A Guide to the UK s Bribery Act 2010 Martin Polaine. London Centre of International Law Practice. Anti-corruption Forum, 007/ /02/2015

Transcription

1 A Guide to the UK s Bribery Act 2010 Martin Polaine London Centre of International Law Practice Anti-corruption Forum, 007/ /02/2015 This paper is downloadable at: Martin Polaine. All LCILP publications are for non-commercial research use only. Distribution of publications from our website for material interest, profit-making and or commercial gain is strictly forbidden.

2 A Guide to the UK s Bribery Act 2010 Martin Polaine 1 BACKGROUND TO THE ACT General reform of the UK's bribery laws was first proposed in a Law Commission report in This led to a draft Government Bill in 2003 that failed to win broad support in pre-legislative scrutiny, which, in turn, resulted in mounting pressure as the UK faced criticism from the Organisation for Economic Co-Operation and Development (OECD) for its lack of clear substantive prohibitions on bribery and its failure comprehensively to implement and enforce its obligations under the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. In addition to addressing the OECD's criticisms, the Bribery Act Act seeks to remedy some of the shortcomings under the 'old' law, which can be summarised as follows: A lack of consistency and comprehensiveness of the law on corruption: a patchwork quilt of offences. A lack of a statutory definition of the term "corruptly", which has been open to different interpretations and in respect of which there has been no settled judicial definition. Criminalisation being partly reliant on the agent/principal relationship. The old law being predicated on the distinction between public and non-public bodies. No specific foreign bribery offence and a less than complete definition of foreign public official. The difficulty in prosecuting legal persons because of the common law attribution test. The requirement of Attorney-General s consent for the statutory offences. The key international anti-corruption obligations for the UK 1 Martin Polaine is the Joint Head of International Human Rights and Criminal Justice at the London Centre of International Law Practice (LCILP). 2 The Act came into force on 2 July

3 OECD Convention on the Bribery of Foreign Public Officials in International Business Transactions 1997 (entered into force in 1999); UN Convention Against Corruption 2003 (entered into force in 2005). What does the Act address? The Bribery Act has amended and repealed the 'old' bribery offences under the Public Bodies Corrupt Practices Act 1889, the Prevention of Corruption Act 1906 and the Prevention of Corruption Act 1916; it has also abolished the UK common law offences of bribery and embracery (bribery of jurors). The legislation has produced a long awaited simplification of the law on corruption and makes the UK compliant with its international obligations under the OECD Convention, and also impacts on the way businesses connected to the UK manage their international business. What is the effect of the Act? The Act: provides a more effective legal framework for law enforcement and prosecutors to combat bribery in the public or private sectors; replaces the fragmented and complex offences at common law and in the Prevention of Corruption Acts ; creates two general offences covering the offering, promising or giving of an advantage, and requesting, agreeing to receive or accepting of an advantage; creates a discrete offence of bribery of a foreign public official; creates a new offence of failure by a commercial organisation to prevent a bribe being paid for or on its behalf. It will, however, be a defence if the organisation has adequate procedures in place to prevent bribery; supports good business practice by making clear the responsibilities to do business in an open and honest way. Particular Issues for businesses The new corporate offence of failing to prevent bribery; Self-reporting/voluntary disclosure; Enhanced risk of personal criminal liability for individual staff, particularly at senior level; Wide jurisdictional provisions and enhanced international co-operation by prosecutors/law enforcement; Both US and UK prosecuting authorities looking to prosecute individuals as well as their companies; 3

