note also the common law identification principle as defined by cases such as Tesco Supermarkets vNattrass [1972] AC 153 which provides that corporate liability arises only where the offence is committed by a natural person who is thedirecting mind or will of the organisation.

4 Although this particular offence is not relevant for the purposes of section 7.


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Section 1:Offences of bribing another person

17 Section 1 makes it an offence for a person(P) to offer, promise or give a financial orother advantage to another person in oneof two cases:

Case 1applies where P intends theadvantage to bring about the improperperformance by another person of

a relevant function or activity or toreward such improper performance.

Case 2applies where P knows orbelieves that the acceptance of theadvantage offered, promised or givenin itself constitutes the improperperformance of a relevant function oractivity.

18 Improper performance is defined at

sections 3, 4 and 5. In summary, thismeans performance which amounts toa breach of an expectation that a personwill act in good faith, impartially, or inaccordance with a position of trust. Theoffence applies to bribery relating to anyfunction of a public nature, connectedwith a business, performed in the courseof a persons employment or performedon behalf of a company or another bodyof persons. Therefore, bribery in both thepublic and private sectors is covered.

19 For the purposes of deciding whether afunction or activity has been performedimproperly the test of what is expectedis a test of what a reasonable person inthe UK would expect in relation to theperformance of that function or activity.Where the performance of the functionor activity is not subject to UK law (for

example, it takes place in a countryoutside UK jurisdiction) then any localcustom or practice must be disregarded unless permitted or required by thewritten law applicable to that particularcountry. Written law means any writtenconstitution, provision made by or underlegislation applicable to the country

concerned or any judicial decisionevidenced in published written sources.

20 By way of illustration, in order to proceedwith a case under section 1 based on anallegation that hospitality was intendedas a bribe, the prosecution would need toshow that the hospitality was intended toinduce conduct that amounts to a breachof an expectation that a person will act in

good faith, impartially, or in accordancewith a position of trust. This would bejudged by what a reasonable personin the UK thought. So, for example, aninvitation to foreign clients to attend aSix Nations match at Twickenham as partof a public relations exercise designedto cement good relations or enhanceknowledge in the organisations field isextremely unlikely to engage section1 as there is unlikely to be evidenceof an intention to induce improperperformance of a relevant function.


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Section 6:Bribery of a foreign public official

21 Section 6 creates a standalone offenceof bribery of a foreign public official. Theoffence is committed where a personoffers, promises or gives a financial orother advantage to a foreign publicofficial with the intention of influencingthe official in the performance of his orher official functions. The person offering,

promising or giving the advantage mustalso intend to obtain or retain business oran advantage in the conduct of businessby doing so. However, the offence is notcommitted where the official is permittedor required by the applicable written lawto be influenced by the advantage.

22 A foreign public official includesofficials, whether elected or appointed,

who hold a legislative, administrative orjudicial position of any kind of a countryor territory outside the UK. It alsoincludes any person who performs publicfunctions in any branch of the national,local or municipal government of sucha country or territory or who exercisesa public function for any public agencyor public enterprise of such a country orterritory, such as professionals workingfor public health agencies and officersexercising public functions in state-owned enterprises. Foreign public officialscan also be an official or agent of a publicinternational organisation, such as theUN or the World Bank.

23 Sections 1 and 6 may capture the sameconduct but will do so in different ways.The policy that founds the offence atsection 6 is the need to prohibit theinfluencing of decision making in the

context of publicly funded businessopportunities by the inducement ofpersonal enrichment of foreign publicofficials or to others at the officialsrequest, assent or acquiescence.Such activity is very likely to involveconduct which amounts to improperperformance of a relevant function

or activity to which section 1 applies,but, unlike section 1, section 6 does notrequire proof of it or an intention toinduce it. This is because the exact natureof the functions of persons regardedas foreign public officials is often verydifficult to ascertain with any accuracy,and the securing of evidence will often bereliant on the co-operation of the stateany such officials serve. To require the

prosecution to rely entirely on section1 would amount to a very significantdeficiency in the ability of the legislationto address this particular mischief. Thatsaid, it is not the Governments intentionto criminalise behaviour where no suchmischief occurs, but merely to formulatethe offence to take account of theevidential difficulties referred to above. Inview of its wide scope, and its role in thenew form of corporate liability at section7, the Government offers the followingfurther explanation of issues arising fromthe formulation of section 6.

Local law24 For the purposes of section 6 prosecutors

will be required to show not only thatan advantage was offered, promisedor given to the official or to anotherperson at the officials request, assent oracquiescence, but that the advantage was


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one that the official was not permittedor required to be influenced by asdetermined by the written law applicableto the foreign official.

25 In seeking tenders for publicly fundedcontracts Governments often permitor require those tendering for the

contract to offer, in addition to theprincipal tender, some kind of additionalinvestment in the local economyor benefit to the local community.Such arrangements could in certaincircumstances amount to a financialor other advantage to a public officialor to another person at the officialsrequest, assent or acquiescence. Where,however, relevant written law permits

or requires the official to be influencedby such arrangements they will falloutside the scope of the offence. So,for example, where local planninglaw permits community investmentor requires a foreign public official tominimise the cost of public procurementadministration through cost sharing withcontractors, a prospective contractorsoffer of free training is very unlikelyto engage section 6. In circumstanceswhere the additional investment wouldamount to an advantage to a foreignpublic official and the local law is silentas to whether the official is permittedor required to be influenced by it,prosecutors will consider the publicinterest in prosecuting. This will providean appropriate backstop in circumstanceswhere the evidence suggests that theoffer of additional investment is alegitimate part of a tender exercise.

Hospitality, promotional, and otherbusiness expenditure26 Bona fide hospitality and promotional, or

other business expenditure which seeksto improve the image of a commercialorganisation, better to present productsand services, or establish cordialrelations, is recognised as an established

and important part of doing businessand it is not the intention of the Actto criminalise such behaviour. TheGovernment does not intend for the Actto prohibit reasonable and proportionatehospitality and promotional or othersimilar business expenditure intendedfor these purposes. It is, however, clearthat hospitality and promotional orother similar business expenditure can be

employed as bribes.

27 In order to amount to a bribe undersection 6 there must be an intention for afinancial or other advantage to influencethe official in his or her official role andthereby secure business or a businessadvantage. In this regard, it may be insome circumstances that hospitality orpromotional expenditure in the formof travel and accommodation costsdoes not even amount to a financial orother advantage to the relevant officialbecause it is a cost that would otherwisebe borne by the relevant foreignGovernment rather than the official himor herself.


