Fraud and financial crime briefing: Ministry of Justice publishes guidance on the Bribery Bill

Monday, January 4, 2010

The Ministry of Justice has published two helpful pieces of guidance on the application of the Bribery Bill, in relation to corporate hospitality and "adequate procedures".

Corporate hospitality is an accepted part of modern business but the Bribery Bill raises questions as to where the line between legitimate hospitality and bribery lies. Lord Tunnicliffe has addressed this issue confirming that corporate hospitality would only trigger the bribery offence where it was proved that the person offering the hospitality intended the recipient to be influenced to act improperly. This would most likely include obviously lavish or extraordinary hospitality but echoing the words of the Director of the Serious Fraud Office, "most routine and inexpensive hospitality would be unlikely to lead to a reasonable expectation of improper conduct". Accordingly it is proposed that no amendment to the Bill should be made to clarify the distinction between legitimate and corrupt corporate hospitality - which distinction will be made by prosecutors.

The meaning of "adequate procedures" in respect of the "failure to prevent bribery" offence is of key importance to UK businesses. The SFO has promised to provide guidance as to what steps might constitute "adequate procedures" before the Bill becomes law. Any such guidance is likely to be principles based rather than prescriptive checklist however. In the meantime the current guidance note prepared by senior legal officers from over 85 FTSE 100 companies provides a useful steer for businesses that are preparing themselves for the Bill's implementation.

Whilst it is recognised that "adequate procedures" will vary from organisation to organisation, some of the suggested steps include:

• Board responsibility for the company's anti-corruption programme
• Appointment of a senior officer with responsibility for compliance
• Adopting a clear and unambiguous code of conduct including a well publicised anti-corruption code
• Putting in place procedures for risk assessment, reporting and investigation
• Employee vetting and revision of employment contracts and procedures to deal with the issue of corruption
• Developing and implementing a gifts and hospitality policy
• Provision of thorough anti-corruption training to employees
• Undertaking due diligence before commencing new business relationships and careful management of supply chains
• Formalising the organisation's decision making processes
• Tightening financial controls