The revised Bribery Act was passed in an attempt by the Government to clamp down on perceived business corruption. Companies and their business advisors have been tasked with ensuring the relevant procedures are now in place to prevent bribery but how many have actually taken steps to minimise the risk?
John Edwards, partner at the Nuneaton office of Midlands’ accountancy firm, Baldwins, discusses: “The Bribery Act clearly states that it is a criminal office for an individual or business to give or receive a bribe and it is a corporate offence if a business is found to have failed to prevent bribery from occurring. Failure to do so can mean up to ten years imprisonment and a fine for individuals and unlimited fines for companies.
“The first person to be convicted under the Act was a court worker who received a six year sentence last November for accepting a £500 bribe to ‘get rid’ of a speeding charge. This should have served as a wake-up call; the consequences of non compliance are serious.
“The Bribery Act has been much publicised and debated over the last 12 months – to such an extent that you may have expected every business to be fully aware of the Act and the penalties for non compliance.
Yet, although there is a general awareness of the Act, I have seen little evidence of clients proactively taking steps to protect their businesses from risk. So whilst the general message seems to have been communicated, there is still a lot of work to be done on the ground to ensure businesses are protecting themselves by mitigating risk.
“As auditors we are expected to understand the legal and regulatory framework in which our clients operate and assess the possible risk and consequence associated with non compliance. In order to discharge that responsibility we are obliged to consider the steps management have taken, or will need to take in order to mitigate that risk.
Many companies have, quite rightly, adopted a ‘zero tolerance’ approach and communicated this very clearly to all employees and contractors. It is important that every individual is clear as to what constitutes a bribe or equivalent and then understands the procedure for reporting. It goes without saying that there should be absolute confidence that management will take immediate and appropriate action.
“Basically, businesses need to be able to demonstrate that there are adequate processes and procedures in place to prevent bribery. Adequate procedures may include staff training, risk assessments (which may differ in different markets) and appropriate due diligence on entities with which the company associates.
The latter is particularly important as companies may still be found guilty under the Act if one of its employees is found to be guilty. Being able to show that steps had been taken to minimise this risk will not only stand you in good stead if this situation arises but is perhaps the only defence available in such circumstances.
“One particularly grey area has been corporate ‘hospitality’. This has not, as some seem to think, been prohibited. It will, in future require the exercise of judgement; Inviting customers and clients to an annual golf day is one thing whereas an all expenses paid trip to overseas will be perceived differently.
“Companies are under no obligation to seek professional advice on these issues but, given the complexity of the issues it is advisable to at least be aware of the way in which the legislation may affect your business decisions. If you are subject to statutory audit, your auditor will no doubt be considering the matter and will should provide advice and guidance..
“Even if you are not subject to audit, your accountant should by now have brought the matter to your attention. On the basis that, of all professional advisors they are most probably conversant with the way in which you do business, they are ideally placed to identify risks. As a minimum, I would urge everyone to ensure that at least they understand the principles involved.
“The Bribery Act isn’t something that will go away – it needs to be addressed and quickly if it hasn’t already been done. Make sure you’re receiving the right level of support for your business and if you don’t think you’re getting the help you should, raise the issue with your accountant or other professional advisor.
Don’t put your head in the sand and think it doesn’t apply to you – it does. Act effectively and act now.”