What should an SME do about the new Bribery Act?
The answer, in most cases, is probably not much more than thinking whether there is any real risk of bribery being committed on their behalf and then making a record that they have done so.
If an organisation is corrupt then any new legislation is unlikely to change that.
The fact that a director or manager can be personally liable if they knew about and didn’t stop any bribery may give pause for thought to those who are themselves pukka but suspect, or know, the company they work for isn’t entirely straight. They are now exposed to a possible penalty of up to 10 years imprisonment and/or an unlimited fine.
The organisation itself can now be liable for the acts of its employees, agents, representatives and subsidiaries – even when they are acting on their own initiative and without approval. Giving a bribe normally requires money and the normal financial controls should enable management to see where the company’s funds are going. However the legislation also applies to accepting a bribe and this may be harder to discover if the money goes to an individual rather than the company.
It is a defence for the company to show it had ‘adequate procedures’ in place to prevent anyone associated with it from giving or receiving bribes. To protect honest companies and their directors from things they don’t condone even SME’s should:
- carry out risk assessment to identify if anything they do or anyone does on their behalf could involve them in bribery;
- prepare a simple anti-corruption policy to make it clear the company doesn’t condone bribery. This should refer to corporate hospitality;
- train, or at least inform, staff about the new procedures and provide a method of reporting concerns;
- consider revising staff handbooks or employment contracts to make it clear that the company avoiding bribery is more important than improperly landing the business;
- possibly add a clause to contracts with distributors, agents, joint venture partners and others that no bribes, secret commissions and the like will be given or accepted;
- repeat on a regular basis.
For most SMEs this is just more administration that won’t change anything they do or is done on their behalf. However some will be surprised about what is being done in their name or for their benefit. Prosecutions need the consent of one of three senior prosecutors and the director of the Serious Fraud Office has said
‘Bringing the full force of the SFO and the criminal justice system to bear on a very small company (say under 50 people) seems to me to be a wrong use of resource. Far better to find other ways of making sure that that small company knows how to operate ethically.’
That may be some comfort but note how small the company has to be.
