Bribery Act 2010

We outline here the offences introduced by the Bribery Act 2010, the penalties for committing them and practical steps you can take to avoid breaching the legislation.

What is bribery?

Transparency International (a non-governmental anti-corruption organisation) defines bribery as “the offering, promising, giving, accepting or soliciting of an advantage as an inducement for an action which is illegal or a breach of trust.”

What are the offences under the Bribery Act 2010?

Bribing another person

A person is guilty of this offence if they offer, promise or give a financial advantage or other advantage to another person:

o        to bring about improper performance of a relevant function or an activity; or

o        to reward a person for the improper performance of a relevant function or an activity.

The types of function or activity that can be improperly performed include:

o        all functions of a public nature;

o        all activities connected with a business;

o        any activity performed in the course of a person’s employment; and

o        any activity performed by or on behalf of a body of persons.

There must be an expectation that the functions are carried out in good faith or impartially, or the person performing them must be in a position of trust. It may not matter whether the person offered the bribe is the same person that actually performs or performed the function or activity concerned. The advantage can be offered, promised or given by the person themselves or by a third party.

Being bribed

The recipient or potential recipient of the bribe is guilty of this offence if they request, agree to receive, or accept a financial or other advantage to perform a relevant function or activity improperly.  It doesn’t matter whether it’s the recipient, or someone else through whom the recipient acts, who requests, agrees to receive or accepts the advantage. In addition, the advantage can be for the benefit of the recipient or another person.

Bribing a foreign public official

A person is guilty of this offence if they intend to influence an official in their capacity as a foreign public official. The offence does not cover accepting bribes, only offering, promising or giving bribes. It does not matter whether the offer, promise or gift is made directly to the official or by a third party.

Failing to prevent bribery

A commercial organisation is guilty of this offence if a person associated with it bribes another person, with the intention of obtaining or retaining business or a business advantage for the commercial organisation. The offence can be committed in the UK or overseas.  A business can avoid conviction if it can demonstrate that it had adequate procedures in place designed to prevent bribery.

What are the penalties for committing an offence?

The offences of bribing another person, being bribed and bribing a foreign public official are punishable on indictment either by an unlimited fine, imprisonment of up to ten years or both. Both a company and its directors could be subject to criminal penalties. The offence of failure to prevent bribery is punishable on indictment by an unlimited fine.  Businesses convicted of corruption could find themselves permanently debarred from tendering for public sector contracts.  A business may also be damaged by adverse publicity if it is prosecuted for an offence.

Practical steps to help avoid liability under the Bribery Act 2010

Top level commitment

All senior managers and directors must understand that they could be personally liable under the Bribery Act 2010 for offences committed by the business. It is important that senior management leads the anti-bribery culture of a business, especially if the business wants to take advantage of the “adequate procedures” defence to the offence of failing to prevent bribery.

Risk assessment

Consider all the potential risks the business may be exposed to. For example, certain industry sectors (such as construction, energy, oil and gas, defence and aerospace, mining and financial services) and countries are associated with a greater risk of bribery.

Think about the types of transactions the business engages in, who the transactions are with and how the transaction is conducted. High-risk transactions include:

o        procurement and supply chain management;

o        involvement with regulatory relationships (for example, licences or permits); and

o        charitable and political contributions.

Review how the business entertains potential customers, especially those from government agencies, state-owned enterprises or charitable organisations. Routine or inexpensive corporate hospitality is unlikely to be a problem, but clear guidelines should be put in place.  If the business operates in foreign jurisdictions, always check local laws.

Implementing and communicating an anti-corruption code of conduct

Implement a code of conduct setting out clear, practical and accessible policies and procedures that apply to the entire business. Make sure the code is communicated effectively to all parts of the organisation.

Carry out background checks when dealing with third parties

A business will be liable if a person associated with it commits an offence on its behalf. Businesses should therefore review all their relationships with any partners, suppliers and customers. For example, if an agent or distributor uses a bribe to win a contract for a business, that business could be liable. Ensure that background checks are carried out on any agents or distributors before they are engaged by the business.

Policies and procedures

Review any existing policies and procedures and decide whether they need to be updated. If the business does not have any policies or procedures in place, consider preparing them as a matter of urgency.

Effective implementation and monitoring

Consider introducing a compulsory training programme for all staff. If only a few employees operate in a high-risk area, consider targeting the training at those employees.  Ensure anti-corruption policies and procedures are continually monitored for compliance and effectiveness, both internally and externally.

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“I’ll see you in Court!”

