Guidance on the British Bribery Act of 2010

8/7/2019 Guidance on the British Bribery Act of 2010

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THE

BRIBERYACT2010

Guidanceabout procedures which relevant commercialorganisations can put into place to prevent

persons associated with them rom bribing(section 9 o 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 rms thatlose out unairly. The wider victims are government and society,undermined by a weakened rule o law and damaged social andeconomic development. At stake is the principle o ree and aircompetition, which stands diminished by each bribe oered oraccepted.

Tackling this scourge is a priority or anyonewho cares about the uture o business, thedeveloping world or international trade. Thatis why the entry into orce o the BriberyAct on 1 July 2011 is an important steporward or 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 o bribery. My aim is that it oers clarityon how the law will operate.

Readers o this document will be awarethat the Act creates oences o oering orreceiving bribes, bribery o oreign publicocials and o ailure to prevent a bribebeing paid on an organisations behal.These are certainly tough rules. But readersshould understand too that they are directedat making lie dicult or the mavericksresponsible or corruption, not undulyburdening the vast majority o decent,law-abiding rms.

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

is proportionality. It also oers case studyexamples that help illuminate the applicationo the Act. Rest assured no one wants tostop rms 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 thisor a concise introduction to how they canmeet the requirements o the law.

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


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Contents

Introduction 6

Government policy and Section 7 o the Bribery Act 8

Section 1 Oences o bribing another person 10

Section 6 Bribery o a oreign ofcial 11

Section 7 Failure o 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 ull copy othe Act and its Explanatory Notes canbe accessed at: www.opsi.gov.uk/acts/acts2010/ukpga_20100023_en_1The Act creates a new oence undersection 7 which can be committed bycommercial organisations1 which ail to

prevent persons associated with themrom committing bribery on their behal.It is a ull deence or an organisationto prove that despite a particular caseo bribery it nevertheless had adequateprocedures in place to prevent personsassociated with it rom bribing. Section 9o the Act requires the Secretary o Stateto publish guidance about procedureswhich commercial organisations can put in

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

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

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

4 The guidance is designed to be o general

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

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

5 I your organisation is small or mediumsized the application o the principlesis likely to suggest procedures that aredierent rom those that may be right ora 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 denition o 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 aced by an organisation. Nopolicies or procedures are capable odetecting and preventing all bribery.A risk-based approach will, however,

serve to ocus the eort 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 guidancerefects its non-prescriptive nature.The six principles are intended to be o

general application and are thereoreexpressed in neutral but armativelanguage. The commentary ollowingeach o the principles is expressed morebroadly.

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


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Government policy andSection 7 of the Bribery Act

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

ways that bribery can be committed. Itdoes this by providing robust oences,enhanced sentencing powers or thecourts (raising the maximum sentence orbribery committed by an individual rom7 to 10 years imprisonment) and widejurisdictional powers (see paragraphs 15and 16 on page 9).

10 The Act contains two general oences

covering the oering, promising orgiving o a bribe (active bribery) andthe requesting, agreeing to receive oraccepting o a bribe (passive bribery)at sections 1 and 2 respectively. It alsosets out two urther oences whichspecically address commercial bribery.Section 6 o the Act creates an oencerelating to bribery o a oreign publicocial in order to obtain or retainbusiness or an advantage in the conducto business2, and section 7 creates a neworm o corporate liability or ailing toprevent bribery on behal o a commercialorganisation. More detail about thesections 1, 6 and 7 oences is providedunder the separate headings below.

11 The objective o the Act is not to bringthe ull orce o the criminal law to bearupon well run commercial organisationsthat experience an isolated incident obribery on their behal. So in order toachieve an appropriate balance, section7 provides a ull deence. This is inrecognition o the act that no bribery

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

12 The application o bribery preventionprocedures by commercial organisationsis o signicant interest to those

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

2 Conduct amounting to bribery o a oreign public ocial could also be charged under section 1 o the Act. It will be orprosecutors to select the most appropriate charge.


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

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

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

Jurisdiction15 Section 12 o the Act provides that the

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

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

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

amounting to a section 1 or 6 oenceon the part o a person who is neithera UK national or resident in the UK, nora body incorporated or ormed in theUK. In addition, section 12(5) providesthat it does not matter whether theacts or omissions which orm part o thesection 7 oence take part in the UK orelsewhere. So, provided the organisationis incorporated or ormed in the UK,or that the organisation carries on abusiness or part o a business in theUK (wherever in the world it may beincorporated or ormed) 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 identication principle as dened by cases such as Tesco Supermarkets vNattrass [1972] AC 153 which provides that corporate liability arises only where the oence is committed by a natural person who is thedirecting mind or will o the organisation.

4 Although this particular oence is not relevant or the purposes o section 7.


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Section 1:Oences o bribing another person

17 Section 1 makes it an oence or a person(P) to oer, promise or give a nancial orother advantage to another person in oneo two cases:

Case 1 applies where P intends theadvantage to bring about the improperperormance by another person o

a relevant unction or activity or toreward such improper perormance.

Case 2 applies where P knows orbelieves that the acceptance o theadvantage oered, promised or givenin itsel constitutes the improperperormance o a relevant unction oractivity.

18 Improper perormance is dened at

sections 3, 4 and 5. In summary, thismeans perormance which amounts toa breach o an expectation that a personwill act in good aith, impartially, or inaccordance with a position o trust. Theoence applies to bribery relating to anyunction o a public nature, connectedwith a business, perormed in the courseo a persons employment or perormedon behal o a company or another bodyo persons. Thereore, bribery in both thepublic and private sectors is covered.