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28 Where the prosecution is able toestablish a financial or other advantagehas been offered, promised or given, itmust then show that there is a sufficientconnection between the advantage andthe intention to influence and securebusiness or a business advantage. Wherethe prosecution cannot prove this to

the requisite standard then no offenceunder section 6 will be committed.There may be direct evidence to supportthe existence of this connection andsuch evidence may indeed relate torelatively modest expenditure. Inmany cases, however, the question asto whether such a connection can beestablished will depend on the totalityof the evidence which takes into account

all of the surrounding circumstances.It would include matters such as thetype and level of advantage offered,the manner and form in which theadvantage is provided, and the level ofinfluence the particular foreign publicofficial has over awarding the business.In this circumstantial context, the morelavish the hospitality or the higherthe expenditure in relation to travel,accommodation or other similar businessexpenditure provided to a foreign publicofficial, then, generally, the greater theinference that it is intended to influencethe official to grant business or a businessadvantage in return.

29 The standards or norms applying in aparticular sector may also be relevanthere. However, simply providinghospitality or promotional, or othersimilar business expenditure which iscommensurate with such norms is not,of itself, evidence that no bribe was paidif there is other evidence to the contrary;

particularly if the norms in question areextravagant.

30 Levels of expenditure will not, therefore,be the only consideration in determiningwhether a section 6 offence has beencommitted. But in the absence of anyfurther evidence demonstrating therequired connection, it is unlikely, forexample, that incidental provision of a

routine business courtesy will raise theinference that it was intended to havea direct impact on decision making,particularly where such hospitality iscommensurate with the reasonable andproportionate norms for the particularindustry; e.g. the provision of airport tohotel transfer services to facilitate anon-site visit, or dining and tickets to anevent.


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31 Some further examples might be helpful.The provision by a UK mining companyof reasonable travel and accommodationto allow foreign public officials to visittheir distant mining operations so thatthose officials may be satisfied of the highstandard and safety of the companysinstallations and operating systems

are circumstances that fall outside theintended scope of the offence. Flights andaccommodation to allow foreign publicofficials to meet with senior executivesof a UK commercial organisation in NewYork as a matter of genuine mutualconvenience, and some reasonablehospitality for the individual and his or herpartner, such as fine dining and attendanceat a baseball match are facts that are, in

themselves, unlikely to raise the necessaryinferences. However, if the choice of NewYork as the most convenient venue was indoubt because the organisations seniorexecutives could easily have seen theofficial with all the relevant documentationwhen they had visited the relevant countrythe previous week then the necessaryinference might be raised. Similarly,supplementing information provided toa foreign public official on a commercialorganisations background, track recordand expertise in providing private healthcare with an offer of ordinary travel andlodgings to enable a visit to a hospital runby the commercial organisation is unlikelyto engage section 6. On the other hand,the provision by that same commercialorganisation of a five-star holiday for theforeign public official which is unrelatedto a demonstration of the organisationsservices is, all things being equal, far morelikely to raise the necessary inference.

32 It may be that, as a result of theintroduction of the section 7 offence,commercial organisations will reviewtheir policies on hospitality andpromotional or other similar businessexpenditure as part of the selection andimplementation of bribery preventionprocedures, so as to ensure that they

are seen to be acting both competitivelyand fairly. It is, however, for individualorganisations, or business representativebodies, to establish and disseminateappropriate standards for hospitality andpromotional or other similar expenditure.


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Section 7: Failure of commercial organisations to

prevent bribery33 A commercial organisation will be liable

to prosecution if a person associatedwith it bribes another person intendingto obtain or retain business or anadvantage in the conduct of businessfor that organisation. As set out above,the commercial organisation will have afull defence if it can show that despite a

particular case of bribery it neverthelesshad adequate procedures in place toprevent persons associated with it frombribing. In accordance with establishedcase law, the standard of proof which thecommercial organisation would need todischarge in order to prove the defence,in the event it was prosecuted, is thebalance of probabilities.

Commercial organisation34 Only a relevant commercial organisation

can commit an offence under section 7 ofthe Bribery Act. A relevant commercialorganisation is defined at section 7(5)as a body or partnership incorporated orformed in the UK irrespective of where itcarries on a business, or an incorporatedbody or partnership which carries on abusiness or part of a business in the UKirrespective of the place of incorporationor formation. The key concept here isthat of an organisation which carries ona business. The courts will be the finalarbiter as to whether an organisationcarries on a business in the UK takinginto account the particular facts inindividual cases. However, the followingparagraphs set out the Governmentsintention as regards the application of thephrase.

35 As regards bodies incorporated, orpartnerships formed, in the UK, despitethe fact that there are many ways inwhich a body corporate or a partnershipcan pursue business objectives, theGovernment expects that whethersuch a body or partnership can be saidto be carrying on a business will be

answered by applying a common senseapproach. So long as the organisation inquestion is incorporated (by whatevermeans), or is a partnership, it does notmatter if it pursues primarily charitableor educational aims or purely publicfunctions. It will be caught if it engages incommercial activities, irrespective of thepurpose for which profits are made.

36 As regards bodies incorporated, orpartnerships formed, outside theUnited Kingdom, whether such bodiescan properly be regarded as carryingon a business or part of a businessin any part of the United Kingdomwill again be answered by applying acommon sense approach. Where thereis a particular dispute as to whether abusiness presence in the United Kingdomsatisfies the test in the Act, the finalarbiter, in any particular case, will be thecourts as set out above. However, theGovernment anticipates that applyinga common sense approach would meanthat organisations that do not have ademonstrable business presence in theUnited Kingdom would not be caught.The Government would not expect, forexample, the mere fact that a companyssecurities have been admitted to theUK Listing Authoritys Official List andtherefore admitted to trading on the


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London Stock Exchange, in itself, toqualify that company as carrying on abusiness or part of a business in the UKand therefore falling within the definitionof a relevant commercial organisationfor the purposes of section 7. Likewise,having a UK subsidiary will not, in itself,mean that a parent company is carrying

on a business in the UK, since a subsidiarymay act independently of its parent orother group companies.

Associated person37 A commercial organisation is liable under

section 7 if a person associated withit bribes another person intending toobtain or retain business or a businessadvantage for the organisation. A

person associated with a commercialorganisation is defined at section 8 as aperson who performs services for or onbehalf of the organisation. This personcan be an individual or an incorporatedor unincorporated body. Section 8provides that the capacity in which aperson performs services for or on behalfof the organisation does not matter, soemployees (who are presumed to beperforming services for their employer),agents and subsidiaries are included.Section 8(4), however, makes it clear thatthe question as to whether a person isperforming services for an organisation isto be determined by reference to all therelevant circumstances and not merely byreference to the nature of the relationshipbetween that person and the organisation.The concept of a person who performsservices for or on behalf of the organisation

is intended to give section 7 broad scope soas to embrace the whole range of personsconnected to an organisation who mightbe capable of committing bribery on theorganisations behalf.

38 This broad scope means that contractorscould be associated persons to the

extent that they are performing servicesfor or on behalf of a commercialorganisation. Also, where a supplier canproperly be said to be performing servicesfor a commercial organisation rather thansimply acting as the seller of goods, itmay also be an associated person.

