In this article
A sweetener, inducement, incentive, bung, backhander, kick-back, these are all terms that might describe what is essentially bribery and corruption.
Statistics gathered by Transparency International UK show that:
- 76% of people think wealthy individuals often use their influence on Government for their own interests.
- Just 52 people made a sixth of all declared UK political donations between 2001 and 2016.
- £1.27 billion is lost annually to fraud, bribery and corruption in the NHS.
- Up to 25% of public procurement funds are lost to corruption each year.
- The annual cost of international corruption is estimated to amount to a staggering $3.6 trillion in the form of bribes and stolen money.
- Airbus was fined £3.6 billion in February 2020 by courts in the UK, US and France for slush funds, “success payments” and lavish hospitality. £820 million of this fine was paid in the UK. This is more than double the total of fines paid in respect of all criminal conduct in England and Wales in 2018.
The multinational professional services company PricewaterhouseCoopers (PwC) reports in their Global Economic Crime Survey 2018 UK findings that:
- 24% of respondents have been asked to pay a bribe in the last two years, up from 5% in 2016.
- Bribery and corruption were reported by 23% of respondents, up from 6% in 2016.
- 21% of the UK respondents felt that they had lost an opportunity to a global competitor who they believed had paid a bribe.
- Only 10% of respondents think that bribery and corruption will be the most disruptive economic crime that they will experience over the next two years.
- 53% will do additional due diligence on anti-bribery and corruption.
What is anti-bribery?
To recognise what anti-bribery is, it is important to understand what bribery is. There is no universal definition of bribery; however, it usually involves someone in an appointed position acting voluntarily in breach of trust in exchange for a benefit. Bribery includes offering, promising, giving, accepting or seeking a bribe.
Bribe means a financial or other inducement or reward for action which is illegal, unethical, a breach of trust or improper in any way. Bribes can take the form of money, gifts, loans, fees, hospitality, services, discounts, the award of a contract or any other advantage or benefit.
Corruption is dishonest behaviour, usually by those in positions of power, such as managers or government officials. Corruption can include giving or accepting bribes or inappropriate gifts, double-dealing, under-the-table transactions, manipulating elections, diverting funds, laundering money, and defrauding investors.
Anti-bribery is the actions taken and controls put in place to prevent bribery and corruption from happening.
These actions and controls include:
- Codes of conduct.
- Risk assessments.
- Due diligence.
- Inspections and audits.
- Independent reviews.
Laws and regulations around anti-bribery and corruption
The primary UK legislation in relation to bribery and corruption is the Bribery Act 2010 which came into force on 1 July 2011.
It created new offences of significant scope and extra-territorial reach:
- It criminalises both active and passive bribery, that is both bribing and being bribed.
- It criminalises not just bribery of public officials, but also bribery entirely in the private sector.
- It does not require proof of dishonesty or corruption.
- It criminalises the failure to prevent bribery from taking place.
- It requires those carrying on business in the UK to have in place “adequate procedures” to prevent bribery from taking place, even if the bribery is unconnected with the UK.
- The offences have extensive extra-territorial reach, criminalising activities which may take place entirely outside the UK.
- Committing offences could lead to imprisonment for up to 10 years for individuals, and/or unlimited fines for individuals and corporate bodies.
- There is no exception for “facilitation payments”.
- “Local customs and practices” will not necessarily provide a defence.
The Act aimed to reform criminal liability for bribery and corruption, replacing existing common law and statutory offences with a new consolidated scheme of five bribery offences.
- Bribing Another Person – For example, offering, promising, or giving a financial or other advantage; intending to induce or reward the improper performance of a relevant function or activity or knowing that accepting the advantage is improper.
- Being Bribed – For example, requesting, agreeing to receive, or receiving a financial or other advantage; intending a relevant function or activity to be improperly performed or rewarding improper performance or where accepting the advantage is improper.
- Bribing a Foreign Public Official (FPO) – For example, offering, promising, or giving a financial or other advantage; intending to influence the FPO in their official capacity; intending to obtain or retain a business advantage.
- Senior Officer Offence – For example, the corporate body has bribed or has been bribed; the senior officer has consented to or connived in the bribery.
- Failure to Prevent Bribery – For example, a person associated with a commercial organisation bribes someone else; intending to obtain or retain a business advantage for the organisation; the organisation did not have in place “adequate procedures”.