19 For the purposes o deciding whether aunction or activity has been perormedimproperly the test o what is expectedis a test o what a reasonable person inthe UK would expect in relation to theperormance o that unction or activity.Where the perormance o the unctionor activity is not subject to UK law (or

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 o 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 breacho an expectation that a person will act in

good aith, impartially, or in accordancewith a position o trust. This would bejudged by what a reasonable personin the UK thought. So, or example, aninvitation to oreign clients to attend aSix Nations match at Twickenham as parto a public relations exercise designedto cement good relations or enhanceknowledge in the organisations eld isextremely unlikely to engage section1 as there is unlikely to be evidenceo an intention to induce improperperormance o a relevant unction.


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Section 6:Bribery o a oreign public ofcial

21 Section 6 creates a standalone oenceo bribery o a oreign public ocial. Theoence is committed where a personoers, promises or gives a nancial orother advantage to a oreign publicocial with the intention o infuencingthe ocial in the perormance o his orher ocial unctions. The person oering,

promising or giving the advantage mustalso intend to obtain or retain business oran advantage in the conduct o businessby doing so. However, the oence is notcommitted where the ocial is permittedor required by the applicable written lawto be infuenced by the advantage.

22 A oreign public ocial includesocials, whether elected or appointed,

who hold a legislative, administrative orjudicial position o any kind o a countryor territory outside the UK. It alsoincludes any person who perorms publicunctions in any branch o the national,local or municipal government o sucha country or territory or who exercisesa public unction or any public agencyor public enterprise o such a country orterritory, such as proessionals workingor public health agencies and ocersexercising public unctions in state-owned enterprises. Foreign public ocialscan also be an ocial or agent o a publicinternational organisation, such as theUN or the World Bank.

23 Sections 1 and 6 may capture the sameconduct but will do so in dierent ways.The policy that ounds the oence atsection 6 is the need to prohibit theinfuencing o decision making in the

context o publicly unded businessopportunities by the inducement opersonal enrichment o oreign publicocials or to others at the ocialsrequest, assent or acquiescence.Such activity is very likely to involveconduct which amounts to improperperormance o a relevant unction

or activity to which section 1 applies,but, unlike section 1, section 6 does notrequire proo o it or an intention toinduce it. This is because the exact natureo the unctions o persons regardedas oreign public ocials is oten verydicult to ascertain with any accuracy,and the securing o evidence will oten bereliant on the co-operation o the stateany such ocials serve. To require the

prosecution to rely entirely on section1 would amount to a very signicantdeciency in the ability o the legislationto address this particular mischie. Thatsaid, it is not the Governments intentionto criminalise behaviour where no suchmischie occurs, but merely to ormulatethe oence to take account o theevidential diculties reerred to above. Inview o its wide scope, and its role in thenew orm o corporate liability at section7, the Government oers the ollowingurther explanation o issues arising romthe ormulation o section 6.

Local law24 For the purposes o section 6 prosecutors

will be required to show not only thatan advantage was oered, promisedor given to the ocial or to anotherperson at the ocials request, assent oracquiescence, but that the advantage was


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one that the ocial was not permittedor required to be infuenced by asdetermined by the written law applicableto the oreign ocial.

25 In seeking tenders or publicly undedcontracts Governments oten permitor require those tendering or the

contract to oer, in addition to theprincipal tender, some kind o additionalinvestment in the local economyor benet to the local community.Such arrangements could in certaincircumstances amount to a nancialor other advantage to a public ocialor to another person at the ocialsrequest, assent or acquiescence. Where,however, relevant written law permits

or requires the ocial to be infuencedby such arrangements they will alloutside the scope o the oence. So,or example, where local planninglaw permits community investmentor requires a oreign public ocial tominimise the cost o public procurementadministration through cost sharing withcontractors, a prospective contractorsoer o ree training is very unlikelyto engage section 6. In circumstanceswhere the additional investment wouldamount to an advantage to a oreignpublic ocial and the local law is silentas to whether the ocial is permittedor required to be infuenced by it,prosecutors will consider the publicinterest in prosecuting. This will providean appropriate backstop in circumstanceswhere the evidence suggests that theoer o additional investment is alegitimate part o a tender exercise.

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

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

and important part o doing businessand it is not the intention o the Actto criminalise such behaviour. TheGovernment does not intend or the Actto prohibit reasonable and proportionatehospitality and promotional or othersimilar business expenditure intendedor 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 or anancial or other advantage to infuencethe ocial in his or her ocial role andthereby secure business or a businessadvantage. In this regard, it may be insome circumstances that hospitality orpromotional expenditure in the ormo travel and accommodation costsdoes not even amount to a nancial orother advantage to the relevant ocialbecause it is a cost that would otherwisebe borne by the relevant oreignGovernment rather than the ocial himor hersel.


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

the requisite standard then no oenceunder section 6 will be committed.There may be direct evidence to supportthe existence o 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 totalityo the evidence which takes into account

all o the surrounding circumstances.It would include matters such as thetype and level o advantage oered,the manner and orm in which theadvantage is provided, and the level oinfuence the particular oreign publicocial 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 oreign publicocial, then, generally, the greater theinerence that it is intended to infuencethe ocial 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,o itsel, evidence that no bribe was paidi there is other evidence to the contrary;

particularly i the norms in question areextravagant.

