UK Bribery Act Defines New Regulations For Local/International Businesses

The UK Bribery Act 2010, which came into force on July 1, 2011, enhances sentencing power of courts and raises the maximum sentence for bribery committed by an individual from 7 to 10 years imprisonment and/or with unlimited fine.

On whether a company falls within the scope of the Act, the guidance states that jurisdiction not only extends to commercial organizations which are "incorporated or formed in the UK" but also to those "which carry on a business or a part of a business in the UK irrespective of their place of incorporation or formation." A determination regarding whether an organization is carrying on a business or a part of a business in the UK will be made by UK’s courts. For one to prove that a business carries on business in the UK, such business must have "a demonstrable business presence" in the UK.

The Act supersedes existing British laws dating back to 1889. It will affect foreign companies with offices in the UK and British companies operating overseas and seeks to prosecute companies and individuals who not only offer or receive bribes but also fail to prevent bribery. The Act not only prohibits domestic and international bribery, but also bribery across both private and public sectors.

“In light of the new Act, it is advisable for companies that come under the purview of this law to review their existing anti-corruption policies and procedures to ensure compliance as appropriate. The onus lies on the senior management to assess and establish anti-corruption policies and procedures and enhance training for their personnel,” said Shan Nair, Co-founder and CEO of Nair & Co.

According to the Act, an offence is committed where a person or corporate offers, promises or gives a financial or other advantage to another, with the intention of influencing the latter in the improper performance of his or her relevant function or activity.

However, one should take note that certain expenditures which are essential for a commercial organization to improve its image, establish cordial relations, etc. is recognized as an established and important part of doing business and will not be in danger of being criminalized.

Companies prosecuted under the Act must show they have "adequate procedures" in place to stop bribes. The procedures include: providing anti-bribery training to staff, carrying out risk assessments, carrying out due diligence on the people being dealt with, monitoring and review of the policies on an ongoing basis, formulating proper communication channels, etc.

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Disclaimer :

Published: July 18, 2011. The information provided on this page is intended merely to highlight issues for general information purposes only. It is not comprehensive nor does it provide legal advice. Any information is subject to change without notice. No liability whatsoever is accepted by Nair & Co.