4 Civil recovery powers. OVERVIEW OF OFFENCES CREATED BY THE ACT Individuals/Natural Persons: Individuals can be prosecuted for offering, promising or giving a bribe. The bribe need not be a financial advantage, but can be of other value. This can occur for any function of a public nature (i.e. governmental official ) or connected with a business (i.e. private entity ). The Bribery Act makes it a crime to accept a bribe where a person requests, agrees to receive or accepts an advantage of value (whether or not the person actually receives it). As with offering a bribe, the legislation prohibits such actions both by public officials and those connected with a business. The test for whether a financial or other advantage is, in fact, a bribe is what a reasonable person in the UK would expect in relation to the performance of the type of function or activity concerned. Companies/Legal Persons: In addition to the already existing corporate liability (on the common law attribution test) for a company engaging in bribery, the Act creates a strict liability crime when a 'commercial organisation' fails to prevent bribery. This means that if an employee, agent or any other 'associated person' bribes another person in order to obtain or retain business or a business opportunity for the commercial organisation, it will be liable for the offence of failing to prevent bribery under section 7. The only defence is for the organisation to prove that it had in place 'adequate procedures' designed to prevent such conduct. The Adequate Procedures Defence: The Explanatory Notes to the Bribery Act indicate that this narrow defence would allow a commercial organisation to put forward credible evidence that it had adequate procedures in place to prevent persons associated with it from committing bribery offences. Although not explicit on the face of the Act, in accordance with established case law, the standard of proof the defendant would need to discharge is the balance of probabilities. The legislation (at section 9) requires the Secretary of State to publish guidance on procedures that relevant commercial organisations can put in place to prevent bribery by persons associated with them. That Guidance was published in March 2011 and is discussed in more detail, below. Extraterritorial application: The Bribery Act has extraterritorial application so that any UK citizen or company (or any person with a 'close connection' to the UK) acting anywhere in the world may be liable under the Act. This means that the relevant criminal act can occur outside the UK and persons or companies in the UK can be liable. But, more importantly for non-uk companies, the section 7 failing to prevent offence has its own extended jurisdiction, meaning that they will be liable to prosecution for a failure 4

5 occurring inside or outside the UK if they carry on business or part of their business in the UK; in essence, the simple instance of having a UK presence will create jurisdiction. Thus, if, for example, a Dutch company has a UK branch and engages in bribery in an Asian or African State, that Dutch company will be criminally liable in, and can be prosecuted in, the UK. Penalties: The Bribery Act provides penalties for individuals for up to 10 years imprisonment for an offence and an unlimited fine. Equally significantly, prohibited actions by companies are punishable by fines that not limited. (Senior company officials who connive in, consent to or are a part of a bribery scheme are liable as individuals as well.) THE BRIBERY ACT IN DETAIL Section 1: Offences of bribing another person This creates an active bribery offence in relation to the person who offers, promises or gives a financial or other advantage to another. That person is referred to in the Section as P. The meaning of financial or other advantage will be determined as a matter of common sense by the tribunal of fact. Section 1 distinguishes two cases: Case 1 (subsection (2)) and Case 2 (subsection (3)) respectively. Case 1 concerns the situation in which P offers, promises or gives an advantage which is intended to bring about an improper performance by another person of a function or activity, or to reward such improper performance. The nature of this function or activity is addressed in Section 3(1) to (5) and improper performance is defined in Sections 3(6) and 3(7). It is not necessary that the person to whom the advantage is promised or given is the same person as the person who is to engage in the improper performance of an activity or function, or to be rewarded for having engaged in it. This is made clear in Section 1(4). Case 2 concerns cases in which P knows or believes that the acceptance of the advantage offered, promised or given in itself constitutes the improper performance of a function or activity as defined in Section 3. Section 1(5) makes it clear that, in Cases 1 and 2, the advantage can be offered, promised or given by P himself or herself or by P through someone else. Section 2: Offences relating to being bribed This Section creates a so-called passive bribery offence as it applies to the recipient or potential recipient of the bribe, who is called R in the Section. It distinguishes four types 5