30 Levels o expenditure will not, thereore,be the only consideration in determiningwhether a section 6 oence has beencommitted. But in the absence o anyurther evidence demonstrating therequired connection, it is unlikely, orexample, that incidental provision o a

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


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31 Some urther examples might be helpul.The provision by a UK mining companyo reasonable travel and accommodationto allow oreign public ocials to visittheir distant mining operations so thatthose ocials may be satised o the highstandard and saety o the companysinstallations and operating systems

are circumstances that all outside theintended scope o the oence. Flights andaccommodation to allow oreign publicocials to meet with senior executiveso a UK commercial organisation in NewYork as a matter o genuine mutualconvenience, and some reasonablehospitality or the individual and his or herpartner, such as ne dining and attendanceat a baseball match are acts that are, in

themselves, unlikely to raise the necessaryinerences. However, i the choice o NewYork as the most convenient venue was indoubt because the organisations seniorexecutives could easily have seen theocial with all the relevant documentationwhen they had visited the relevant countrythe previous week then the necessaryinerence might be raised. Similarly,supplementing inormation provided toa oreign public ocial on a commercialorganisations background, track recordand expertise in providing private healthcare with an oer o 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 o a ve-star holiday or theoreign public ocial which is unrelatedto a demonstration o the organisationsservices is, all things being equal, ar morelikely to raise the necessary inerence.

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

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


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Section 7: Failure o commercial organisations to

prevent bribery33 A commercial organisation will be liable

to prosecution i a person associatedwith it bribes another person intendingto obtain or retain business or anadvantage in the conduct o businessor that organisation. As set out above,the commercial organisation will have aull deence i it can show that despite a

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

Commercial organisation34 Only a relevant commercial organisation

can commit an oence under section 7 othe Bribery Act. A relevant commercialorganisation is dened at section 7(5)as a body or partnership incorporated orormed in the UK irrespective o where itcarries on a business, or an incorporatedbody or partnership which carries on abusiness or part o a business in the UKirrespective o the place o incorporationor ormation. The key concept here isthat o an organisation which carries ona business. The courts will be the nalarbiter as to whether an organisationcarries on a business in the UK takinginto account the particular acts inindividual cases. However, the ollowingparagraphs set out the Governmentsintention as regards the application o thephrase.

35 As regards bodies incorporated, orpartnerships ormed, in the UK, despitethe act 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 i it pursues primarily charitableor educational aims or purely publicunctions. It will be caught i it engages incommercial activities, irrespective o thepurpose or which prots are made.

36 As regards bodies incorporated, orpartnerships ormed, outside theUnited Kingdom, whether such bodiescan properly be regarded as carryingon a business or part o a businessin any part o the United Kingdomwill again be answered by applying acommon sense approach. Where thereis a particular dispute as to whether abusiness presence in the United Kingdomsatises the test in the Act, the nalarbiter, 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, orexample, the mere act that a companyssecurities have been admitted to theUK Listing Authoritys Ocial List andthereore admitted to trading on the


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London Stock Exchange, in itsel, toqualiy that company as carrying on abusiness or part o a business in the UKand thereore alling within the denitiono a relevant commercial organisationor the purposes o section 7. Likewise,having a UK subsidiary will not, in itsel,mean that a parent company is carrying

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

Associated person37 A commercial organisation is liable under

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

person associated with a commercialorganisation is dened at section 8 as aperson who perorms services or or onbehal o the organisation. This personcan be an individual or an incorporatedor unincorporated body. Section 8provides that the capacity in which aperson perorms services or or on behalo the organisation does not matter, soemployees (who are presumed to beperorming services or their employer),agents and subsidiaries are included.Section 8(4), however, makes it clear thatthe question as to whether a person isperorming services or an organisation isto be determined by reerence to all therelevant circumstances and not merely byreerence to the nature o the relationshipbetween that person and the organisation.The concept o a person who perormsservices or or on behal o the organisation

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

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

extent that they are perorming servicesor or on behal o a commercialorganisation. Also, where a supplier canproperly be said to be perorming servicesor a commercial organisation rather thansimply acting as the seller o goods, itmay also be an associated person.

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

a prime contractor with a series o sub-contractors, an organisation is likely only toexercise control over its relationship withits contractual counterparty. Indeed, theorganisation may only know the identityo its contractual counterparty. It is likelythat persons who contract with thatcounterparty will be perorming services orthe counterparty and not or other personsin the contractual chain. The principal wayin which commercial organisations maydecide to approach bribery risks which ariseas a result o a supply chain is by employingthe types o anti-bribery proceduresreerred to elsewhere in this guidance(e.g. risk-based due diligence and the useo 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 or joint ventures, these come in manydierent orms, sometimes operatingthrough a separate legal entity, butat other times through contractualarrangements. In the case o a jointventure operating through a separatelegal entity, a bribe paid by the jointventure entity may lead to liability or a

member o the joint venture i the jointventure is perorming services or themember and the bribe is paid with theintention o beneting that member.However, the existence o a joint ventureentity will not o itsel mean that it isassociated with any o its members. Abribe paid on behal o the joint ventureentity by one o its employees or agentswill thereore not trigger liability or

members o the joint venture simply byvirtue o them beneting indirectly romthe bribe through their investment in orownership o the joint venture.

41 The situation will be dierent wherethe joint venture is conducted througha contractual arrangement. The degreeo control that a participant has overthat arrangement is likely to be oneo the relevant circumstances thatwould be taken into account in decidingwhether a person who paid a bribe in theconduct o the joint venture businesswas perorming services or or on behalo a participant in that arrangement. Itmay be, or example, that an employeeo such a participant who has paid a bribein order to benet his employer is notto be regarded as a person associatedwith all the other participants in thejoint venture. Ordinarily, the employee

o a participant will be presumed to bea person perorming services or and onbehal o 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 o evidence that the agent isacting on behal o the contractual joint

venture as a whole.

