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The Bribery Act 2010 contains a new and unprecedented offence of failure of a commercial organisation to prevent bribery. Under this law, a commercial organisation will be liable to prosecution if a person associated with it engages in bribery. It is the corporate offence that managers, executives and directors need to address with some immediacy. If it was revealed that a bribe was paid in connection with obtaining or retaining business or a business advantage, a company could be prosecuted for failing to prevent bribery. Penalties include an unlimited fine and custodial sentences of up to 10 years.

A company’s only defence in court would be to prove that it had working “adequate procedures” in place to prevent bribery and that, in the case in question, the paying of the bribe had circumvented those procedures. Turning a blind eye at executive or board room levels (including non-executive directors) is no longer an option and could have grave consequences for the reputation of the company and its individual directors as well as punitive financial costs.

The key question for commercial organisations is: “what are adequate procedures?” The Ministry of Justice has issued guidance on the Bribery Act, based on six principles that are designed to help organisations implement anti-bribery procedures. One of these principles is communication (including training), which states:

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

So employees need to be trained in anti-bribery policy and procedures. What should this training include, and how should it be delivered to ensure that it is considered ‘adequate’ in the eyes of the law?

The guidance gives some pointers to an answer. It states that training should be “effective in firmly establishing an anti-bribery culture. It may take the form of education and awareness-raising about the threats posed by bribery in general and in the sector or areas in which the organisation operates in particular, and the various ways it is being addressed.” The guidance goes on to make a distinction between general awareness training about anti-bribery, to be done by all employees, and anti-bribery training for specialist areas, such as s purchasing, contracting, distribution and marketing, and working in high risk countries.

The amount of anti-bribery training a commercial organisation undertakes should be proportionate to the risk of bribery it faces. So for large companies that operate in countries that represent a high corruption risk, a high level of training will be necessary. For a small UK-based company with no international markets, the amount of training required will be less.

To provide a defence, anti-bribery training will need an associated audit trail, that tracks who undertakes the training and when they undertake it. For this reason, e-learning presents the best delivery solution, as it is easy to roll out to everyone in an organisation, and can provide the necessary audit trail.

As a defence against the corporate offence, all companies will require some basic awareness training, ideally in e-learning format, that seeks to promote an anti-bribery culture and explain the threats presented by bribery and corruption. This e-learning will need to communicate effectively to everybody, and not take too long to complete, ideally less than 20 minutes.

What outcomes should this short, general awareness e-learning unit deliver? What should participants in the training be able to do upon completion? To demonstrate commitment to establishing an anti-bribery culture, the outcomes need to be clear and demonstrable. Here are four outcomes, which if delivered, will fulfil the purpose of general awareness anti-bribery training.

1. Explain what is meant by ethical behaviour at work.

Participants will need to explain what ethical behaviour means, and why it is important to them both personally and to the organisation they work in. The training will explain the business benefits of ethical behaviour, and the impact of individuals who engage in unethical conduct. It will need to identify the risks of unethical behaviour to the participant’s job, his or her colleagues and their organisation.

2. Make ethical choices at work
Participants should be able to make better ethical decisions as a result of the training. Ideally the training will include practical scenarios that allow participants to exercise their own judgement on ethical dilemmas.

3. Recognise unethical behaviour
Employees need to be able to recognise unethical behaviour, not only in themselves, but also in others. Ideally, they will be able to identify the warning signs that may precede an unethical act, and take action to prevent it.

4. Get help
Finally participants need to know how to get help if they are faced with an ethical situation. While a 15 minute training unit will not be able to give guidance on all ethical situations that may arise, it can certainly explain the procedures for obtaining relevant advice.

If these outcomes are delivered successfully, an organisation will demonstrate commitment to an anti-bribery and corruption culture, as well as providing some practical guidance on how to minimise the risks of bribery and corruption.

Those in a managerial or supervisory role may require further training on how an anti-bribery policy should be implemented. People working in high-risk areas, such as sales or procurement, may require additional training specific to their function. General awareness anti-bribery training certainly makes a good starting point for an anti-bribery policy.