39 Where a supply chain involves severalentities or a project is to be performed by

a prime contractor with a series of sub-contractors, an organisation is likely only toexercise control over its relationship withits contractual counterparty. Indeed, theorganisation may only know the identityof its contractual counterparty. It is likelythat persons who contract with thatcounterparty will be performing services forthe counterparty and not for other personsin the contractual chain. The principal wayin which commercial organisations maydecide to approach bribery risks which ariseas a result of a supply chain is by employingthe types of anti-bribery proceduresreferred to elsewhere in this guidance(e.g. risk-based due diligence and the useof anti-bribery terms and conditions) inthe relationship with their contractualcounterparty, and by requesting thatcounterparty to adopt a similar approachwith the next party in the chain.


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40 As for joint ventures, these come in manydifferent forms, sometimes operatingthrough a separate legal entity, butat other times through contractualarrangements. In the case of a jointventure operating through a separatelegal entity, a bribe paid by the jointventure entity may lead to liability for a

member of the joint venture if the jointventure is performing services for themember and the bribe is paid with theintention of benefiting that member.However, the existence of a joint ventureentity will not of itself mean that it isassociated with any of its members. Abribe paid on behalf of the joint ventureentity by one of its employees or agentswill therefore not trigger liability for

members of the joint venture simply byvirtue of them benefiting indirectly fromthe bribe through their investment in orownership of the joint venture.

41 The situation will be different wherethe joint venture is conducted througha contractual arrangement. The degreeof control that a participant has overthat arrangement is likely to be oneof the relevant circumstances thatwould be taken into account in decidingwhether a person who paid a bribe in theconduct of the joint venture businesswas performing services for or on behalfof a participant in that arrangement. Itmay be, for example, that an employeeof such a participant who has paid a bribein order to benefit his employer is notto be regarded as a person associatedwith all the other participants in thejoint venture. Ordinarily, the employee

of a participant will be presumed to bea person performing services for and onbehalf of his employer. Likewise, an agentengaged by a participant in a contractualjoint venture is likely to be regarded as aperson associated with that participant inthe absence of evidence that the agent isacting on behalf of the contractual joint

venture as a whole.

42 Even if it can properly be said thatan agent, a subsidiary, or anotherperson acting for a member of a jointventure, was performing services forthe organisation, an offence will becommitted only if that agent, subsidiaryor person intended to obtain or retainbusiness or an advantage in the conduct

of business for the organisation. The factthat an organisation benefits indirectlyfrom a bribe is very unlikely, in itself, toamount to proof of the specific intentionrequired by the offence. Without proofof the required intention, liability willnot accrue through simple corporateownership or investment, or throughthe payment of dividends or provision ofloans by a subsidiary to its parent. So, forexample, a bribe on behalf of a subsidiaryby one of its employees or agents willnot automatically involve liability on thepart of its parent company, or any othersubsidiaries of the parent company, if itcannot be shown the employee or agentintended to obtain or retain businessor a business advantage for the parentcompany or other subsidiaries. This isso even though the parent company orsubsidiaries may benefit indirectly fromthe bribe. By the same token, liability


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for a parent company could arise wherea subsidiary is the person which pays abribe which it intends will result in theparent company obtaining or retainingbusiness or vice versa.

43 The question of adequacy of briberyprevention procedures will depend in

the final analysis on the facts of eachcase, including matters such as thelevel of control over the activities of theassociated person and the degree of riskthat requires mitigation. The scope ofthe definition at section 8 needs to beappreciated within this context. This pointis developed in more detail under the sixprinciples set out on pages 20 to 31.

Facilitation payments44 Small bribes paid to facilitate routine

Government action otherwise calledfacilitation payments could triggereither the section 6 offence or, wherethere is an intention to induce improperconduct, including where the acceptanceof such payments is itself improper, thesection 1 offence and therefore potentialliability under section 7.

45 As was the case under the old law,the Bribery Act does not (unlike USforeign bribery law) provide anyexemption for such payments. The 2009Recommendation of the Organisationfor Economic Co-operation andDevelopment5recognises the corrosiveeffect of facilitation payments andasks adhering countries to discourage

companies from making such payments.Exemptions in this context createartificial distinctions that are difficultto enforce, undermine corporate anti-bribery procedures, confuse anti-briberycommunication with employees andother associated persons, perpetuate anexisting culture of bribery and have the

potential to be abused.

46 The Government does, however,recognise the problems that commercialorganisations face in some parts ofthe world and in certain sectors. Theeradication of facilitation paymentsis recognised at the national andinternational level as a long termobjective that will require economic

and social progress and sustainedcommitment to the rule of law in thoseparts of the world where the problemis most prevalent. It will also requirecollaboration between internationalbodies, governments, the anti-briberylobby, business representative bodiesand sectoral organisations. Businessesthemselves also have a role to play andthe guidance below offers an indicationof how the problem may be addressedthrough the selection of briberyprevention procedures by commercialorganisations.

47 Issues relating to the prosecution offacilitation payments in England andWales are referred to in the guidance ofthe Director of the Serious Fraud Officeand the Director of Public Prosecutions.6

5 Recommendation of the Council for Further Combating Bribery of Foreign Public Officials in International Business Transactions.6 Bribery Act 2010: Joint Prosecution Guidance of the Director of the Serious Fraud Office and the Director of Public Prosecutions.


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Duress48 It is recognised that there are

circumstances in which individuals areleft with no alternative but to makepayments in order to protect againstloss of life, limb or liberty. The commonlaw defence of duress is very likely to beavailable in such circumstances.

Prosecutorial discretion49 Whether to prosecute an offence under

the Act is a matter for the prosecutingauthorities. In deciding whether toproceed, prosecutors must first decideif there is a sufficiency of evidence, and,if so, whether a prosecution is in thepublic interest. If the evidential test hasbeen met, prosecutors will consider the

general public interest in ensuring thatbribery is effectively dealt with. The moreserious the offence, the more likely it isthat a prosecution will be required in thepublic interest.

50 In cases where hospitality, promotionalexpenditure or facilitation payments do,on their face, trigger the provisions ofthe Act prosecutors will consider verycarefully what is in the public interestbefore deciding whether to prosecute.The operation of prosecutorial discretionprovides a degree of flexibility whichis helpful to ensure the just and fairoperation of the Act.

51 Factors that weigh for and against thepublic interest in prosecuting in Englandand Wales are referred to in the jointguidance of the Director of the SeriousFraud Office and the Director of PublicProsecutions referred to at paragraph 47.


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The six principles

The Government considers that procedures put in placeby commercial organisations wishing to prevent briberybeing committed on their behalf should be informed by sixprinciples. These are set out below. Commentary and guidanceon what procedures the application of the principles mayproduce accompanies each principle.