42 Even i it can properly be said thatan agent, a subsidiary, or anotherperson acting or a member o a jointventure, was perorming services orthe organisation, an oence will becommitted only i that agent, subsidiaryor person intended to obtain or retainbusiness or an advantage in the conduct

o business or the organisation. The actthat an organisation benets indirectlyrom a bribe is very unlikely, in itsel, toamount to proo o the specic intentionrequired by the oence. Without prooo the required intention, liability willnot accrue through simple corporateownership or investment, or throughthe payment o dividends or provision oloans by a subsidiary to its parent. So, orexample, a bribe on behal o a subsidiaryby one o its employees or agents willnot automatically involve liability on thepart o its parent company, or any othersubsidiaries o the parent company, i itcannot be shown the employee or agentintended to obtain or retain businessor a business advantage or the parentcompany or other subsidiaries. This isso even though the parent company orsubsidiaries may benet indirectly romthe bribe. By the same token, liability


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or 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 o adequacy o briberyprevention procedures will depend in

the nal analysis on the acts o eachcase, including matters such as thelevel o control over the activities o theassociated person and the degree o riskthat requires mitigation. The scope othe denition 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 acilitate routine

Government action otherwise calledacilitation payments could triggereither the section 6 oence or, wherethere is an intention to induce improperconduct, including where the acceptanceo such payments is itsel improper, thesection 1 oence and thereore potentialliability under section 7.

45 As was the case under the old law,the Bribery Act does not (unlike USoreign bribery law) provide anyexemption or such payments. The 2009Recommendation o the Organisationor Economic Co-operation andDevelopment5 recognises the corrosiveeect o acilitation payments andasks adhering countries to discourage

companies rom making such payments.Exemptions in this context createarticial distinctions that are dicultto enorce, undermine corporate anti-bribery procedures, conuse anti-briberycommunication with employees andother associated persons, perpetuate anexisting culture o bribery and have the

potential to be abused.

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

and social progress and sustainedcommitment to the rule o law in thoseparts o 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 oers an indicationo how the problem may be addressedthrough the selection o briberyprevention procedures by commercialorganisations.

47 Issues relating to the prosecution oacilitation payments in England andWales are reerred to in the guidance othe Director o the Serious Fraud Oceand the Director o Public Prosecutions.6

5 Recommendation o the Council or Further Combating Bribery o Foreign Public Ocials in International Business Transactions.6 Bribery Act 2010: Joint Prosecution Guidance o the Director o the Serious Fraud Oce and the Director o Public Prosecutions.


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Duress48 It is recognised that there are

circumstances in which individuals arelet with no alternative but to makepayments in order to protect againstloss o lie, limb or liberty. The commonlaw deence o duress is very likely to beavailable in such circumstances.

Prosecutorial discretion49 Whether to prosecute an oence under

the Act is a matter or the prosecutingauthorities. In deciding whether toproceed, prosecutors must rst decidei there is a suciency o evidence, and,i so, whether a prosecution is in thepublic interest. I the evidential test hasbeen met, prosecutors will consider the

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

50 In cases where hospitality, promotionalexpenditure or acilitation payments do,on their ace, trigger the provisions othe Act prosecutors will consider verycareully what is in the public interestbeore deciding whether to prosecute.The operation o prosecutorial discretionprovides a degree o fexibility whichis helpul to ensure the just and airoperation o the Act.

51 Factors that weigh or and against thepublic interest in prosecuting in Englandand Wales are reerred to in the jointguidance o the Director o the SeriousFraud Oce and the Director o PublicProsecutions reerred 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 behal should be inormed by sixprinciples. These are set out below. Commentary and guidanceon what procedures the application o the principles mayproduce accompanies each principle.

These principles are not prescriptive. They are intended to be

fexible and outcome ocussed, allowing or the huge variety ocircumstances that commercial organisations nd themselvesin. Small organisations will, or example, ace dierentchallenges to those aced by large multi-national enterprises.Accordingly, the detail o how organisations might apply theseprinciples, taken as a whole, will vary, but the outcome shouldalways be robust and eective 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 ace lower risks o bribery on their behalby associated persons than the risks that operate in oreignmarkets. In any event procedures put in place to mitigatedomestic bribery risks are likely to be similar i not the sameas those designed to mitigate those associated with oreignmarkets.

A series o case studies based on hypothetical scenarios isprovided at Appendix A. These are designed to illustrate theapplication o the principles or 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 aces and to the nature, scaleand complexity o the commercialorganisations activities. They are alsoclear, practical, accessible, eectivelyimplemented and enorced.

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 thereore

a necessary measure in the preventiono 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 aces. An initialassessment o risk across the organisationis thereore a necessary rst step. To acertain extent the level o risk will belinked to the size o the organisation andthe nature and complexity o its business,but size will not be the only determiningactor. Some small organisations canace quite signicant risks, and willneed more extensive procedures thantheir counterparts acing limited risks.However, small organisations are unlikelyto need procedures that are as extensiveas those o a large multi-nationalorganisation. For example, a very small

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

1.3 The level o risk that organisations acewill also vary with the type and natureo the persons associated with it. For

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

with oreign public ocials may beassessed as signicant and accordinglyrequire much more in the way oprocedures to mitigate those risks.Organisations are likely to need to selectprocedures to cover a broad range orisks but any consideration by a courtin an individual case o the adequacy oprocedures is likely necessarily to ocuson those procedures designed to preventbribery on the part o the associatedperson committing the oence in question.