The first two offences are the “General Offences”, covering bribery in both the private and public sectors. The third targets bribery specifically in the public sector. The fourth targets the complicity of senior officers of corporate bodies who have committed bribery.
The fifth and perhaps most concerning for corporate bodies covers their failure to prevent bribery, no matter where in the world the bribery takes place. All of these offences apply not only to behaviour in the UK, but also potentially to behaviour by individuals and corporate bodies all over the world.
Enforcement of domestic bribery has primarily been investigated by specialist police units and is prosecuted by the Crown Prosecution Service (CPS). Serious and complex bribery and corruption, often with an international component, is investigated and prosecuted by the Serious Fraud Office (SFO).
The Financial Conduct Authority (FCA) requires firms in the regulated sector to establish and maintain effective systems and controls to counter the risk that they might be used to further financial crime, including bribery.
Regulated firms can be subject to FCA enforcement actions for failing to implement effective ABC systems and controls, regardless of whether bribery or corruption has actually taken place.
- Banks, building societies and credit unions.
- Claims management companies.
- Consumer credit firms.
- Electronic money and payment institutions.
- FCA Innovation Hub.
- Financial advisers.
- General insurers and insurance intermediaries.
- Investment managers.
- Life insurers and pension providers.
- Mortgage lenders and intermediaries.
- Mutual societies.
- Sole advisers.
- Wealth managers.
What is an anti-bribery and corruption policy?
A good policy should be more than just a list of rules, it should show employees the purpose behind the policy, how the policy is to be implemented into their roles and should be a guide to day-to-day operations. Anti-bribery policies and procedures should be clear, practical, accessible and enforceable.
The purpose of an anti-bribery and corruption policy is to communicate an organisation’s values, philosophy and ethos on the issue of bribery and corruption.
An anti-bribery and corruption policy is an organisation’s set of general guidelines that outline the organisation’s stance, approach and plan for tackling bribery and corruption within its organisation and in all the dealings and relationships that the organisation has with third parties.
Who would need an anti-bribery and corruption policy?
Any organisation irrespective of size should have an anti-bribery and corruption policy if there is any risk that anyone who works for the organisation might be exposed to any form of bribery or corruption.
You may be thinking, well we are only a small organisation, or as an organisation we don’t do big business deals.
Before dismissing the idea of needing an anti-bribery and corruption policy, consider the following scenarios:
- A small business gives Christmas gifts each year to its major clients. What the business should consider is, what is the purpose of the gifts, are they to cement good business relations or are they intended as some form of inducement to gain more business? Is the recipient given the impression that they are under some obligation to give business to the small business as a result of accepting the gift?
- Someone seeking planning permission offers to discuss plans with a planning committee member over a restaurant meal where they will pick up the bill. What the committee member should consider is whether the hospitality is being offered as a means to curry favour and sway the committee’s decision. It is not the hospitality in itself that might constitute a bribe but the intent behind it; most offers of hospitality are a genuine business expenditure.
- Parents lavishing gifts on teachers at a time of internally assessed examinations. It is the proportionality of the gift that might constitute a bribe; a box of chocolates is seemingly innocent, whereas an all-expenses-paid trip to the Caribbean might raise a few eyebrows.
- Customers tipping waiting staff with a view to getting the best table.
- A security officer in an organisation accepts a bribe from criminals to allow them access to theft.
- A recruiting manager demands a bribe to appoint a person who would otherwise not have been selected.
- A bank employee accepts a bribe to provide details of the bank’s customers.
- Free samples and discounts are offered to procurement personnel prior to orders being made or contracts signed.
As you can see, there are many instances where even something innocent could be interpreted as bribery and corruption in some circumstances.
The key to assessing whether or not an organisation needs to introduce an anti-bribery and corruption policy is to carry out a risk assessment of the organisation’s exposure to bribery risk which needs to be proportionate to the risks the organisation faces, including identifying any internal risks and external risk factors.
As part of the risk assessment process, organisations should also carry out due diligence covering all parties to a business relationship, including the organisation’s supply chain, agents and intermediaries, all forms of joint venture and similar relationships.
Any organisation in any sector – public, private, charity, health, education – should consider the risks of bribery occurring and also consider the intent behind any gifts, hospitality and favours, and not only those that they are offered or receive, but also those they themselves offer and give. Organisations should also consider what their employees might be engaged in without the organisation’s knowledge or approval.
Is an anti-bribery and corruption policy needed?