These principles are not prescriptive. They are intended to be

flexible and outcome focussed, allowing for the huge variety ofcircumstances that commercial organisations find themselvesin. Small organisations will, for example, face differentchallenges to those faced by large multi-national enterprises.Accordingly, the detail of how organisations might apply theseprinciples, taken as a whole, will vary, but the outcome shouldalways be robust and effective anti-bribery procedures.

As set out in more detail below, bribery prevention proceduresshould be proportionate to risk. Although commercial

organisations with entirely domestic operations may requirebribery prevention procedures, we believe that as a generalproposition they will face lower risks of bribery on their behalfby associated persons than the risks that operate in foreignmarkets. In any event procedures put in place to mitigatedomestic bribery risks are likely to be similar if not the sameas those designed to mitigate those associated with foreignmarkets.

A series of case studies based on hypothetical scenarios isprovided at Appendix A. These are designed to illustrate theapplication of the principles for small, medium and largeorganisations.


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Principle 1Proportionate procedures

A commercial organisations proceduresto prevent bribery by persons associatedwith it are proportionate to the briberyrisks it faces and to the nature, scaleand complexity of the commercialorganisations activities. They are alsoclear, practical, accessible, effectivelyimplemented and enforced.

Commentary1.1 The term procedures is used in this

guidance to embrace both briberyprevention policies and the procedureswhich implement them. Policiesarticulate a commercial organisationsanti-bribery stance, show how it willbe maintained and help to create ananti-bribery culture. They are therefore

a necessary measure in the preventionof bribery, but they will not achievethat objective unless they are properlyimplemented. Further guidance onimplementation is provided throughprinciples 2 to 6.

1.2 Adequate bribery prevention proceduresought to be proportionate to the briberyrisks that the organisation faces. An initialassessment of risk across the organisationis therefore a necessary first step. To acertain extent the level of risk will belinked to the size of the organisation andthe nature and complexity of its business,but size will not be the only determiningfactor. Some small organisations canface quite significant risks, and willneed more extensive procedures thantheir counterparts facing limited risks.However, small organisations are unlikelyto need procedures that are as extensiveas those of a large multi-nationalorganisation. For example, a very small

business may be able to rely heavily onperiodic oral briefings to communicateits policies while a large one may need torely on extensive written communication.

1.3 The level of risk that organisations facewill also vary with the type and natureof the persons associated with it. For

example, a commercial organisationthat properly assesses that there is norisk of bribery on the part of one of itsassociated persons will accordinglyrequire nothing in the way of proceduresto prevent bribery in the context of thatrelationship. By the same token thebribery risks associated with relianceon a third party agent representing acommercial organisation in negotiations

with foreign public officials may beassessed as significant and accordinglyrequire much more in the way ofprocedures to mitigate those risks.Organisations are likely to need to selectprocedures to cover a broad range ofrisks but any consideration by a courtin an individual case of the adequacy ofprocedures is likely necessarily to focuson those procedures designed to preventbribery on the part of the associatedperson committing the offence in question.

1.4 Bribery prevention procedures maybe stand alone or form part of widerguidance, for example on recruitment oron managing a tender process in publicprocurement. Whatever the chosenmodel, the procedures should seek toensure there is a practical and realisticmeans of achieving the organisationsstated anti-bribery policy objectivesacross all of the organisations functions.


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1.5 The Government recognises that applyingthese procedures retrospectively toexisting associated persons is moredifficult, but this should be done overtime, adopting a risk-based approachand with due allowance for what ispracticable and the level of control overexisting arrangements.

Procedures1.6 Commercial organisations bribery

prevention policies are likely to includecertain common elements. As an indicativeand not exhaustive list, an organisationmay wish to cover in its policies:

its commitment to bribery prevention(see Principle 2)

its general approach to mitigationof specific bribery risks, such asthose arising from the conduct ofintermediaries and agents, or thoseassociated with hospitality andpromotional expenditure, facilitationpayments or political and charitabledonations or contributions; (seePrinciple 3 on risk assessment)

an overview of its strategy toimplement its bribery preventionpolicies.

1.7 The procedures put in place to implementan organisations bribery preventionpolicies should be designed to mitigateidentified risks as well as to preventdeliberate unethical conduct on the partof associated persons. The followingis an indicative and not exhaustive listof the topics that bribery preventionprocedures might embrace depending onthe particular risks faced:

The involvement of the organisations top-level management (see Principle 2).

Risk assessment procedures(see Principle 3).

Due diligence of existing or prospectiveassociated persons (see Principle 4).

The provision of gifts, hospitality andpromotional expenditure; charitable

and political donations; or demands forfacilitation payments.

Direct and indirect employment, includingrecruitment, terms and conditions,disciplinary action and remuneration.

Governance of business relationships withall other associated persons including preand post contractual agreements.

Financial and commercial controls suchas adequate bookkeeping, auditing and

approval of expenditure.

Transparency of transactions anddisclosure of information.

Decision making, such as delegationof authority procedures, separation offunctions and the avoidance of conflicts ofinterest.

Enforcement, detailing discipline processesand sanctions for breaches of theorganisations anti-bribery rules.

The reporting of bribery including speakup or whistle blowing procedures.

The detail of the process by which theorganisation plans to implement its briberyprevention procedures, for example, how itspolicy will be applied to individual projectsand to different parts of the organisation.

The communication of the organisationspolicies and procedures, and training intheir application (see Principle 5).

The monitoring, review and evaluationof bribery prevention procedures (seePrinciple 6).

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Principle 2Top-level commitment

The top-level management of acommercial organisation (be it a boardof directors, the owners or any otherequivalent body or person) are committedto preventing bribery by personsassociated with it. They foster a culturewithin the organisation in which bribery isnever acceptable.

Commentary2.1 Those at the top of an organisation are

in the best position to foster a culture ofintegrity where bribery is unacceptable.The purpose of this principle is toencourage the involvement of top-levelmanagement in the determination ofbribery prevention procedures. It is alsoto encourage top-level involvement

in any key decision making relating tobribery risk where that is appropriate forthe organisations management structure.

Procedures2.2 Whatever the size, structure or market

of a commercial organisation, top-level management commitmentto bribery prevention is likely toinclude (1) communication of theorganisations anti-bribery stance, and(2) an appropriate degree of involvementin developing bribery preventionprocedures.

Internal and externalcommunication of the commitmentto zero tolerance to bribery2.3 This could take a variety of forms.