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


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1.5 The Government recognises that applyingthese procedures retrospectively toexisting associated persons is moredicult, but this should be done overtime, adopting a risk-based approachand with due allowance or what ispracticable and the level o 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 mitigationo specic bribery risks, such asthose arising rom the conduct ointermediaries and agents, or thoseassociated with hospitality andpromotional expenditure, acilitationpayments or political and charitabledonations or contributions; (seePrinciple 3 on risk assessment)

an overview o its strategy toimplement its bribery preventionpolicies.

1.7 The procedures put in place to implementan organisations bribery preventionpolicies should be designed to mitigateidentied risks as well as to preventdeliberate unethical conduct on the parto associated persons. The ollowingis an indicative and not exhaustive listo the topics that bribery preventionprocedures might embrace depending onthe particular risks aced:

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

Risk assessment procedures(see Principle 3).

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

The provision o gits, hospitality andpromotional expenditure; charitable

and political donations; or demands oracilitation payments.

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

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

Financial and commercial controls suchas adequate bookkeeping, auditing and

approval o expenditure.

Transparency o transactions anddisclosure o inormation.

Decision making, such as delegationo authority procedures, separation ounctions and the avoidance o conficts ointerest.

Enorcement, detailing discipline processesand sanctions or breaches o theorganisations anti-bribery rules.

The reporting o bribery including speakup or whistle blowing procedures.

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

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

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

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Principle 2Top-level commitment

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

Commentary2.1 Those at the top o an organisation are

in the best position to oster a culture ointegrity where bribery is unacceptable.The purpose o this principle is toencourage the involvement o top-levelmanagement in the determination obribery prevention procedures. It is alsoto encourage top-level involvement

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

Procedures2.2 Whatever the size, structure or market

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

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

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

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

a commitment to carry out businessairly, honestly and openly

a commitment to zero tolerancetowards bribery

the consequences o breaching thepolicy or employees and managers

or other associated personsthe consequences o breachingcontractual provisions relating to

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

articulation o the business benetso rejecting bribery (reputational,customer and business partnercondence)

reerence to the range o briberyprevention procedures the commercialorganisation has or is putting inplace, including any protection andprocedures or condential reportingo bribery (whistle-blowing)

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

reerence to the organisationsinvolvement in any collective actionagainst bribery in, or example, thesame business sector.


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

prevention will take a variety o ormsappropriate or 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 or 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 refect theollowing elements:

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

Leadership on key measures such as acode o conduct.

Endorsement o all bribery preventionrelated publications.

Leadership in awareness raising andencouraging transparent dialoguethroughout the organisation so as toseek to ensure eective disseminationo 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.

Specic involvement in high proleand critical decision making whereappropriate.

Assurance o risk assessment. General oversight o breaches o

procedures and the provision oeedback to the board or equivalent,where appropriate, on levels ocompliance.

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Principle 3Risk Assessment

The commercial organisation assessesthe nature and extent o its exposure topotential external and internal risks obribery on its behal by persons associatedwith it. The assessment is periodic,inormed and documented.

Commentary3.1 For many commercial organisations this

principle will maniest itsel as part oa more general risk assessment carriedout in relation to business objectives.For others, its application may producea more specic stand alone briberyrisk assessment. The purpose o thisprinciple is to promote the adoptiono risk assessment procedures that areproportionate to the organisations

size and structure and to the nature,scale and location o its activities. Butwhatever approach is adopted the ullerthe understanding o the bribery risks anorganisation aces the more eective itseorts to prevent bribery are likely to be.

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

Procedures3.3 Risk assessment procedures that enable

the commercial organisation accuratelyto identiy and prioritise the risks itaces will, whatever its size, activities,customers or markets, usually refect aew basic characteristics. These are:

Oversight o the risk assessment bytop level management.

Appropriate resourcing this shouldrefect the scale o the organisationsbusiness and the need to identiy andprioritise all relevant risks.

Identication o the internal andexternal inormation sources thatwill enable risk to be assessed andreviewed.

Due diligence enquiries(see Principle 4).

Accurate and appropriatedocumentation o the risk assessmentand its conclusions.

3.4 As a commercial organisations businessevolves, so will the bribery risks it aces 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 o the world in whichit has not done business beore(see Principle 6 or more on this).

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Commonly encountered risks3.5 Commonly encountered external risks

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

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

absence o eectively implementedanti-bribery legislation and a ailure othe oreign government, media, localbusiness community and civil societyeectively to promote transparentprocurement and investment policies.

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

Transaction risk: certain types otransaction give rise to higher risks,or 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, orexample, the use o intermediaries intransactions with oreign public ocials;consortia or joint venture partners; andrelationships with politically exposedpersons where the proposed businessrelationship involves, or is linked to, aprominent public ocial.

3.6 An assessment o 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 o risk. Commonly encounteredinternal actors may include:

deciencies in employee training, skillsand knowledge

bonus culture that rewards excessiverisk taking

lack o clarity in the organisationspolicies on, and procedures or,hospitality and promotional

expenditure, and political or charitablecontributions

lack o clear nancial controls

lack o a clear anti-bribery messagerom 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 opersons who perorm or will perormservices or or on behal o the organisation,in order to mitigate identied bribery risks.