Recovering a trade debt 

There is a lot to consider before starting court proceedings in England & Wales:

  • The court has to deal with matters “justly and at proportionate cost.”
  • Do a cost/benefit analysis before starting proceedings, including the cost of enforcement.
  • Check the other party is good for the money – there’s no point incurring the cost of litigation if you can’t enforce the judgment.
  • Don’t start proceedings if you don’t intend to see them through. Unless it’s a small claim (less than £10,ooo) you’ll almost certainly be liable for the other party’s costs if you discontinue the claim.
  • Be careful about always threatening to sue if you don’t mean it – don’t just “cry wolf” – the word will get round to your contacts and damage your reputation.
  • Recovery of your legal costs depends on:
    • who wins or loses;
    • your conduct as well as compliance with court rules and orders (for example, a failure to comply with a pre-action protocol can have cost consequences even for the party that wins);
    • when the matter ends (whether before or after proceedings have been started);
    • the financial value of the claim and the “track” the claim is allocated;
    • how the claim is concluded (whether by agreement or at trial).

Reaching a settlement

Litigation can be disproportionately expensive to the sums being argued about, the outcome is uncertain, the court is only able to offer a limited range of remedies and litigation often destroys any prospect of the parties resuming a commercial relationship so consider alternatives -for example:

Negotiation

  • It might be possible to recover the debt or agree an alternative future course of action by opening a negotiation with the debtor.
  • This can be done verbally or in writing (which includes e-mails).
  • Parties usually negotiate on a without prejudice basis.
  • The without prejudice rule generally prevents statements made in a genuine attempt to settle an existing dispute from being used as evidence of admissions against the party which made them.
  • This rule means that, if the negotiation or mediation fails and the business then issues court proceedings, any statements that the parties made in a genuine attempt to settle the dispute (whether in writing or orally) will not be put before the court in the proceedings.

Mediation

  • Mediation is a flexible, voluntary and confidential form of dispute resolution in which a neutral third party helps parties to work towards a negotiated settlement of their dispute.
  • The parties retain control of the decision whether or not to settle and on what terms. 

Doing nothing

You can always simply write off the sum but before taking this step, consider the:

  • Size of the debt.
  • Likely cost of recovering the debt.
  • Importance of the current relationship between the parties.
  • Likelihood of maintaining an on-going commercial relationship between the parties.

norma.morris@curwens.co.uk

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http://www.justice.gov.uk

 

 

 

If you die suddenly, who “minds the shop” ?

Certain business assets attract significant relief from Inheritance Tax at either 50% or 100% depending on the type of assets involved but what can be done on a more practical basis in order to protect your business and your beneficiaries, should the worst happen? Guest blogger and Wills specialist James Blakemore looks at the options.

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If you die, what happens to your business? It’s a big question whether you’re a sole trader, partner or director/shareholder. Your Will gives you the chance to reduce the risk of loss of profit, dissolution of the business, unbalanced shareholder control. Most importantly, it ensures your assets pass to those you want and that they get a fair value for them. Ask yourself :

1. Who gets the business assets or their fair value – your spouse, children, business partner or employees? Your Will is the only way to ensure that the rightful beneficiary receives their gift.

2. What about the day to day running of your business if you’re not there? How will the business cope without you? Your executors administer your estate but are they best qualified to actually run your business? If not, you can appoint separate executors to deal with the running of the business and give them wide powers of management. In effect, you can separate your personal and business assets to ensure that they are dealt with as you want and by those you trust to do the right thing.

3. What will happen to the business, your co-directors and employees? Would you want your business to be sold as a going concern or simply dissolved to achieve the best price? Many shareholder and partnership agreements include the right to allow other parties the first option to buy the shares or the assets of a deceased partner from their estate – however, many do not. As well as making your wishes legally binding in your Will you can also have a separate agreement with your business partners to deal with this.

Commonly referred to as a “Cross Option” or “Double Option Agreement”, it is used in situations where a shareholder or partner has passed away or is critically ill. If you believe that the business would be best served by its assets being retained by the remaining owners and/or employees, these agreements allow the assets to be offered first to the owners/employees and require your executors to do this.

If you want the business to continue and your beneficiaries to receive a fair price for the shares or other assets, this can set out the terms of the transaction. It would usually require each shareholder or partner to take out a suitable life and/or critical illness insurance policy, held in trust, to ensure that funds are available to purchase the business assets.

4. In relation to critical illness, what happens if you are unable to make decisions? Your executors will have no rights to deal with that as they are only appointed on your death. The answer lies in a Lasting Power of Attorney. You can appoint those you wish to deal with your property and financial affairs in circumstances where you can’t and also appoint those you trust to deal with different aspects of your affairs. Much like the appointment of separate executors, you can appoint different attorneys to deal with your personal assets and others to deal with business assets. You are also free to restrict or place conditions on their role.

Your Will ensures that those you want to benefit from your estate can do so, without the interference of outdated statutory rules. It is equally important to ensure that your Will reflects that both your wishes in relation to your business are carried out and offers comfort to your beneficiaries and business partners by ensuring that which you have worked so hard to achieve is not lost.

Can we help you? Our commercial and private client teams can advise on drawing up Cross Option Agreements, Wills, Trust Deeds and Powers of Attorney. Contact us today for more certainty. James.blakemore@curwens.co.uk or 01992 463727