A formal statement appropriatelycommunicated can be very effective inestablishing an anti-bribery culture withinan organisation. Communication might

be tailored to different audiences. Thestatement would probably need to bedrawn to peoples attention on a periodicbasis and could be generally available,for example on an organisations intranetand/or internet site. Effective formalstatements that demonstrate top levelcommitment are likely to include:

a commitment to carry out businessfairly, honestly and openly

a commitment to zero tolerancetowards bribery

the consequences of breaching thepolicy for employees and managers

for other associated personsthe consequences of breachingcontractual provisions relating to

bribery prevention (this could includea reference to avoiding doing businesswith others who do not commit todoing business without bribery as abest practice objective)

articulation of the business benefitsof rejecting bribery (reputational,customer and business partnerconfidence)

reference to the range of briberyprevention procedures the commercialorganisation has or is putting inplace, including any protection andprocedures for confidential reportingof bribery (whistle-blowing)

key individuals and departmentsinvolved in the development andimplementation of the organisationsbribery prevention procedures

reference to the organisationsinvolvement in any collective actionagainst bribery in, for example, thesame business sector.


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Top-level involvement in briberyprevention2.4 Effective leadership in bribery

prevention will take a variety of formsappropriate for and proportionate tothe organisations size, managementstructure and circumstances. In smallerorganisations a proportionate response

may require top-level managers tobe personally involved in initiating,developing and implementing briberyprevention procedures and briberycritical decision making. In a large multi-national organisation the board should beresponsible for setting bribery preventionpolicies, tasking management to design,operate and monitor bribery preventionprocedures, and keeping these policies

and procedures under regular review. Butwhatever the appropriate model, top-level engagement is likely to reflect thefollowing elements:

Selection and training of seniormanagers to lead anti-bribery workwhere appropriate.

Leadership on key measures such as acode of conduct.

Endorsement of all bribery preventionrelated publications.

Leadership in awareness raising andencouraging transparent dialoguethroughout the organisation so as toseek to ensure effective disseminationof anti-bribery policies and proceduresto employees, subsidiaries, andassociated persons, etc.

Engagement with relevant associatedpersons and external bodies, such assectoral organisations and the media,to help articulate the organisationspolicies.

Specific involvement in high profileand critical decision making whereappropriate.

Assurance of risk assessment. General oversight of breaches of

procedures and the provision offeedback to the board or equivalent,where appropriate, on levels ofcompliance.

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Principle 3Risk Assessment

The commercial organisation assessesthe nature and extent of its exposure topotential external and internal risks ofbribery on its behalf by persons associatedwith it. The assessment is periodic,informed and documented.

Commentary3.1 For many commercial organisations this

principle will manifest itself as part ofa more general risk assessment carriedout in relation to business objectives.For others, its application may producea more specific stand alone briberyrisk assessment. The purpose of thisprinciple is to promote the adoptionof risk assessment procedures that areproportionate to the organisations

size and structure and to the nature,scale and location of its activities. Butwhatever approach is adopted the fullerthe understanding of the bribery risks anorganisation faces the more effective itsefforts to prevent bribery are likely to be.

3.2 Some aspects of risk assessment involveprocedures that fall within the generallyaccepted meaning of the term duediligence. The role of due diligence as arisk mitigation tool is separately dealtwith under Principle 4.

Procedures3.3 Risk assessment procedures that enable

the commercial organisation accuratelyto identify and prioritise the risks itfaces will, whatever its size, activities,customers or markets, usually reflect afew basic characteristics. These are:

Oversight of the risk assessment bytop level management.

Appropriate resourcing this shouldreflect the scale of the organisationsbusiness and the need to identify andprioritise all relevant risks.

Identification of the internal andexternal information sources thatwill enable risk to be assessed andreviewed.

Due diligence enquiries(see Principle 4).

Accurate and appropriatedocumentation of the risk assessmentand its conclusions.

3.4 As a commercial organisations businessevolves, so will the bribery risks it faces andhence so should its risk assessment. Forexample, the risk assessment that appliesto a commercial organisations domesticoperations might not apply when it enters anew market in a part of the world in whichit has not done business before(see Principle 6 for more on this).

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Commonly encountered risks3.5 Commonly encountered external risks

can be categorised into five broad groups country, sectoral, transaction, businessopportunity and business partnership:

Country risk:this is evidenced byperceived high levels of corruption, an

absence of effectively implementedanti-bribery legislation and a failure ofthe foreign government, media, localbusiness community and civil societyeffectively to promote transparentprocurement and investment policies.

Sectoral risk: some sectors are higherrisk than others. Higher risk sectorsinclude the extractive industries and thelarge scale infrastructure sector.

Transaction risk:certain types oftransaction give rise to higher risks,for example, charitable or politicalcontributions, licences and permits,and transactions relating to publicprocurement.

Business opportunity risk:such risksmight arise in high value projectsor with projects involving manycontractors or intermediaries; or withprojects which are not apparentlyundertaken at market prices, or whichdo not have a clear legitimate objective.

Business partnership risk:certainrelationships may involve higher risk, forexample, the use of intermediaries intransactions with foreign public officials;consortia or joint venture partners; andrelationships with politically exposedpersons where the proposed businessrelationship involves, or is linked to, aprominent public official.

3.6 An assessment of external bribery risksis intended to help decide how thoserisks can be mitigated by proceduresgoverning the relevant operations orbusiness relationships; but a bribery riskassessment should also examine theextent to which internal structures orprocedures may themselves add to the

level of risk. Commonly encounteredinternal factors may include:

deficiencies in employee training, skillsand knowledge

bonus culture that rewards excessiverisk taking

lack of clarity in the organisationspolicies on, and procedures for,hospitality and promotional

expenditure, and political or charitablecontributions

lack of clear financial controls

lack of a clear anti-bribery messagefrom the top-level management.

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Principle 4Due diligence

The commercial organisation applies duediligence procedures, taking a proportionateand risk based approach, in respect ofpersons who perform or will performservices for or on behalf of the organisation,in order to mitigate identified bribery risks.

Commentary4.1 Due diligence is firmly established as an

element of corporate good governanceand it is envisaged that due diligencerelated to bribery prevention will oftenform part of a wider due diligenceframework. Due diligence procedures areboth a form of bribery risk assessment(see Principle 3) and a means ofmitigating a risk. By way of illustration,a commercial organisation may identify

risks that as a general proposition attachto doing business in reliance uponlocal third party intermediaries. Duediligence of specific prospective thirdparty intermediaries could significantlymitigate these risks. The significance ofthe role of due diligence in bribery riskmitigation justifies its inclusion here as aPrinciple in its own right.

4.2 The purpose of this Principle is toencourage commercial organisations toput in place due diligence proceduresthat adequately inform the applicationof proportionate measures designed toprevent persons associated with themfrom bribing on their behalf.