Commentary4.1 Due diligence is rmly established as an

element o corporate good governanceand it is envisaged that due diligencerelated to bribery prevention will otenorm part o a wider due diligenceramework. Due diligence procedures areboth a orm o bribery risk assessment(see Principle 3) and a means omitigating a risk. By way o illustration,a commercial organisation may identiy

risks that as a general proposition attachto doing business in reliance uponlocal third party intermediaries. Duediligence o specic prospective thirdparty intermediaries could signicantlymitigate these risks. The signicance othe role o due diligence in bribery riskmitigation justies its inclusion here as aPrinciple in its own right.

4.2 The purpose o this Principle is toencourage commercial organisations toput in place due diligence proceduresthat adequately inorm the applicationo proportionate measures designed toprevent persons associated with themrom bribing on their behal.

Procedures4.3 As this guidance emphasises throughout,

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

or by external consultants. A personassociated with a commercialorganisation as set out at section 8 othe Bribery Act includes any personperorming services or a commercialorganisation. As explained at paragraphs37 to 43 in the section GovernmentPolicy and section 7, the scope o this

denition is broad and can embrace awide range o business relationships. Butthe appropriate level o due diligenceto prevent bribery will vary enormouslydepending on the risks arising rom theparticular relationship. So, or example,the appropriate level o due diligencerequired by a commercial organisationwhen contracting or the perormance oinormation technology services may be

low, to refect low risks o bribery on itsbehal. In contrast, an organisation thatis selecting an intermediary to assist inestablishing a business in oreign marketswill typically require a much higher levelo due diligence to mitigate the risks obribery on its behal.

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 olocal agents in circumstances whereit may be dicult or a commercialorganisation to extricate itsel rom abusiness relationship once established.The importance o 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 mergero commercial organisations or anacquisition o one by another.

4.5 Due diligence or the purposes oPrinciple 4 should be conducted usinga risk-based approach (as reerred to

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

engaged associated persons may also berequired, proportionate to the identiedrisks. Generally, more inormation islikely to be required rom prospectiveand existing associated persons thatare incorporated (e.g. companies) thanrom individuals. This is because on abasic level more individuals are likelyto be involved in the perormance oservices by a company and the exactnature o the roles o such individualsor other connected bodies may not beimmediately obvious. Accordingly, duediligence may involve direct requestsor details on the background, expertiseand business experience, o relevantindividuals. This inormation can thenbe veried through research and theollowing up o reerences, etc.

4.6 A commercial organisations employeesare presumed to be persons associatedwith the organisation or the purposeso the Bribery Act. The organisationmay wish, thereore, to incorporate inits recruitment and human resourcesprocedures an appropriate level o duediligence to mitigate the risks o 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 aces.

Commentary5.1 Communication and training deters

bribery by associated persons byenhancing awareness and understandingo a commercial organisationsprocedures and to the organisationscommitment to their proper application.Making inormation available assists inmore eective monitoring, evaluationand review o 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 toneo communications or internalconsumption may vary rom that orexternal use in response to the dierentrelationship the audience has with thecommercial organisation. The nature ocommunication will vary enormouslybetween commercial organisations inaccordance with the dierent briberyrisks aced, the size o the organisationand the scale and nature o its activities.

5.3 Internal communications should conveythe tone rom the top but are also likelyto ocus on the implementation o theorganisations policies and proceduresand the implications or employees.Such communication includes policieson particular areas such as decisionmaking, nancial control, hospitality and

promotional expenditure, acilitationpayments, training, charitable andpolitical donations and penalties orbreach o rules and the articulation omanagement roles at dierent levels.Another important aspect o internalcommunications is the establishmento a secure, condential and accessiblemeans or internal or external partiesto raise concerns about bribery on the

part o associated persons, to providesuggestions or improvement o briberyprevention procedures and controls andor requesting advice. These so calledspeak up procedures can amountto a very helpul management toolor commercial organisations withdiverse operations that may be in manycountries. I these procedures are tobe eective there must be adequateprotection or those reporting concerns.

5.4 External communication o briberyprevention policies through a statementor codes o conduct, or example,can reassure existing and prospectiveassociated persons and can act as adeterrent to those intending to bribe ona commercial organisations behal. Suchcommunications can include inormationon bribery prevention procedures andcontrols, sanctions, results o 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 all outside the scope o therange o its associated persons, or to thegeneral public.

Training

5.5 Like all procedures training should beproportionate to risk but some training islikely to be eective in rmly establishingan anti-bribery culture whatever the levelo risk. Training may take the orm o

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 mandatoryor new employees or or agents (ona weighted risk basis) as part o aninduction process, but it should also betailored to the specic risks associatedwith specic posts. Consideration shouldalso be given to tailoring training to thespecial needs o those involved in anyspeak up procedures, and higher riskunctions such as purchasing, contracting,distribution and marketing, and workingin high risk countries. Eective training iscontinuous, and regularly monitored andevaluated.

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

5.8 Nowadays there are many dierenttraining ormats available in additionto the traditional classroom or seminarormats, such as e-learning and otherweb-based tools. But whatever theormat, the training ought to achieveits objective o ensuring that thoseparticipating in it develop a rmunderstanding o what the relevantpolicies and procedures mean in practice

or 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 aces may change over

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

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

Procedures6.2 There is a wide range o internal and

external review mechanisms whichcommercial organisations could considerusing. Systems set up to deter, detectand investigate bribery, and monitor theethical quality o transactions, such asinternal nancial control mechanisms,will help provide insight into theeectiveness o procedures designedto prevent bribery. Sta surveys,questionnaires and eedback romtraining can also provide an importantsource o inormation on eectivenessand a means by which employees andother associated persons can inormcontinuing improvement o anti-briberypolicies.

