This note has been updated to reflect the new UK regulatory structure, with effect from 1 April 2013 and amendments to the Financial Services and Markets Act 2000 (FSMA) made by the Financial Services Act 2012.
Bribery Act 2010: toolkit
A toolkit to assist with Bribery Act 2010 compliance.
Understanding the Bribery Act 2010
Advising the board of directors
Achieving compliance: adequate procedures to prevent bribery
For an overview of how to implement an effective anti-corruption programme, see Practice note, Bribery Act 2010: anti-corruption policies (www.practicallaw.com/9-502-3153).
This note includes information based on the Ministry of Justice's Guidance about procedures which relevant commercial organisations can put into place to prevent persons associated with them from bribing (section 9 of the Bribery Act 2010) (www.practicallaw.com/0-505-4865) (Adequate Procedures Guidance) and covers, in particular, the following:
Conducting a risk assessment.
Top level commitment.
Due diligence on entering into and managing business relationships.
Developing and reviewing an anti-corruption code of conduct.
Monitoring and audit of anti-corruption policies and procedures.
For introducing (or reviewing) an anti-corruption code of conduct, see:
To ensure commercial contracts contain anti-bribery clauses to protect the organisation from bribery committed by third parties, see standard clauses:
For demonstrating top level commitment and establishing an anti-corruption culture within an organisation, see:
Addressing specific legal issues arising from the Bribery Act
We have published practice notes examining the following key issues relating to the Bribery Act:
For an overview of the bribery and corruption self-reporting initiative in Scotland, see Practice note, Bribery and corruption: self-reporting regime in Scotland (www.practicallaw.com/1-518-2202). This initiative is distinct from the SFO's self-reporting regime in England, Wales and Northern Ireland.
For information on how the SFO must exercise its prosecutorial discretion, including details on the guidelines it must apply (including the Bribery Act Prosecution Guidance), and the evidential and public interest factors it must take into account, see Practice note, Bribery Act 2010: enforcement: prosecutorial discretion (www.practicallaw.com/6-504-2191).
Concerns for certain types of organisation
Multinational organisations and those conducting business outside the UK
Organisations involved in public procurement
For an examination of the potential for the mandatory and discretionary exclusion of contractors from competing for public contracts if they have been convicted of bribery or corruption, see:
For standard clauses which may be inserted into contracts with public authorities, see below, Public authorities.
Organisations in the construction industry
According to research carried out by Transparency International, organisations in the construction and public works industry are the most likely to pay a bribe to win business abroad (see Transparency International).
Construction standard form contracts tend to refer to bribery and corruption, and there are various industry initiatives aiming to address the problems. However, some of the practical issues hindering effective enforcement in the construction sector include:
The size of some construction and infrastructure projects.
The difficulty of tracing all payments between the various parties involved (contractors, sub-contractors and designers).
The bespoke nature of projects, which makes it hard to benchmark costs, and therefore harder to identify some inflated costs that may indicate corruption.
The number of administrative and regulatory requirements that may surround a significant project, such as planning permission (zoning) and environmental permits, which increase the opportunity for facilitation payments and other bribes to be demanded or paid.
For one example of a UK industry approach, see the UK Contractors Group (UKCG) short anti-bribery code of conduct.
Clause 8.6 of the following JCT contracts addresses corruption:
JCT Standard Building Contract, 2005 edition, Revision 2 2009 (SBC05) and the 2011 edition (SBC11).
JCT Design and Build Contract, 2005 edition, Revision 2 2009 (DB05) and the 2011 edition (DB11).
JCT Intermediate Building Contract, 2005 edition, Revision 2 2009 (IC05) and the 2011 edition (IC11).
JCT Intermediate Building Contract with contractor's design, 2005 edition, Revision 2 2009 (ICD05) and the 2011 edition (IC11).
For a standard clause amending JCT clause 8.6 to address the requirements of the Bribery Act 2010, see Standard clause, Bribery Act 2010: Replacement JCT clause 8.6: Corruption (www.practicallaw.com/1-505-9810). (Note that, while clause 8.6 the JCT 2011 editions already refers to the Bribery Act 2010, this standard clause includes further amendments that may be appropriate.)
PLC Construction has also amended a number of standard documents to incorporate this new clause (see Legal update, New standard clause: amending JCT contracts to refer to Bribery Act 2010 (www.practicallaw.com/0-506-0423).
Clause 15 (in particular, clauses 15.2 and 15.6) of the FIDIC Pink Book refer to bribery and corrupt practice, allowing the employer to terminate the contract. When FIDIC was developing the Pink Book, this was one area where it made significant changes from the FIDIC Red Book (1999). (For more information, see Practice note, FIDIC Pink Book: The MDB Harmonised Edition of the Red Book (www.practicallaw.com/3-385-9997).)