The new Bribery Act 2010 contains a new and unprecedented offence of failure of a commercial organisation to prevent bribery. Under this law, a commercial organisation will be liable to prosecution if a person associated with it engages in bribery. It is the corporate offence that managers, executives and directors need to address with some immediacy. If it was revealed that a bribe was paid in connection with obtaining or retaining business or a business advantage, a company could be prosecuted for failing to prevent bribery. Penalties include an unlimited fine and custodial sentences of up to 10 years.

A company’s only defence in court would be to prove that it had working “adequate procedures” in place to prevent bribery and that, in the case in question, the paying of the bribe had circumvented those procedures. Turning a blind eye at executive or board room levels (including non-executive directors) is no longer an option and could have grave consequences for the reputation of the company and its individual directors as well as punitive financial costs.

The key question for commercial organisations is:  “what are adequate procedures?”  The Ministry of Justice has issued guidance on the Bribery Act, based on six principles that are designed to help organisations implement anti-bribery procedures. One of these principles is communication (including training), which states:

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

So employees need to be trained in anti-bribery policy and procedures. What should this training include, and how should it be delivered to ensure that it is considered ‘adequate’ in the eyes of the law?

The guidance gives some pointers to an answer. It states that training should be “effective in firmly establishing an anti-bribery culture. It may take the form of education and awareness-raising about the threats posed by bribery in general and in the sector or areas in which the organisation operates in particular, and the various ways it is being addressed.” The guidance goes on to make a distinction between general awareness training about anti-bribery, to be done by all employees, and anti-bribery training for specialist areas, such as s purchasing, contracting, distribution and marketing, and working in high risk countries.

The amount of anti-bribery training a commercial organisation undertakes should be proportionate to the risk of bribery it faces. So for large companies that operate in countries that represent a high corruption risk, a high level of training will be necessary. For a small UK-based company with no international markets, the amount of training required will be less.

To provide a defence, anti-bribery training will need an associated audit trail, that tracks who undertakes the training and when they undertake it. For this reason, e-learning presents the best delivery solution, as it is easy to roll out to everyone in an organisation, and can provide the necessary audit trail.

As a defence against the corporate offence, all companies will require some basic awareness training, ideally in e-learning format, that seeks to promote an anti-bribery culture and explain the threats presented by bribery and corruption. This e-learning will need to communicate effectively to everybody, and not take too long to complete, ideally less than 20 minutes.

What outcomes should this short, general awareness e-learning unit deliver? What should participants in the training be able to do upon completion? To demonstrate commitment to establishing an anti-bribery culture, the outcomes need to be clear and demonstrable. Here are four outcomes, which if delivered, will fulfil the purpose of general awareness anti-bribery training.

1. Explain what is meant by ethical behaviour at work.

Participants will need to explain what ethical behaviour means, and why it is important to them both personally and to the organisation they work in. The training will explain the business benefits of ethical behaviour, and the impact of individuals who engage in unethical conduct. It will need to identify the risks of unethical behaviour to the participant’s  job, his or her colleagues and their organisation.

2. Make ethical choices at work
Participants should be able to make better ethical decisions as a result of the training. Ideally the training will include practical scenarios that allow participants to exercise their own judgement on ethical dilemmas.

3. Recognise unethical behaviour
Employees need to be able to recognise unethical behaviour, not only in themselves, but also in others. Ideally, they will be able to identify the warning signs that may precede an unethical act, and take action to prevent it.

4. Get help
Finally participants need to know how to get help if they are faced with an ethical situation. While a 15 minute training unit will not be able to give guidance on all ethical situations that may arise, it can certainly explain the procedures for obtaining relevant advice.

If these outcomes are delivered successfully, an organisation will demonstrate commitment to an anti-bribery and corruption culture, as well as providing some practical guidance on how to minimise the risks of bribery and corruption.

Those in a managerial or supervisory role may require further training on how an anti-bribery policy should be implemented. People working in high-risk areas, such as sales or procurement, may require additional training specific to their function. General awareness anti-bribery training certainly makes a good starting point for an anti-bribery policy.