6.3 Organisations could also considerormal periodic reviews and reports ortop-level management. Organisationscould also draw on inormation on otherorganisations practices, or examplerelevant trade bodies or regulatorsmight highlight examples o good or badpractice in their publications.

6.4 In addition, organisations might wishto consider seeking some orm oexternal verication or assurance o theeectiveness o anti-bribery procedures.Some organisations may be able to applyor certied compliance with one othe independently-veried anti-briberystandards maintained by industrial sectorassociations or multilateral bodies.

However, such certication may notnecessarily mean that a commercialorganisations bribery preventionprocedures are adequate or all purposeswhere an oence under section 7 o theBribery Act could be charged.

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The Bribery Act 2010 Appendix A: Case Studies

32

Appendix ABribery Act 2010 case studies

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

context can assist commercial organisations indeciding what procedures to prevent personsassociated with them rom bribing on theirbehal 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 o 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, refecting a minimumbaseline o action or being appropriate or allorganisations whatever their size. Accordingly,the considerations set out below are not:

comprehensive o all considerations in allcircumstances

conclusive o adequate procedures

conclusive o inadequate procedures i notall o the considerations are consideredand/or applied.

All but one o these case studies ocus onbribery risks associated with oreign markets.This is because bribery risks associated withoreign markets are generally higher thanthose associated with domestic markets.Accordingly case studies ocussing on oreignmarkets are better suited as vehicles or theillustration o bribery prevention procedures.


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Case study 1 Principle 1

Facilitation paymentsA medium sized company (A) has acquireda new customer in a oreign country (B)where it operates through its agent company(C). Its bribery risk assessment has identiedacilitation payments as a signicant problemin securing reliable importation into B andtransport to its new customers manuacturinglocations. These sometimes take the orm o

inspection ees required beore Bs importinspectors will issue a certicate o inspectionand thereby acilitate the clearance o goods.

A could consider any or a combination o theollowing:

Communication o its policy o non-payment o acilitation payments to Cand its sta.

Seeking advice on the law o B relatingto certicates o inspection and ees orthese to dierentiate between properlypayable ees and disguised requests oracilitation payments.

Building realistic timescales into theplanning o the project so that shipping,importation and delivery schedules allowwhere easible or resisting and testingdemands or acilitation payments.

Requesting that C train its sta aboutresisting demands or acilitationpayments and the relevant local law andprovisions o the Bribery Act 2010.

Proposing or including as part o anycontractual arrangement certainprocedures or C and its sta, which mayinclude one or more o the ollowing, iappropriate:

questioning o legitimacy o demands

requesting receipts and identicationdetails o the ocial making thedemand

requests to consult with superiorocials

trying to avoid paying inspectionees (i not properly due) in cash anddirectly to an ocial

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

commit an oence under UK law inorming those demanding payments

that it will be necessary or C to inormthe UK embassy o the demand.

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

Use o any UK diplomatic channels

or participation in locally active non-governmental organisations, so as toapply pressure on the authorities oB to take action to stop demands oracilitation 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 toacilitate business opportunities and to assistin the preparation o both pre-qualicationsubmissions and ormal tenders in seekingnew business. Such consultants work on an

arms-length-ee-plus-expenses basis. They areengaged by sales sta and selected because otheir extensive network o business contactsand the specialist inormation they have.The reason or engaging them is to enhancethe companys prospects o being includedin tender and pre-qualication lists and obeing selected as main or sub-contractors.The reliance on consultants and, in particular,diculties in monitoring expenditure which

sometimes involves cash transactions hasbeen identied by the company as a sourceo medium to high risk o bribery beingundertaken on the companys behal.

In seeking to mitigate these risks the companycould consider any or a combination o theollowing:

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

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

searches and ollowing up any businessreerences and nancial statements.

Considering rming up the terms othe consultants contracts so that theyrefect a commitment to zero toleranceo bribery, set clear criteria or provisiono bona de hospitality on the companysbehal and dene in detail the basis o

remuneration, including expenses. Consider making consultants contracts

subject to periodic review and renewal.

Drawing up key points guidance onpreventing bribery or its sales sta andall other sta involved in bidding orbusiness and when engaging consultants

Periodically emphasising these policiesand procedures at meetings orexample, this might orm a standing item

on meeting agendas every ew months.

Providing a condential means or staand external business contacts to air anysuspicions o the use o bribery on thecompanys behal.


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Case study 3 Principles 1 and 6

Joint ventureA medium sized company (D) is interestedin signicant oreign 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 identies thenecessary interaction between DE and localpublic ocials as a source o signicant risks

o bribery.

D could consider negotiating or the inclusiono any or a combination o the ollowingbribery prevention procedures into theagreement setting up DE:

Parity o representation on the board oDE.

That DE put in place measures designed

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

gits and hospitality

agreed decision making rules

procurement

engagement o third parties, includingdue diligence requirements

conduct o relations with publicocials

training or sta in high risk positions

record keeping and accounting.

The establishment o an audit committeewith at least one representative o eacho 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 o DE, witha breach by either D or E being a breacho the agreement between them. Wheresuch a breach is a material breach thiscould lead to termination or othersimilarly signicant consequences.


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Case study 4 Principles 1 and 5

Hospitality and Promotional expenditureA rm o engineers (F) maintains aprogramme o annual events providingentertainment, quality dining and attendanceat various sporting occasions, as an expressiono appreciation o 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 o the traveland accommodation o any oreign publicocials attending are, however, met by F.

F could consider any or a combination o theollowing:

Conducting a bribery risk assessmentrelating to its dealings with businesspartners and oreign public ocials and

in particular the provision o hospitalityand promotional expenditure.