6 of cases, numbered 3 to 6. In Cases 3, 4 and 5 there is a requirement that R 'requests, agrees to receive or accepts' an advantage, whether or not R actually receives it. This requirement must then be linked with R s 'improper performance' of a function or activity. As with Section 1 the nature of this function or activity is addressed in Section 3(1) to (5), whilst 'improper performance' is defined in Section 3(6) and 3(7). The link between the request, agreement or receipt of an advantage and improper performance may take three forms: 1. R may intend improper performance to follow as a consequence of the request, the agreement to receive or the acceptance of the advantage (Case 3, in subsection (2)). 2. Receiving, agreeing to receive or accepting the advantage may itself amount to improper performance of the relevant function or activity (Case 4, in subsection (3)). 3. Alternatively, the advantage may be a reward for performing the function or activity improperly (Case 5, in subsection (4)). In Case 6 (subsection (5)) what is required is improper performance by R (or that of another person, where R requests it, assents to or acquiesces in it). This performance must be in anticipation or in consequence of a request, agreement to receive or acceptance of an advantage. In Cases 3 and 5, it does not matter whether the improper performance is by R or by another person. In Case 4 it must be R, him or herself, who requests, agrees to receive or accepts the advantage, subject to subsection (6). Subsection (6) is concerned with the role of R in requesting, agreeing to receive or accepting advantages, or in benefiting from them, in Cases 3 to 6. First, subsection (6) makes it clear that, in Cases 3 to 6, it does not matter whether it is R, or someone else through whom R acts, who requests, agrees to receive or accepts the advantage (paragraph (a)). Secondly, subsection (6) indicates that the advantage can be for the benefit of R, or of another person (paragraph (b)). Subsections (7) and (8), make it clear that, in Cases 4 to 6, it is immaterial whether R knows or believes that the performance of the function is improper. Additionally, in Case 6, where the function or activity is performed by another person, it is immaterial whether that person knew or believed that the performance of the function is improper. Section 3: Function or activity to which the bribe relates 6

7 This defines the parameters within which bribery can take place; in other words, the types of function or activity that can be improperly performed for the purposes of the first two Sections. The purpose of Section 3 is to ensure that the law of bribery applies equally to public and to selected private functions without discriminating between the two. Accordingly, the functions or activities in question include all functions of a public nature and all activities connected with a business, trade or profession. In addition, the functions or activities include all activities performed either in the course of employment or on behalf of any body of persons: these two categories straddle the public/private divide. Not every defective performance of one of these functions for reward, or in the hope of advantage, engages the law of bribery. Subsections (3) to (5) make clear that there must be an expectation that the functions be carried out in good faith (condition A), or impartially (condition B), or he person performing it must be in a position of trust (condition C). Section 4: Improper performance to which bribe relates Section 4 defines 'improper performance' as performance which breaches a relevant expectation, as mentioned in condition A or B (subsections (3) and (4) of Section 3 respectively) or any expectation as to the manner in which, or reasons for which, a function or activity satisfying condition C (subsection (5) of Section 3) will be performed. Subsection (1)(b) states that an omission can in some circumstances amount to improper 'performance'. Subsection (3) addresses the case where R is no longer engaged in a given function or activity but still carries out acts related to his or her former function or activity. These acts are treated as done in performance of the function or activity in question. Section 5: Expectation test This provides that, when deciding what is expected of a person performing a function or activity for the purposes of section 3 and 4, the test is what a reasonable person in the UK would expect of a person performing the relevant function or activity. Subsection (2) makes it clear that in deciding what a reasonable person in the UK would expect in relation to functions or activities the performance of which is not subject to UK laws, local practice and custom must not be taken into account unless such practice or custom is permitted or required by written law. Subsection (3) defines what is meant by written law for the purposes of this Section. 7

