The UK Bribery Act 2010 (“the Act”) entered into force on 1 July 2011. Its potentially far-reaching impact, even on non-UK businesses and individuals, makes it one of the most important pieces of legislation of recent times. While the UK Ministry of Justice published guidance on some aspects of the Act and its operation prior to its entry into force, considerable uncertainty remains as to how it will be enforced in practice.
A number of new offences are created under the Act. The corporate offence created under Section 7 is perhaps the most unclear and may be of particular concern to the metals industry, given that the industry encompasses a variety of businesses, regularly involves the use of local agents and intermediaries and frequently operates in markets where established customs and practices may no longer be acceptable under the terms of the Act.
The offence under Section 7 is that of commercial organisations failing to prevent persons associated with them from committing bribery on their behalf. Associated persons might include agents and intermediaries and the offence can be committed irrespective of where in the world the acts or omissions which form part of the offence take place. Section 7 applies to organisations incorporated in the UK and to organisations carrying on a business (or part of a business) in the UK, wherever they may be incorporated.
The concept of carrying on a business is not defined in the Act. The guidance published by the Ministry of Justice is of limited use: it suggests that whether a particular organisation can be regarded as carrying on a business, or part of a business, in the UK can be answered by adopting a “common sense” approach. The organisation responsible for enforcing the Act (the Serious Fraud Office) has indicated that it intends to interpret Section 7 widely. Ultimately, it will be for the UK Courts to interpret this term and uncertainty will remain until they do so.
By way of example, a non-UK based metals trading company may have an office in London, whose staff carry out marketing and back-office related work. The real intention of such an office may be to create a London presence, as well as to act as a base for those traders who visit London from time to time but who do not carry out any trading business there. That non-UK based trading company may now find itself subject to the Act.
A potential defence may be available to an organisation if it can show that it has adequate procedures in place designed to prevent persons associated with it from committing an offence. Guidance issued by the Ministry of Justice outlines six key principles for organisations seeking to ensure that they have adequate procedures in place. These principles were the subject of an earlier briefing issued by this firm, copies of which are available on request.
All companies concerned that the Act may apply to their business are recommended to undertake a full review of their existing anti-corruption policies and practices, including an assessment of any and all risks that they may be exposed to by virtue of the geographic locations in which they conduct business. They should also have robust, but proportionate, procedures in place to prevent bribery, particularly where risks are identified. Adopting and adhering to such procedures should go some way towards demonstrating that an organisation is complying with the Act.
HFW is able to assist organisations seeking to comply with the Act, such as providing training, assistance with preparing adequate procedures including on anti-bribery and anti-corruption policy, briefings to staff and appropriate contractual protection.
For more information, please contact Richard Merrylees, Partner, on +44 (0)20 7264 8408 or richard.merrylees@hfw.com, or Anthony Woolich, Partner, on +44 (0)20 7264 8033 or anthony.woolich@hfw.com, or your usual contact at HFW.
