Think BR: The Bribery Act isn't just about the free lunch
Safe in the knowledge it can happily polish off the petits fours, will ad land unknowingly fall foul of further offences that will come into play when the Bribery Act is introduced tomorrow, writes Brinsley Dresden, partner, Lewis Silkin LLP.
Brinsley Dresden, partner, Lewis Silkin LLP
Despite the hype generated about the Bribery Act, it’s not likely that anyone in the advertising industry will face jail time as a result of it coming into force on 1 July.
Or at least, it’s no more likely than it is today.
The most important offences of giving or receiving payments in exchange for improper conduct have been illegal for many years.
Unfortunately, when the media fascination with the impact of the act on corporate hospitality was corrected by Ken Clarke (the justice secretary), this created a degree of complacency about compliance.
Although lavishing hospitality on a marketing director during a pitch to skew the decision-making process could be bribery, if the hospitality is not disproportionate and is not intended to prompt a decision in breach of the marketing director’s professional duties, there should not be an issue.
But the act also has two new offences. The first is a twist on the existing offence of offering a bribe, but deals specifically with offering a bribe to a foreign public official, which includes employees of foreign state-owned companies, such as the marketing director of a foreign state-owned bank, airline or automotive company.
Offering lavish hospitality to such a person during the course of a pitch would therefore be very risky.
Even more challenging is the issue of facilitation payments, which are usually relatively small payments to grease the wheels of officialdom so that they turn more quickly, rather than to obtain any improper conduct.
For example, a payment to a foreign customs official to ‘prioritise’ the release of camera equipment could be an unlawful facilitation payment.
It is no defense to simply say that such payments are a function of doing business in some countries.
From now on, British companies will be expected to have policies in place to advise their staff and sub-contractors how to deal with requests for facilitation payments.
Some degree of pushback will be expected, such as a request for an invoice or receipt, or for escalation to a more senior official.
If a facilitation payment is shown to have been anticipated and budgeted for, that could create compliance problems.
For example, a line in a TV production budget for an overseas production which referred to ‘Customs: miscellaneous payments’ might take some explaining.
The other new offence concerns the failure of a commercial organisation to prevent corruption.
As the name suggests, that means that simply burying your head in the sand and hoping for the best is not a viable option.
At the very least, companies need to create a properly considered and informed, written risk assessment, which analyses the internal and external risks of bribery and corruption faced by its employees and agents.
This should be considered at board level and treated as a dynamic document to be regularly updated from time-to-time and whenever required by changes to the circumstances of the business.
Having done so, an appropriate set of ‘adequate procedures’ can be designed and implemented to create a defense against liability under the act.
But if the prospects of prosecution are relatively low, is any of this really worth the effort?
Yes, because failure to comply leaves companies exposed to termination of contracts by their customers for failure to be legally compliant; to ‘blackmail’ by employees with whom they are in dispute for other reasons; and even to disbarment from public sector appointments.
So if you want to know more, simply invite me along to any event at the Olympic stadium, and I’ll tell you all about it.
Brinsley Dresden, partner, Lewis Silkin LLP
For further information contact Brinsley at: email@example.com
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