8 Section 6: Bribery of foreign public officials This creates a separate offence of bribery of a foreign public official. This offence closely follows the requirements of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. Unlike the general bribery offences in Sections 1 and 2, the offence of bribery of a foreign public official only covers the offering, promising or giving of bribes, and not the acceptance of them. It is confined to the so called 'supply side'. The person giving the bribe must intend to influence the recipient in the performance of his or her functions as a public official, and must intend to obtain or retain business or a business advantage. Foreign public officials are defined in subsection (5) to include both government officials and those working for international organisations. The definition draws on Article 1.4(a) of the OECD Convention. Similarly, the definition of 'public international organisation' in subsection (6) draws on Commentary 17 to the OECD Convention. The conduct element: The conduct element of the offence (what a person must do in order to commit the offence) is set out in subsection (3). The offence may be committed in a number of ways: If a person (P) offers, promises or gives any advantage to a foreign public official (F) with the requisite intention, and the written law applicable to F neither permits nor requires F to be influenced in his or her capacity as a foreign public official by the offer, promise or gift, then P commits an offence. The written law applicable to F is defined in subsection (7) as the law of the relevant part of the UK where the performance of F s functions would be subject to that law. Where the performance of F s functions would not be subject to the law of a part of the UK, the written law is either the applicable rules of a public international organisation, or the law of the country or territory in relation to which F is a foreign public official as contained in its written constitution, provision made by or under legislation or judicial decisions that are evidenced in writing. The offence will also be committed if the advantage is offered to someone other than the official, if that happens at the official s request, or with the official s assent or acquiescence. It does not matter whether the offer, promise or gift is made directly to the official or through a third party (subsection (3)(a)). 8

9 The language of the OECD Convention is mirrored in the phrases 'obtain or retain business' in subsection (2), 'offers, promises or gives' and 'advantage' in subsection (3), and in the words 'public function' in subsection (5)(b). The fault element: The fault element of the offence (what a person must intend in order to commit the offence) is specified in subsections (1), (2) and (4). Subsections (1) and (4) have the effect that, in order to commit the offence, a person must intend to influence a foreign public official in the performance of his or her functions as a public official, including any failure to exercise those functions and any use of his or her position, even if he or she does not have authority to use the position in that way. In order to commit the offence a person must also intend to obtain or retain business or an advantage in the conduct of business (subsection (2)). The effect of subsection (8) is that 'business' includes what is done in the course of a trade or profession. Section 7: Failure of commercial organisations to prevent bribery This creates the offence already mentioned, that of failing to prevent bribery. It can only be committed by a relevant commercial organisation, not by an individual (natural person). 'Relevant commercial organisation' is defined (at subsection (5)) as: a body incorporated under the law of any part of the UK and which carries on business whether there or elsewhere; a partnership that is formed under the law of any part of the UK and which carries on business there or elsewhere; or, any other body corporate or partnership wherever incorporated or formed which carries on business in any part of the UK. Subsection (5) also provides that 'business' includes a trade or profession and includes what is done in the course of a trade or profession. The offence is committed where a person (A) who is associated with the commercial organisation (C) bribes another person with the intention of obtaining or retaining business or an advantage in the conduct of business for C. Subsection (2) provides that it is a defence for the commercial organisation to show it had adequate procedures in place 9

10 to prevent persons associated with C from committing bribery offences. Although not explicit on the face of the Act, in accordance with established case law, the standard of proof the defendant would need to discharge is the balance of probabilities. Subsection (3) provides that 'bribery' in the context of this offence relates only to the offering, promising or giving of a bribe contrary to Sections 1 and 6 (there is no corresponding offence of failure to prevent the taking of bribes). Applying ordinary principles of criminal law, the reference to offences under Section 1 and 6 include being liable for such offences by way of aiding, abetting, counselling or procuring (secondary liability). Subsection (3) also makes clear that there is no need for the prosecution to show that the person who committed the bribery offence has already been successfully prosecuted. The prosecution must, however, show that the person would be guilty of the offence were that person prosecuted under this Act. Finally, subsection (3)(b) makes clear that there is no need for A to have a close connection to the UK as defined in Section 12; rather, so long as C falls within the definition of relevant commercial organisation that should be enough to provide courts in the UK with jurisdiction. Section 8: Meaning of associated person This provides that A is associated with C for the purposes of Section 7, if A performs services for, or on behalf of C. It also ensures that Section 7 relates to the actual activities being undertaken by A at the time, rather than A s general position. The Section expressly states that A may be the commercial organisation s employee, agent or subsidiary. But where A is an employee it is to be presumed that A is performing services for or on behalf of C unless the contrary is shown. Section 9: Guidance about commercial organisations preventing bribery This Section requires the Secretary of State to publish guidance on procedures that relevant commercial organisations can put in place to prevent bribery by persons associated with them (subsection (1)). The Secretary of State may revise such guidance or publish revised guidance from time to time (subsection (2)). That Guidance was published in March 2011 and is discussed below. Section 10: Consent to prosecution A prosecution under the Act in England and Wales can only be brought with the consent of the Director of one of the three senior prosecuting authorities; that is to say the Director of Public Prosecutions, the Director of the Serious Fraud Office and the Director of Revenue and Customs Prosecutions (subsection (1)). A prosecution in Northern Ireland can only be brought with the consent of the Director of Public Prosecutions for Northern Ireland or the Director of the Serious Fraud Office (subsection (2)). The Director of the Serious Fraud Office may delegate his or her functions under 10