Publication o a policy statementcommitting it to transparent,proportionate, reasonable and bona dehospitality and promotional expenditure.

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

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

that any procedures are designedto seek to ensure transparency andconormity with the relevant lawsand codes applying to oreign publicocials

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

seek to improve the image o 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 coner any businessadvantage or that the recipients

independence will be aected criteria to be applied when deciding

the appropriate levels o hospitalityor both private and public businesspartners, clients, suppliers andoreign public ocials and the typeo hospitality that is appropriate indierent sets o circumstances

that provision o hospitality or publicocials be cleared with the relevant

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

or expenditure over certain limits,approval by an appropriately seniorlevel o management may be arelevant consideration

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

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

Appropriate training and supervisionprovided to sta.


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

The small manuacturer could consider any ora combination o the ollowing:

Incorporating an assessment o briberyrisk into research to identiy the optimummarket or expansion.

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

Consulting general country assessments

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

Seeking advice rom industryrepresentatives.

Following up any general or specialistadvice with urther independent research.


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Due diligence o agentsA medium to large sized manuacturer ospecialist equipment (G) has an opportunityto enter an emerging market in a oreigncountry (H) by way o a government contractto supply equipment to the state. Localconvention requires any oreign commercialorganisations to operate through a localagent. G is concerned to appoint a reputable

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

G could consider any or a combination o theollowing:

Compiling a suitable questionnaire orpotential agents requiring or example,details o ownership i not an individual;

CVs and reerences or those involvedin perorming the proposed service;details o any directorships held, existingpartnerships and third party relationshipsand any relevant judicial or regulatoryndings.

Having a clear statement o the precisenature o the services oered, costs,commissions, ees and the preerredmeans o remuneration.

Undertaking research, including internetsearches, o the prospective agents and,i a corporate body, o every personidentied as having a degree o controlover its aairs.

Making enquiries with the relevantauthorities in H to veriy the inormationreceived in response to the questionnaire.

Following up reerences and clariyingany matters arising rom thequestionnaire or any other inormationreceived with the agents, arranging aceto ace meetings where appropriate.

Requesting sight or evidence o 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 ocials?

Is what you are proposing to payreasonable and commercial?

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


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

J could consider any or a combination o the

ollowing:

Making employees o J engaged inbidding or business ully aware o Jsanti-bribery statement, code o conductand, where appropriate, that details oits anti-bribery policies are included in itstender.

Including suitable contractual termson bribery prevention measures in the

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

Making employees o J ully awareo policies and procedures applyingto relevant issues such as hospitalityand acilitation payments, includingall nancial control mechanisms,sanctions or any breaches o the rulesand instructions on how to report anysuspicious conduct.

Supplementing the inormation, whereappropriate, with specially preparedtraining to Js sta involved with theoreign country.


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Case study 8 Principle 1, 4 and 6

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

Ls representative about the problems whichthe relative unavailability o antiretroviraldrugs cause locally in the ace o a high HIVinection rate.

In a subsequent meeting with an ocial o Mto discuss the approval o Ls new wheat strainor import, the ocial suggests that L couldpay or the necessary antiretroviral drugs andthat this will be a very positive actor in the

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

L could consider any or a combination o theollowing:

Making reasonable eorts to conductdue diligence, including consultation withsta members and any business partnersit has in country M in order to satisyitsel that the suggested arrangement islegitimate and in conormity with anyrelevant laws and codes applying to theoreign public ocial responsible orapproving the product. It could do this byobtaining inormation on:

Ms local law on community benetsas part o Government procurementand, i no particular local law, theocial status and legitimacy o 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 oreign ocial inquestion, i possible.

Adopting an internal communication plandesigned to ensure that any relationshipswith charitable organisations areconducted in a transparent and openmanner and do not raise any expectationo the award o a contract or licence.

Adopting company-wide policiesand procedures about the selectiono charitable projects or initiativeswhich are inormed by appropriate riskassessments.

Training and support or sta inimplementing the relevant policiesand procedures o communicationwhich allow issues to be reported andcompliance to be monitored.

I charitable donations made in countryM are routinely channelled throughgovernment ocials or to others at theocials request, a red fag should beraised and L may seek to monitor the wayits contributions are ultimately applied,or investigate alternative methods odonation such as ocial o-set orcommunity gain arrangements with thegovernment o M.

Evaluation o its policies relating tocharitable donations as part o itsnext periodic review o its anti-briberyprocedures.


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Due diligence o agentsA small UK company (N) relies on agentsin country (P) rom which it imports localhigh quality perishable produce and to whichit exports nished goods. The bribery risks itaces arise entirely as a result o its relianceon agents and their relationship with localbusinessmen and ocials. N is oered a newbusiness opportunity in P through a new

agent (Q). An agreement with Q needs to beconcluded quickly.

N could consider any or a combination o theollowing:

Conducting due diligence and backgroundchecks on Q that are proportionate tothe risk beore engaging Q; which couldinclude:

making enquiries through Ns businesscontacts, local chambers o commerceor business associations, or internetsearches

seeking business reerences and anancial statement rom Q andreviewing Qs CV to ensure Q hassuitable experience.

Considering how best to structurethe relationship with Q, includinghow Q should be remunerated or itsservices and how to seek to ensure Qscompliance with relevant laws and codesapplying to oreign public ocials.

Making the contract with Q renewableannually or periodically.

Travelling to P periodically to review theagency situation.


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Top level commitmentA small to medium sized componentmanuacturer is seeking contracts in marketsabroad where there is a risk

Documents

Guidance on the British Bribery Act of 2010