Procedures4.3 As this guidance emphasises throughout,

due diligence procedures should beproportionate to the identified risk.They can also be undertaken internally

or by external consultants. A personassociated with a commercialorganisation as set out at section 8 ofthe Bribery Act includes any personperforming services for a commercialorganisation. As explained at paragraphs37to 43in the section GovernmentPolicy and section 7, the scope of this

definition is broad and can embrace awide range of business relationships. Butthe appropriate level of due diligenceto prevent bribery will vary enormouslydepending on the risks arising from theparticular relationship. So, for example,the appropriate level of due diligencerequired by a commercial organisationwhen contracting for the performance ofinformation technology services may be

low, to reflect low risks of bribery on itsbehalf. In contrast, an organisation thatis selecting an intermediary to assist inestablishing a business in foreign marketswill typically require a much higher levelof due diligence to mitigate the risks ofbribery on its behalf.

4.4 Organisations will need to takeconsiderable care in entering intocertain business relationships, dueto the particular circumstances inwhich the relationships come intoexistence. An example is where locallaw or convention dictates the use oflocal agents in circumstances whereit may be difficult for a commercialorganisation to extricate itself from abusiness relationship once established.The importance of thorough duediligence and risk mitigation prior toany commitment are paramount in suchcircumstances. Another relationship


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that carries particularly importantdue diligence implications is a mergerof commercial organisations or anacquisition of one by another.

4.5 Due diligence for the purposes ofPrinciple 4 should be conducted usinga risk-based approach (as referred to

on page 27). For example, in lower risksituations, commercial organisationsmay decide that there is no needto conduct much in the way of duediligence. In higher risk situations,due diligence may include conductingdirect interrogative enquiries, indirectinvestigations, or general research onproposed associated persons. Appraisaland continued monitoring of recruited or

engaged associated persons may also berequired, proportionate to the identifiedrisks. Generally, more information islikely to be required from prospectiveand existing associated persons thatare incorporated (e.g. companies) thanfrom individuals. This is because on abasic level more individuals are likelyto be involved in the performance ofservices by a company and the exactnature of the roles of such individualsor other connected bodies may not beimmediately obvious. Accordingly, duediligence may involve direct requestsfor details on the background, expertiseand business experience, of relevantindividuals. This information can thenbe verified through research and thefollowing up of references, etc.

4.6 A commercial organisations employeesare presumed to be persons associatedwith the organisation for the purposesof the Bribery Act. The organisationmay wish, therefore, to incorporate inits recruitment and human resourcesprocedures an appropriate level of duediligence to mitigate the risks of bribery

being undertaken by employees whichis proportionate to the risk associatedwith the post in question. Due diligence isunlikely to be needed in relation to lowerrisk posts.

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Principle 5Communication (including training)

The commercial organisation seeksto ensure that its bribery preventionpolicies and procedures are embeddedand understood throughout theorganisation through internal and externalcommunication, including training, that isproportionate to the risks it faces.

Commentary5.1 Communication and training deters

bribery by associated persons byenhancing awareness and understandingof a commercial organisationsprocedures and to the organisationscommitment to their proper application.Making information available assists inmore effective monitoring, evaluationand review of bribery prevention

procedures. Training provides theknowledge and skills needed to employthe organisations procedures and dealwith any bribery related problems orissues that may arise.

ProceduresCommunication

5.2 The content, language and toneof communications for internalconsumption may vary from that forexternal use in response to the differentrelationship the audience has with thecommercial organisation. The nature ofcommunication will vary enormouslybetween commercial organisations inaccordance with the different briberyrisks faced, the size of the organisationand the scale and nature of its activities.

5.3 Internal communications should conveythe tone from the top but are also likelyto focus on the implementation of theorganisations policies and proceduresand the implications for employees.Such communication includes policieson particular areas such as decisionmaking, financial control, hospitality and

promotional expenditure, facilitationpayments, training, charitable andpolitical donations and penalties forbreach of rules and the articulation ofmanagement roles at different levels.Another important aspect of internalcommunications is the establishmentof a secure, confidential and accessiblemeans for internal or external partiesto raise concerns about bribery on the

part of associated persons, to providesuggestions for improvement of briberyprevention procedures and controls andfor requesting advice. These so calledspeak up procedures can amountto a very helpful management toolfor commercial organisations withdiverse operations that may be in manycountries. If these procedures are tobe effective there must be adequateprotection for those reporting concerns.

5.4 External communication of briberyprevention policies through a statementor codes of conduct, for example,can reassure existing and prospectiveassociated persons and can act as adeterrent to those intending to bribe ona commercial organisations behalf. Suchcommunications can include informationon bribery prevention procedures andcontrols, sanctions, results of internal

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surveys, rules governing recruitment,procurement and tendering. Acommercial organisation may considerit proportionate and appropriate tocommunicate its anti-bribery policiesand commitment to them to a wideraudience, such as other organisations inits sector and to sectoral organisations

that would fall outside the scope of therange of its associated persons, or to thegeneral public.

Training

5.5 Like all procedures training should beproportionate to risk but some training islikely to be effective in firmly establishingan anti-bribery culture whatever the levelof risk. Training may take the form of

education and awareness raising aboutthe threats posed by bribery in generaland in the sector or areas in which theorganisation operates in particular, andthe various ways it is being addressed.

5.6 General training could be mandatoryfor new employees or for agents (ona weighted risk basis) as part of aninduction process, but it should also betailored to the specific risks associatedwith specific posts. Consideration shouldalso be given to tailoring training to thespecial needs of those involved in anyspeak up procedures, and higher riskfunctions such as purchasing, contracting,distribution and marketing, and workingin high risk countries. Effective training iscontinuous, and regularly monitored andevaluated.

5.7 It may be appropriate to requireassociated persons to undergo training.This will be particularly relevant for highrisk associated persons. In any event,organisations may wish to encourageassociated persons to adopt briberyprevention training.

5.8 Nowadays there are many differenttraining formats available in additionto the traditional classroom or seminarformats, such as e-learning and otherweb-based tools. But whatever theformat, the training ought to achieveits objective of ensuring that thoseparticipating in it develop a firmunderstanding of what the relevantpolicies and procedures mean in practice

for them.

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Principle 6Monitoring and review

The commercial organisation monitors andreviews procedures designed to preventbribery by persons associated with it andmakes improvements where necessary.

Commentary6.1 The bribery risks that a commercial

organisation faces may change over

time, as may the nature and scale of itsactivities, so the procedures requiredto mitigate those risks are also likelyto change. Commercial organisationswill therefore wish to consider how tomonitor and evaluate the effectiveness oftheir bribery prevention procedures andadapt them where necessary. In additionto regular monitoring, an organisationmight want to review its processes in

response to other stimuli, for examplegovernmental changes in countries inwhich they operate, an incident of briberyor negative press reports.

Procedures6.2 There is a wide range of internal and

external review mechanisms whichcommercial organisations could considerusing. Systems set up to deter, detectand investigate bribery, and monitor theethical quality of transactions, such asinternal financial control mechanisms,will help provide insight into theeffectiveness of procedures designedto prevent bribery. Staff surveys,questionnaires and feedback fromtraining can also provide an importantsource of information on effectivenessand a means by which employees andother associated persons can informcontinuing improvement of anti-briberypolicies.