11 this Section to an authorised member of staff (subsection (3)). Other delegation powers already exist for the other Directors. Under subsection (6), consent must not be given for the institution of proceedings in respect of conduct which was specifically authorised in advance by the Secretary of State (or, in urgent cases, by a senior official). The Secretary of State, in giving an authorisation, must be satisfied that the conduct is necessary for one of the functions described in Section 13(1) relating to the intelligence services or armed forces (subsection (7)). These provisions do not impose a requirement for an authorisation to be granted in respect of conduct necessary for the proper exercise of the intelligence services or armed forces. So a defendant who carries out such conduct can still rely on the defence under Section 13 in the absence an authorisation. Section 11: Penalties Any offence under the Act committed by an individual under Sections 1, 2 or 6 is punishable either by a fine or imprisonment for up to 10 years (12 months on summary conviction in England and Wales or Scotland or 6 months in Northern Ireland), or both. An offence committed by a person other than an individual is punishable by a fine. In either case, the fine may be up to the statutory maximum ( 5000 in England and Wales or Northern Ireland, 1000 in Scotland) if the conviction is summary, and unlimited if it is on indictment. The Section 7 offence can only be tried upon indictment. Section 154 of the Criminal Justice Act 2003, sets the maximum sentence that can be imposed by a Magistrates Court in England and Wales at 12 months. Where an offence under this Act is committed before section 154 came into force, the Magistrates Court s power is limited to 6 months (subsection (4)(a)) 3. Section 12: Offences under the Bribery Act: territorial application Subsection (1) provides that the offences in Sections 1, 2 or 6 are committed in any part of the UK if any part of the conduct element takes place in that part of the UK. The effect of subsections (2) to (4) is that, even though all the actions in question take place abroad, they still constitute the offence if the person performing them has a 'close connection with the UK' (in other words, is a British national or ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership etc.) 3 The Sentencing Council for England & Wales issued guidelines for sentencing in fraud, bribery and money laundering offences on 1 October They can be found at: _Definitive_guideline.pdf 11

12 Subsection (5) makes it clear that for the purposes of the offence in Section 7 (failure of commercial organisation to prevent bribery), it is immaterial where the conduct element of the offence occurs. Section 13: Defence for certain bribery offences: legitimate purposes This addresses the legitimate functions of the intelligence services or the armed forces which may require the use of a financial or other advantage to accomplish the relevant function. The Section provides a defence where a person charged with a relevant bribery offence can prove that it was necessary for: the proper exercise of any function of one of the intelligence services; or the proper exercise of any function of the armed forces when engaged on active service. Although not explicit on the face of the Act, in accordance with established case law, the standard of proof the defendant would need to discharge is the balance of probabilities. As well as providing definitions for other terms used in the Section, subsection (2) makes it clear that a 'relevant bribery offence' means an offence under Section 1 or 2, including one committed by aiding, abetting, counselling or procuring such an offence, and related inchoate offences. 'Relevant bribery offence' does not include a Section 1 offence which would also amount to an offence of bribing a foreign public official under Section 6. This addresses concerns raised by the Joint Committee on the 2003 draft Corruption Act in relation to, in particular, compliance with the UK s obligations under the OECD Convention. Section 14: Offences under sections 1, 2 and 6 by bodies corporate Section 14 is aimed at individuals who consent or connive at bribery, contrary to Section 1, 2 or 6, committed by a body corporate (of any kind) or Scottish partnership. It does not apply to the offence in Section 7. The first step is to ascertain that the body corporate or Scottish partnership has indeed been guilty of an offence under Section 1, 2 or 6. That established, the Section provides that a director, partner or similar senior manager of the body is guilty of the same offence if he or she has consented to or connived in the commission of the offence. In a body corporate managed by its members, the same applies to the members. In relation to a Scottish partnership, the provision applies to partners. It should be noted that in the situation envisaged by Section 14, the body corporate and the senior manager are both guilty of the main bribery offence. This Section does not create a separate offence of consent or connivance. 12

