The UK Bribery Act An overview of the Act. David Alexander Director, Forensic Services, Smith & Williamson Ltd

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1 The UK Bribery Act An overview of the Act David Alexander Director, Forensic Services, Smith & Williamson Ltd

2 Disclaimer This seminar is of a general nature and is not a substitute for professional advice. No responsibility can be accepted for the consequences of any action taken or refrained from as a result of what is said.

3 Bribery has always been an offence Past Common Law offence of Bribery Prevention of Corruption Acts Anti-bribery provisions of the FCPA (1977) OECD Anti-Bribery Convention (1999) Present Overseas Corruption Unit (December 2007) Open door policy at the SFO policy (April 2008) New self-reporting guidelines issued by SFO (July 2009) Future The UK Bribery Act 2010

4 Implications Fines Siemens Bribery Fines Top 1 Billion Euros (Dec 2008) FSA fines Aon Limited 5.25m for failings in its anti-bribery and corruption systems and controls (January 2009) Halliburton Will Pay $559M in Nigerian Bribery Fines (Jan 2009) BAE fined 286m for bribes scandal (Feb 2010) Innospec chemicals firm fined $12.7m in bribery case (Mar 2010) Daimler s 122m bribery fine (Jun 2010) 6 companies [including Shell], $156M in bribery fines (Nov 2010) Reputational Risk Case Study - Project Rock Terms of Business Shell quizzes all advisers on corruption policies (January 2011)

5 The UK Bribery Act Overview Consolidation of existing law, to make it simpler and more appropriate. The Act refers to four main offences. Bribing another person paying, offering or promising to give a bribe Being bribed requesting, agreeing to receive or accepting a bribe Bribery of foreign public officials Failure of commercial organisations to prevent bribery Effective from 1 July 2011

6 A Gold standard piece of legislation Applies to bribery in both public and private sectors Active & Passive Bribes (Offering, giving, requesting and receiving) UK and Overseas Outlaws facilitation payments Includes all associated persons New corporate offence of failure to prevent bribery

7 Failure to prevent bribery Corporate offence Failing to prevent active bribery (by employees, agents or subsidiaries) or bribery of a foreign official Knowledge/culpability irrelevant Unlimited fines Money laundering and Proceeds of Crime implications Defence Adequate procedures designed to prevent persons associated with undertaking such conduct

8 Adequate procedures six principles 1. Proportionate Procedures clear, practical, and effectively implemented and enforced 2. Top level commitment - Sponsorship of the programme at Board and senior management level 3. Risk Assessment assess the nature and extent of bribery risks to which the organisation is exposed 4. Due diligence of counterparties, agents and intermediaries 5. Communication (including training) embedding of compliance programmes and ensuring understood 6. Monitoring and review of those programmes

9 The Bribery Act and SME s I have listened carefully to business representatives to ensure the Act is implemented in a workable way especially for small firms that have limited resources.combating the risks of bribery is largely about common sense, not burdensome procedures. The core principle is proportionality. Ken Clark Secretary for State for Justice March 2011

10 Gifts and hospitality No one wants to stop firms getting to know their clients by taking them to events like Wimbledon or the Grand Prix. Ken Clark, March 2011 Intention to influence or induce Higher standard for Foreign Public Officials Proportionate or Lavish Not connected with legitimate business activity or concealed

11 Facilitation payments Act outlaws facilitation payments Guidance recognises difficulty faced in some parts of the world and some sectors Prosecutorial discretion and public interest Small payments Self reported payments Payments made by those is vulnerable

12 Associated persons Organisations can be held liable for associated persons who commit a bribery offence which benefits the organisation May include: Contractors Supply chains Joint ventures Parent companies

13 Quick wins Appoint a senior person to take responsibility Assess corruption risk faced by company Review current relationships with connected parties Ensure appropriate due diligence is carried out on all new business relationships plus monitor on an on-going basis Develop an anti-bribery and corruption strategy including policies and procedures Train staff on corruption risk and on policies and procedures

14 Smith & Williamson Limited 25 Moorgate London EC2R 6AY Tel: Fax: Regulated by the Institute of Chartered Accountants in England and Wales for a range of investment business activities A member of Nexia International

15 The UK Bribery Act An overview of the Act David Alexander Director, Forensic Services, Smith & Williamson Ltd

16 [HAND-OUT ONLY] These notes have been produced for the guidance of delegates at the conference for which they were prepared and are not a substitute for detailed professional advice. No responsibility can be accepted for the consequences of any action taken or refrained from as a result of these notes or the talk for which they were prepared. Copyright Smith & Williamson Limited 2008