The Bribery Act 2010 offence of failing to prevent bribery imposes an obligation on organisations to have adequate anti-corruption procedures in place if they are to avoid facing prosecution and hefty financial penalties.
This obligation applies to any organisation, no matter its size. If it is a body incorporated or formed in the UK or carries on a business or part of a business in the UK, it will fall within the scope of the Act.
The nature of these adequate procedures is not set down by law. Each corporate body will need to decide for itself what it will put in place. However, for many organisations creating and implementing an anti-bribery and corruption policy may help to mitigate the offence.
What is included in an anti-bribery and corruption policy?
The purpose of an anti-bribery and corruption policy is to prevent bribery and corruption by having adequate procedures to monitor and identify where and when it may occur. It should take into account the roles of the whole workforce, from the owners or board of directors to all employees, and all people and entities over which the organisation has control.
The policy should include:
- A statement of commitment to counter bribery in all parts of the organisation’s operation from the senior management to reflect the top-level commitment against bribery and corruption in the organisation.
- The purpose of the policy – That it is intended to help employees to recognise and deal with bribery and corruption issues, as well as to understand their responsibilities.
- The legislative context – Which laws and regulations apply.
- Definitions of any terms used in the policy such as bribery, so that everyone is clear.
- The scope of the policy – Who the policy applies to, for example Officers, Trustees, Board, and/or Committee members at any level, all employees, third parties etc.
- Exceptions to the policy, if any.
- Key roles – Specifically who is responsible for policy ownership, review, implementation, first point of contact for advice and for those raising a concern etc.
- General policy principles – This is an overview of the policy.
- Actions – The approach that the organisation takes to reduce and control bribery and corruption, a guide to how business operations should be carried out, and the rules (if applicable) about:
– Prohibition of bribery and corruption.
– Facilitation payments.
– Conflicts of interest.
– Offering and accepting gifts, hospitality and expenses etc.
– What is and is not acceptable.
– Record-keeping, auditing etc.
- Procedure for concerns – How employees raise any issues, including the link to whistleblowing.
- Procedure for non-compliance to the policy including a link to a grievance and discipline policy.
- Implementation/communication – How the policy is implemented and communicated such as training given, part of performance reviews, etc., where it is available such as the organisation’s website, employee’s handbook etc.
Anti-bribery and corruption policies’ content and complexity will vary depending upon individual organisations’ identified risk exposure, so the policy should always be proportionate to an organisation’s activities and risk level.
What are the benefits of an anti-bribery and corruption policy?
Creating and implementing an anti-bribery and corruption policy could help to protect an organisation and ensure that it does not incur liability under Section 7 of the Bribery Act 2010, as failure to implement adequate procedures may result in criminal and civil liability and penalties for the organisation and individuals.
By becoming more open about their anti-bribery and corruption efforts and operations through their anti-bribery and corruption policy, organisations can be transparent about their overall corporate compliance with regulations. This has the effect of building trust with customers and service users, employees, suppliers and other stakeholders. Also, this transparency is a good means to flag bribery and corruption risks, which can arise in any organisation of any size.
An anti-bribery and corruption policy sets out the organisation’s stance and ensures that all employees and other stakeholders are aware of how the organisation views and deals with breaches of the policy. It can send a clear message of zero tolerance for bribery and corruption in all its forms.
What happens if an anti-bribery and corruption policy is breached?
If an employee breaches their organisation’s anti-bribery and corruption policy, they will generally face disciplinary action and could face dismissal for gross misconduct. Whether the offence is reported to either the police or the Serious Fraud Office will depend on the nature and seriousness of the breach of the policy and/or whether the bribery law has been broken.
No one can be prosecuted in England and Wales unless one of the two most senior prosecutors (the Director of Public Prosecutions or the Director of the Serious Fraud Office) is personally satisfied that a conviction is more likely than not, and that prosecution is in the public interest.
The potential consequences of being convicted of a bribery offence under the Bribery Act 2010 include criminal penalties for both individuals and companies. The maximum penalties for Bribery Act 2010 offences are the same for domestic and foreign bribery; for corporates this is an unlimited fine, and for individuals this is a maximum sentence of 10 years’ imprisonment, an unlimited fine, or both. The Sentencing Council sets out its guidelines for determining penalties in bribery cases based on the offence category, the level of culpability and any impact caused by the offence.
Here are some bribery and/or corruption cases from the Crown Prosecution Service (CPS) and the Serious Fraud Office (SFO):