13 Subsection (3) makes clear that for a senior officer or similar person to be guilty he or she must have a close connection to the UK as defined in Section 12(4). Section 15: Offences under section 7 by partnerships This deals with proceedings for an offence under Section 7 against partnerships. Such proceedings must be brought in the name of the partnership (and not the partners) (subsection (1)); certain rules of court and statutory provisions which apply to bodies corporate are deemed to apply to partnerships (subsection (2)); and any fine imposed on the partnership on conviction must be paid out of the partnership assets (subsection (3)). Section 16: Application to the Crown This applies the Act to individuals in the public service of the Crown. Such individuals will therefore be liable to prosecution if their conduct in the discharge of their duties constitutes an offence under the Act. Section 17: Consequential provision This Section abolishes the common law offences of bribery and embracery (bribery etc of jurors), and gives effect to Schedules 1 and 2, which contain consequential amendments and repeals. Subsections (4) to (10) of this Section create a power for the Secretary of State (or, as the case may be, Scottish Ministers) to make supplementary, incidental or consequential provision by order. The order making power is subject to the affirmative resolution procedure where it amends a public general Act or devolved legislation, otherwise the negative resolution procedure applies. Section 18: Extent This Section provides that the Act extends to the whole of the UK and that any amendments or repeals of a provision of an enactment have the same extent as that provision. STATUTORY GUIDANCE UNDER SECTION 9 (RE: THE SECTION 7 OFFENCE) The government's Guidance 4 outlines the six principles which, in its view, should inform the efforts of companies, of any size, to prevent bribery being committed on their behalf

14 These six principles are as follows: 1. Proportionate procedures A commercial organisation s procedures to prevent bribery by persons associated with it are proportionate to the bribery risks it faces and to the nature, scale and complexity of the commercial organisation s activities. They are also clear, practical, accessible, effectively implemented and enforced. 2. Top-level commitment The top-level management of a commercial organisation, who are in the best position to foster a culture of integrity, are committed to preventing bribery by persons associated with it. They foster a culture within the organisation in which bribery is never acceptable. 3. Risk Assessment The commercial organisation assesses the nature and extent of its exposure to potential external and internal risks of bribery on its behalf by persons associated with it. The assessment is periodic, informed and documented. 4. Due diligence The commercial organisation applies due diligence procedures, taking a proportionate and risk based approach, in respect of persons who perform or will perform services for or on behalf of the organisation, in order to mitigate identified bribery risks. 5. Communication (including training) The commercial organisation seeks to ensure that its bribery prevention policies and procedures are embedded and understood throughout the organisation through internal and external communication, including training, that is proportionate to the risks it faces. 6. Monitoring and review The commercial organisation monitors and reviews procedures designed to prevent bribery by persons associated with it and makes improvements where necessary. Proportionality: Proportionality is a key theme throughout the Guidance. All the subsequent principles have an element of proportionality contained within them. Risk assessment procedures, for example, are meant to assess and help implement an anti bribery regime that is proportionate to the size and operational realities of the company. Similarly, training regimes for a small company working solely in the UK are likely to be much less 14