The Bribery Act will be implemented on 1st July 2011 and is commonly viewed as being the strictest anti-corruption law in the world. The Act creates the following new offences:

* offering, promising or giving a bribe;

* requesting, agreeing to receive or accepting a bribe;

* bribing a foreign public official;

* failure of a commercial organisation to prevent bribery.

The clause that has set the cat amongst the pigeons is the new Corporate Offence of failure to prevent bribery by those working on behalf of the organisation, including employees, agents and subsidiaries (whether domestic or foreign).
Penalties for falling foul of the legislation could include: 10 year custodial sentences; unlimited fines and potential debarment from government contracts. Despite the severe nature of the penalties, many directors are displaying a worrying degree of ignorance and apathy towards their compliance requirements.
Here are some of the tell-tale signs of companies that may be in for a shock after the 1st July.
Misconception 1 “The Bribery Act doesn’t apply to me; it’s only for the Big Guys……”
Think again. If you want to win contracts from prime contractors, they’ll require evidence that you are fully compliant with the Bribery Act. You may find that anti-corruption procedures will soon form an important part in the selection process for competitive tenders. Also, insurance underwriters have confirmed that they’ll take a close look at anti-bribery and corruption procedures when assessing applications for Directors’ and Officers’ Liability and Professional Indemnity insurance cover. Organisations that don’t meet the required standard will either have their applications declined or face the prospect of higher premiums. This means that if you find yourself in the unfortunate position of being the innocent victim of a bribery investigation, you risk being unable to claim insurance to pay for legal defence costs. And lawyers don’t come cheap.

Misconception 2 “I can ignore the Bribery Act because my company is already compliant with the Foreign Corrupt Practices Act (FCPA)”.

The FCPA is the US anti-corruption legislation and it applies to any organisation that does business in the US. Companies that have been found guilty under the FCPA have experienced reputational damage, multi-billion dollar fines and jail terms for some of their executives. Compliance with the FCPA does not necessarily denote compliance with the Bribery Act. For example, the Bribery Act draws no distinction between public sector and private sector bribery; has no exemption for facilitation (grease) payments or for promotional expenditure and introduces an explicit offence of failing to prevent bribery by associated parties. Perhaps this is why some US attorneys frequently refer to the “Bribery Act as the FCPA on steroids”.
Misconception 3 “I’m already prepared for the Bribery Act as I don’t take my clients out to lunch”.
If you read the Government Guidance on the Bribery Act, you’ll see that organisations will be required to do much more than revise their corporate hospitality arrangements in order to comply with the legislation. An organisation can defend itself if it can prove that it had adequate procedures to prevent bribery. Prudent businesses are now implementing these procedures.
Misconception 4 “I won’t get caught”.
The Serious Fraud Office will be able to collaborate with police departments, the Department of Work and Pensions, the Foreign and Commonwealth Office, the intelligence services and overseas regulatory authorities. In short, they’ll have resources for thorough investigations. In addition, if your organisation is involved in bribery, there is a serious risk of an investigation being triggered by a whistle-blower.
Misconception 5 “There’s a bit about our anti-corruption policy in the HR handbook”.
Anti-corruption policies and procedures are meaningless if they’re not implemented. This was one of the main conclusions from those who investigated the Siemens case after the company was charged a record $1.3 billion in fines for bribery in 2008. The following questions will help you evaluate your current anti-corruption plans so that you can make the recommended changes.
Is your Board charged with overall responsibility for your anti-corruption programme?
Are your anti-corruption policies and procedures communicated to all relevant personnel and have you considered the possibility that translations may be required for non-native speakers?
Are your anti-corruption policies and procedures publicised on your web-site and other public materials?
Are your personnel and other associated persons, such as your subsidiary staff, joint venture partners and agents given access to anti-bribery and corruption training?
Do you have a mechanism that will allow people to report suspicious conduct?
Are there internal controls to ensure that anti-corruption procedures are being followed?
Are your internal controls audited and reviewed?
Please be in no doubt: for your compliance programme to be adequate for the Bribery Act, anti-corruption procedures need to be embedded into all aspects of working practice.

© Copyright, Sarah Dougan, E-Security Exchange 2011