Organisations in the financial services sector
For an overview of the implications that the Bribery Act will have for banks and other financial institutions, see Practice note, Bribery Act 2010: compliance and enforcement issues for financial institutions (www.practicallaw.com/6-504-4741).
Organisations regulated by the Financial Conduct Authority (FCA) must also comply with its anti-bribery and corruption requirements:
For an overview of the requirements, see Practice note, FCA's financial crime requirements (www.practicallaw.com/0-520-7571).
For an overview of the FCA's financial crime guide (FC), which includes guidance on bribery and corruption, see Practice note, FCA's financial crime guide (www.practicallaw.com/9-509-0166).
To assess whether effective anti-bribery and corruption systems and controls are in place to comply with the FCA's requirements, see Checklist: FCA anti-bribery and corruption systems and controls (www.practicallaw.com/3-504-6925).
The FCA cannot bring criminal prosecutions under the Bribery Act, so Bribery Act compliance is not specifically covered by these resources. Nevertheless, these resources are useful as the FCA's requirements are likely to be instructive for achieving Bribery Act compliance for organisations subject to them.
Other useful resources for organisations in the financial services sector are:
From the Society of Lloyd's:
a market bulletin advising managing agents on compliance with the Bribery Act 2010, particularly in light of the Adequate Procedures Guidance (see Legal update, Lloyd's guidance on Bribery Act 2010 (www.practicallaw.com/7-506-1443)); and
a financial crime endorsement for use in binding authority contracts (produced jointly with the Lloyds Market Association (LMA) and the London & International Insurance Brokers Association (LIIBA)) (see Legal update, Lloyd's financial crime endorsement for binding authority contracts (www.practicallaw.com/4-507-2396)).
From the Association of Investment Companies (AIC), a note considering the section 7 offence of failing to prevent bribery and how this might apply to investment companies. The note considers the Ministry of Justice's Adequate Procedures Guidance and includes recommendations from the AIC.
From the Wolfsberg Group, revised anti-corruption guidance for banks (see Legal update, Wolfsberg Group revises guidance on anti-corruption measures (www.practicallaw.com/7-507-4233)).
Charities and not-for-profit organisations
The Bribery Act is likely to apply to many charities and other not-for-profit organisations. This is made clear in the Adequate Procedures Guidance (see Legal update, Bribery Act 2010: new guidance relevant to charities (www.practicallaw.com/5-505-5037)).
Consequently, the Charity Commission has updated its guidelines, entitled "Protecting charities from harm (the 'compliance toolkit')" to include a new section on bribery and corruption. This provides advice to charities on issues arising out of the Bribery Act.
Practical tips for carrying out risk assessments on commercial transactions and determining if a commercial agreement requires specific anti-bribery terms.
Discussion of the common commercial transactions which fall into scope of the section 7 offence of failing to prevent bribery by an associated person, including agency, consultancy and supply of services.
Analysis of commercial transactions where it is less clear whether one party could be classified as an associated person of the other under section 7, including under franchise, distribution and white label agreements.
Discussion of specific issues, such as what to do when acting for the associated person, supply chain relationships and seeking an indemnity from the associated person.
Mergers and acquisitions
Debt finance: facility (or loan) agreements
For anti-corruption and anti-bribery representations, warranties and covenants for use in a facility agreement (or loan agreement) (including integrated drafting notes explaining the law behind and commercial reasons for the clauses), see Standard clauses, Anti-corruption provisions: facility agreement (www.practicallaw.com/5-506-0784).
27 June 2013: Sentencing Council: Consultation paper: Fraud, Bribery and Money Laundering Offences Guideline published.
16 April 2013: European Commission proposal for a directive amending the Fourth and Seventh Company Law Directives requiring certain large companies and groups to include a non-financial statement in their annual report covering (among other things) anti-corruption and bribery matters, see Legal update, Narrative reporting: proposal for amending directive on disclosure of non-financial and diversity information (www.practicallaw.com/9-525-8071).
PLC webinar on the Bribery Act
On 23 June 2011, Practical Law Company broadcast a webinar "Bribery Act 2010: is your business prepared?" where Roderick Macauley (Bribery Act Implementation Manager at the Ministry of Justice), Brent D. McDaniel (Director, KPMG Forensic) and Charlie Monteith (White & Case) joined Susan Hollingdale (Head of PLC Corporate) to discuss in detail the practical issues surrounding implementation of the Bribery Act 2010 for small and medium sized enterprises.
The webinar gave those preparing their businesses for the implementation of the Bribery Act practical insight on:
The aims and requirements of the Bribery Act from the Ministry of Justice's perspective.
The challenges of implementation from the perspective of SMEs.
The role of the prosecutor.