15 onerous, frequent or formal than that of a large company with a strong international presence in markets that are more susceptible to bribery. It is clear that there is no wish on the Ministry of Justice s part to unduly burden business with anti-bribery regulation. Checks, policies and processes, while important as the company s only legal defence against sanction under the Bribery Act, need only be proportionate to the size of, and the risks associated with, the business. Indeed, the test of what amount to adequate procedures before a court will hinge on the size and activities of the company. Top-level commitment: The Guidance considers that those who are most senior in the organisation are those who are best placed to help combat corruption within it. The suggestion is that the managers, board of directors, partners or executives in charge of the operation of the company are to create, foster and maintain a culture within the company in which bribery is unacceptable. This will involve both adequate communication from the toplevel about the company s stance on bribery, and top-level involvement in forming an anti-bribery policy for the company. Communication for the purpose of fostering an anti-bribery atmosphere could include, for example, circulation, via the company intranet or other accessible outlets, of a statement reinforcing the company s commitment to free and fair business operations, zero tolerance on corruption and bribery, and the consequences for any employees involved with such activity, both under company policy and the Bribery Act itself. The theme of proportionality and scale is again prevalent in this principle: a large company might need written statements against corruption and the delegation of anti-corruption training to other senior managers outside the board, while a small company might only require a verbal statement and the directors could help lead training themselves Risk Assessment: Bribery risks should form part of a more general business risk assessment, both internal and external. If the assessment indicates that the company faces a heightened risk owing to its sector or geographical area of operations, a more specific anti-corruption or bribery response will be necessary. The Guidance urges companies assess their risks on an ongoing basis as business evolves. The underlying rationale is simple: if the nature or extent of the business changes, so does the risk. 15

16 The guidance identifies 5 broad areas of external risks: Country, Sectoral, Transactional, Business opportunity and Business partnership. In keeping with Principle Two, the top-level management of the organisation should be involved in any risk assessment and ensure that there are adequate resources and appropriate sources to fairly assess the level of risk and, by extension, put in place appropriate measures to deal with it. Due diligence: Similar to the concept of due diligence developed by the Financial Action Task Force (FATF) in respect of anti-money laundering and the countering of terrorism financing, the Guidance recommends (with the issue of 'associated person' in mind) that the question is asked: Who is performing a function on behalf of the company? This principle is designed to ensure that a company carries out its due diligence to safeguard itself against those who are susceptible to bribery or could put the company at risk of bribery. The due diligence exercise should be proportionate to the risk faced. As employees of a company are associated persons for the purpose of the Act, a company may well wish to incorporate due diligence measures within its recruitment and human resources procedures. Again, the risk assessment should help to determine the positions, within a company, that are most susceptible. Communication (including training): Ensuring that a strong anti-corruption message, from top-level management, is communicated and understood clearly throughout the company can help foster a culture of anti-bribery. The message should be further progressed through training programmes that help to implement the company policies. The Guidance strongly recommends that companies should put in place strong internal communications to raise concerns about bribery, seek advice, report events, or provide general feedback to the company. As with the risk assessment, there does not necessarily need to be special training on anti-corruption, this can form part of the regular training or continuing professional development procedures that employees must take part in. Involving the top-level management, as in the other measures, is seen as an effective way to ensure that the message is strongly and effectively communicated and understood through the company. Monitoring and review: 16

17 A company will need to ensure that the anti-bribery measures it has put in place are fit for purpose. To do so, it must monitor and review its measures on a continuous basis. However, the frequency and nature of the monitoring is one for each organisation to determine, based on its own internal structures/changes and external events. Whilst there is no legislative requirement for a company to have any external or independent assessment of its anti-bribery policy and procedures, a company might find it helpful to have its anti-bribery and anti-corruption procedures tested by an external body. The assessment may include testing company policy and procedure through a critical incident exercise, or practical debriefing to determine if the company policy and procedure are understood. It is, however, important to emphasise that such external reviews do not, in themselves, amount to a guarantee that the section 7 requirement for adequate procedures will be satisfied oooooo