6.3 Organisations could also considerformal periodic reviews and reports fortop-level management. Organisationscould also draw on information on otherorganisations practices, for examplerelevant trade bodies or regulatorsmight highlight examples of good or badpractice in their publications.

6.4 In addition, organisations might wishto consider seeking some form ofexternal verification or assurance of theeffectiveness of anti-bribery procedures.Some organisations may be able to applyfor certified compliance with one ofthe independently-verified anti-briberystandards maintained by industrial sectorassociations or multilateral bodies.

However, such certification may notnecessarily mean that a commercialorganisations bribery preventionprocedures are adequate for all purposeswhere an offence under section 7 of theBribery Act could be charged.

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The Bribery Act 2010 Appendix A: Case Studies

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Appendix ABribery Act 2010 case studies

IntroductionThese case studies (which do not form partof the guidance issued under section 9 ofthe Act) look at how the application ofthe six principles might relate to a numberof hypothetical scenarios commercialorganisations may encounter. TheGovernment believes that this illustrative

context can assist commercial organisations indeciding what procedures to prevent personsassociated with them from bribing on theirbehalf might be most suitable to their needs.

These case studies are illustrative. Theyare intended to complement the guidance.They do not replace or supersede any of theprinciples. The considerations set out belowmerely show in some circumstances how

the principles can be applied, and shouldnot be seen as standard setting, establishingany presumption, reflecting a minimumbaseline of action or being appropriate for allorganisations whatever their size. Accordingly,the considerations set out below are not:

comprehensive of all considerations in allcircumstances

conclusive of adequate procedures

conclusive of inadequate procedures if notall of the considerations are consideredand/or applied.

All but one of these case studies focus onbribery risks associated with foreign markets.This is because bribery risks associated withforeign markets are generally higher thanthose associated with domestic markets.Accordingly case studies focussing on foreignmarkets are better suited as vehicles for theillustration of bribery prevention procedures.


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Case study 1 Principle 1

Facilitation paymentsA medium sized company (A) has acquireda new customer in a foreign country (B)where it operates through its agent company(C). Its bribery risk assessment has identifiedfacilitation payments as a significant problemin securing reliable importation into B andtransport to its new customers manufacturinglocations. These sometimes take the form of

inspection fees required before Bs importinspectors will issue a certificate of inspectionand thereby facilitate the clearance of goods.

A could consider any or a combination of thefollowing:

Communication of its policy of non-payment of facilitation payments to Cand its staff.

Seeking advice on the law of B relatingto certificates of inspection and fees forthese to differentiate between properlypayable fees and disguised requests forfacilitation payments.

Building realistic timescales into theplanning of the project so that shipping,importation and delivery schedules allowwhere feasible for resisting and testingdemands for facilitation payments.

Requesting that C train its staff aboutresisting demands for facilitationpayments and the relevant local law andprovisions of the Bribery Act 2010.

Proposing or including as part of anycontractual arrangement certainprocedures for C and its staff, which mayinclude one or more of the following, ifappropriate:

questioning of legitimacy of demands

requesting receipts and identificationdetails of the official making thedemand

requests to consult with superiorofficials

trying to avoid paying inspectionfees (if not properly due) in cash anddirectly to an official

informing those demanding paymentsthat compliance with the demandmay mean that A (and possibly C) will

commit an offence under UK law informing those demanding payments

that it will be necessary for C to informthe UK embassy of the demand.

Maintaining close liaison with C so as tokeep abreast of any local developmentsthat may provide solutions andencouraging C to develop its ownstrategies based on local knowledge.

Use of any UK diplomatic channels

or participation in locally active non-governmental organisations, so as toapply pressure on the authorities ofB to take action to stop demands forfacilitation payments.


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Proportionate ProceduresA small to medium sized installation companyis operating entirely within the UnitedKingdom domestic market. It relies to varyingdegrees on independent consultants tofacilitate business opportunities and to assistin the preparation of both pre-qualificationsubmissions and formal tenders in seekingnew business. Such consultants work on an

arms-length-fee-plus-expenses basis. They areengaged by sales staff and selected because oftheir extensive network of business contactsand the specialist information they have.The reason for engaging them is to enhancethe companys prospects of being includedin tender and pre-qualification lists and ofbeing selected as main or sub-contractors.The reliance on consultants and, in particular,difficulties in monitoring expenditure which

sometimes involves cash transactions hasbeen identified by the company as a sourceof medium to high risk of bribery beingundertaken on the companys behalf.

In seeking to mitigate these risks the companycould consider any or a combination of thefollowing:

Communication of a policy statementcommitting it to transparency and zerotolerance of bribery in pursuit of itsbusiness objectives. The statement couldbe communicated to the companysemployees, known consultants andexternal contacts, such as sectoral bodiesand local chambers of commerce.

Firming up its due diligence beforeengaging consultants. This could includemaking enquiries through businesscontacts, local chambers of commerce,business associations, or internet

searches and following up any businessreferences and financial statements.

Considering firming up the terms ofthe consultants contracts so that theyreflect a commitment to zero toleranceof bribery, set clear criteria for provisionof bona fide hospitality on the companysbehalf and define in detail the basis of

remuneration, including expenses. Consider making consultants contracts

subject to periodic review and renewal.

Drawing up key points guidance onpreventing bribery for its sales staff andall other staff involved in bidding forbusiness and when engaging consultants

Periodically emphasising these policiesand procedures at meetings forexample, this might form a standing item

on meeting agendas every few months.

Providing a confidential means for staffand external business contacts to air anysuspicions of the use of bribery on thecompanys behalf.


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Case study 3 Principles 1 and 6

Joint ventureA medium sized company (D) is interestedin significant foreign mineral deposits. Dproposes to enter into a joint venture with alocal mining company (E). It is proposed thatD and E would have an equal holding in thejoint venture company (DE). D identifies thenecessary interaction between DE and localpublic officials as a source of significant risks

of bribery.

D could consider negotiating for the inclusionof any or a combination of the followingbribery prevention procedures into theagreement setting up DE:

Parity of representation on the board ofDE.

That DE put in place measures designed

to ensure compliance with all applicablebribery and corruption laws. Thesemeasures might cover such issues as:

gifts and hospitality

agreed decision making rules

procurement

engagement of third parties, includingdue diligence requirements

conduct of relations with publicofficials

training for staff in high risk positions

record keeping and accounting.

The establishment of an audit committeewith at least one representative of eachof D and E that has the power to viewaccounts and certain expenditure andprepare regular reports.

Binding commitments by D and E tocomply with all applicable bribery lawsin relation to the operation of DE, witha breach by either D or E being a breachof the agreement between them. Wheresuch a breach is a material breach thiscould lead to termination or othersimilarly significant consequences.