Participants were invited to put their questions to the panel and PLC will be publishing the panel's answers to these shortly.
For more details on the webinar, click here.
Other useful resources
Ministry of Justice
The Ministry of Justice is the UK government department behind the Bribery Act. It has the following pages dedicated to the legislation:
Bribery Act 2010: Guidance about procedures which relevant commercial organisations can put into place to prevent persons associated with them from bribing (section 9 of the Bribery Act 2010) (www.practicallaw.com/0-505-4865).
Serious Fraud Office (SFO)
The SFO is the main UK body with responsibility for enforcing the Bribery Act.
It has the following useful resources on its website:
Bribery Act 2010: Joint prosecution guidance of the Director of the Serious Fraud Office and Director of Public Prosecutions (www.practicallaw.com/8-505-4866) (this sets out the SFO's approach to prosecuting the Bribery Act offences).
Guidance on corporate prosecutions (www.practicallaw.com/0-504-2146) (this is about the SFO's approach to prosecuting companies generally).
Code for Crown Prosecutors (www.practicallaw.com/5-504-2144) (all other guidelines are subject to this Code (issued by the Director of Public Prosecutions, the head of the Crown Prosecution Service) and the SFO must apply it in the first instance when exercising its prosecutorial discretion).
Attorney General's guidance to prosecuting bodies on their asset recovery powers under the Proceeds of Crime Act 2002 (this guidance relates to the use of civil recovery orders by the SFO, either in conjunction with a criminal prosecution or instead of one).
Corruption indicators (this is a non-exhaustive list of corruption indicators).
Crown Office and Procurator Fiscal Service (COPFS)
The COPFS has published guidance on the bribery and corruption self-reporting initiative in Scotland.
Organisation for Economic Co-operation and Development (OECD)
The OECD has the following resources, available through its Bribery and Corruption page:
The World Bank
The World Bank provides data on corruption risks in countries in its Worldwide Governance Indicators website.
International Chamber of Commerce (ICC)
The ICC (in conjunction with Transparency International, the United Nations Global Compact and the World Economic Forum) have published:
Transparency International is a leading non-governmental anti-corruption organisation. On its website, the following surveys are available which provide an indication of the corruption risk in countries around the world:
Transparency International also produce an annual report examining the enforcement performance of countries that have ratified the "OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions". For the most recent report, see Exporting Corruption? Country enforcement of the OECD anti-bribery convention, progress report 2012 .
Transparency International has the following useful resources:
On 16 April 2013, the European Commission published a proposal for a directive amending the Fourth and Seventh Company Law Directives as regards the disclosure of non-financial and diversity information by certain large companies and groups. A key element of the proposal is a requirement for large companies with more than 500 employees (and that have either a balance sheet total of more than EUR 20 million or a net turnover of more than EUR 40 million) to include a non-financial statement in their annual report containing information relating to at least environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters. In relation to these areas, the statement would include a description of the company's policies, results and risk-related aspects. If a company does not apply a specific policy for any of these matters, it will be required to explain why this is the case. For further information, see Legal update, Narrative reporting: proposal for amending directive on disclosure of non-financial and diversity information (www.practicallaw.com/9-525-8071).
The Law Society has published a practice note (www.practicallaw.com/4-506-4773) on the Bribery Act to assist lawyers with compliance.
FTSE4Good and EIRIS
The FTSE4Good Index Series measures the performance of companies that meet globally recognised standards of corporate responsibility. The index rules include criteria for countering bribery. This document sets out factors that indicate when a company has a high risk of exposure to bribery, specifically identifying high risk sectors and jurisdictions (drawing from Transparency International and World Bank data).
EIRIS (Experts in Responsible Risk Solutions) carries out the research for the FTSE4Good indices. It published a survey report and press release containing information on the performance of companies in dealing with bribery in different jurisdictions and sectors.
City of London Corporation
Risks of corruption in the City of London are set out in a report prepared by Transparency International for the City of London Corporation, entitled Avoiding Corruption Risks in the City: Bribery Act 2010.
BIS Business anti-corruption portal
BIS, in conjunction with the ministries of other EU nations, has set up a Business anti-corruption portal (www.practicallaw.com/3-517-0420), designed to help SMEs avoid and fight corruption. The portal includes due diligence tools, flowcharts and guidance to assist SMEs in identifying corruption in various situations.
British Bankers' Association
For information on the British Bankers' Association's guidance on compliance with the Bribery Act 2010, see Legal update, BBA banking sector guidance on Bribery Act 2010 compliance (www.practicallaw.com/8-516-9829).
British Standards Institute
The British Standards Institute has published BS 10500 - Specification for an anti-bribery management system, an international anti-bribery framework designed to help organisations demonstrate that they have robust anti-bribery policies, practices and systems in place.