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Case study 4 Principles 1 and 5

Hospitality and Promotional expenditureA firm of engineers (F) maintains aprogramme of annual events providingentertainment, quality dining and attendanceat various sporting occasions, as an expressionof appreciation of its long association withits business partners. Private bodies andindividuals are happy to meet their own traveland accommodation costs associated with

attending these events. The costs of the traveland accommodation of any foreign publicofficials attending are, however, met by F.

F could consider any or a combination of thefollowing:

Conducting a bribery risk assessmentrelating to its dealings with businesspartners and foreign public officials and

in particular the provision of hospitalityand promotional expenditure.

Publication of a policy statementcommitting it to transparent,proportionate, reasonable and bona fidehospitality and promotional expenditure.

The issue of internal guidance onprocedures that apply to the provisionof hospitality and/or promotionalexpenditure providing:

that any procedures are designedto seek to ensure transparency andconformity with any relevant laws andcodes applying to F

that any procedures are designedto seek to ensure transparency andconformity with the relevant lawsand codes applying to foreign publicofficials

that any hospitality should reflecta desire to cement good relationsand show appreciation, and thatpromotional expenditure should

seek to improve the image of F as acommercial organisation, to betterpresent its products or services, orestablish cordial relations

that the recipient should not be giventhe impression that they are underan obligation to confer any businessadvantage or that the recipients

independence will be affected criteria to be applied when deciding

the appropriate levels of hospitalityfor both private and public businesspartners, clients, suppliers andforeign public officials and the typeof hospitality that is appropriate indifferent sets of circumstances

that provision of hospitality for publicofficials be cleared with the relevant

public body so that it is clear who andwhat the hospitality is for

for expenditure over certain limits,approval by an appropriately seniorlevel of management may be arelevant consideration

accounting (book-keeping, orders,invoices, delivery notes, etc).

Regular monitoring, review andevaluation of internal procedures andcompliance with them.

Appropriate training and supervisionprovided to staff.


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Assessing risksA small specialist manufacturer is seeking toexpand its business in one of several emergingmarkets, all of which offer comparableopportunities. It has no specialist riskassessment expertise and is unsure how togo about assessing the risks of entering a newmarket.

The small manufacturer could consider any ora combination of the following:

Incorporating an assessment of briberyrisk into research to identify the optimummarket for expansion.

Seeking advice from UK diplomaticservices and government organisationssuch as UK Trade and Investment.

Consulting general country assessments

undertaken by local chambers ofcommerce, relevant non-governmentalorganisations and sectoral organisations.

Seeking advice from industryrepresentatives.

Following up any general or specialistadvice with further independent research.


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Due diligence of agentsA medium to large sized manufacturer ofspecialist equipment (G) has an opportunityto enter an emerging market in a foreigncountry (H) by way of a government contractto supply equipment to the state. Localconvention requires any foreign commercialorganisations to operate through a localagent. G is concerned to appoint a reputable

agent and ensure that the risk of bribery beingused to develop its business in the market isminimised.

G could consider any or a combination of thefollowing:

Compiling a suitable questionnaire forpotential agents requiring for example,details of ownership if not an individual;

CVs and references for those involvedin performing the proposed service;details of any directorships held, existingpartnerships and third party relationshipsand any relevant judicial or regulatoryfindings.

Having a clear statement of the precisenature of the services offered, costs,commissions, fees and the preferredmeans of remuneration.

Undertaking research, including internetsearches, of the prospective agents and,if a corporate body, of every personidentified as having a degree of controlover its affairs.

Making enquiries with the relevantauthorities in H to verify the informationreceived in response to the questionnaire.

Following up references and clarifyingany matters arising from thequestionnaire or any other informationreceived with the agents, arranging faceto face meetings where appropriate.

Requesting sight or evidence of anypotential agents own anti-briberypolicies and, where a corporate body,reporting procedures and records.

Being alert to key commercial questionssuch as:

Is the agent really required?

Does the agent have the required

expertise? Are they interacting with or closely

connected to public officials?

Is what you are proposing to payreasonable and commercial?

Renewing due diligence enquiries on aperiodic basis if an agent is appointed.


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Communicating and trainingA small UK manufacturer of specialistequipment (J) has engaged an individual asa local agent and adviser (K) to assist withwinning a contract and developing its businessin a foreign country where the risk of bribery isassessed as high.

J could consider any or a combination of the

following:

Making employees of J engaged inbidding for business fully aware of Jsanti-bribery statement, code of conductand, where appropriate, that details ofits anti-bribery policies are included in itstender.

Including suitable contractual termson bribery prevention measures in the

agreement between J and K, for example:requiring K not to offer or pay bribes;giving J the ability to audit Ks activitiesand expenditure; requiring K to reportany requests for bribes by officials toJ; and, in the event of suspicion arisingas to Ks activities, giving J the right toterminate the arrangement.

Making employees of J fully awareof policies and procedures applyingto relevant issues such as hospitalityand facilitation payments, includingall financial control mechanisms,sanctions for any breaches of the rulesand instructions on how to report anysuspicious conduct.

Supplementing the information, whereappropriate, with specially preparedtraining to Js staff involved with theforeign country.


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Case study 8 Principle 1, 4 and 6

Community benefits and charitable donationsA company (L) exports a range of seedproducts to growers around the globe. Itsrepresentative travels to a foreign country(M) to discuss with a local farming co-operative the possible supply of a newstrain of wheat that is resistant to a diseasewhich recently swept the region. In themeeting, the head of the co-operative tells

Ls representative about the problems whichthe relative unavailability of antiretroviraldrugs cause locally in the face of a high HIVinfection rate.

In a subsequent meeting with an official of Mto discuss the approval of Ls new wheat strainfor import, the official suggests that L couldpay for the necessary antiretroviral drugs andthat this will be a very positive factor in the

Governments consideration of the licenceto import the new seed strain. In a furthermeeting, the same official states that L shoulddonate money to a certain charity suggestedby the official which, the official assures, willthen take the necessary steps to purchase anddistribute the drugs. L identifies this as raisingpotential bribery risks.

L could consider any or a combination of thefollowing:

Making reasonable efforts to conductdue diligence, including consultation withstaff members and any business partnersit has in country M in order to satisfyitself that the suggested arrangement islegitimate and in conformity with anyrelevant laws and codes applying to theforeign public official responsible forapproving the product. It could do this byobtaining information on:

Ms local law on community benefitsas part of Government procurementand, if no particular local law, theofficial status and legitimacy of thesuggested arrangement

the particular charity in questionincluding its legal status, its reputationin M, and whether it has conducted

similar projects, and any connections the charity might

have with the foreign official inquestion, if possible.

Adopting an internal communication plandesigned to ensure that any relationshipswith charitable organisations areconducted in a transparent and openmanner and do not raise any expecta

Bribery Act 2010 Guidance

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Transcript of Bribery Act 2010 Guidance