What is the Bribery Act, and how are small businesses affected?

Businesses of all shapes and sizes in the UK are affected by the Bribery Act and company directors need to be aware of what they should do to ensure their full compliance with the rules.

If you think that because you run a small business and always operate openly and honestly, you’re not affected, it’s time to think again.

As an employer, you’re also held responsible for the conduct of your employees. If an employee, agent, or contractor bribes a third party in order to gain some benefit for your company –whether or not you know anything about it – you could face a heavy fine or imprisonment.

So what exactly is the Bribery Act, and what procedures should you establish to ensure you don’t fall foul of the law?

New Act, wider remit

After a few false starts and delays, the new Bribery Act finally came into force in July 2011. It’s considered as one of the toughest pieces of anti-corruption legislation in the world and has had a significant impact on how businesses in this country conduct their affairs. And while it’s true that big business is likely to be more affected, if you deal with high-value contracts or do any type of business overseas, you need to know exactly how those sales or contracts are achieved.

Categories of offence

Four main types of offence were created by the new Bribery Act, these are:

• Offering, promising, giving or facilitating a bribe.
• Accepting or receiving a bribe in return for goods, services or a contract to supply goods or services.
• Bribing or attempting to bribe a foreign public official.
• Failure on the part of a corporate entity to prevent bribery.

The latter may be less of a concern to sole traders, but if you have employees or use agents to procure work for you, you can be held responsible for their actions. For the sake of clarity, facilitation payments, or payments made to people to carry out work that they are already contractually required to do, is illegal under the Act.

How does the Act affect hospitality?

You can still offer clients or prospective customers hospitality, free samples or promotional goods, provided the offer is not excessive. General hospitality to foster closer working relationships is fine but targeting a key decision-maker, especially if it’s connected to a tender award or a lucrative contract, could be interpreted as an attempt at bribery.

What do I need to do?

As a business, you need to be seen to take steps to prevent bribery. This includes carrying out a risk assessment by checking the nature of all your sales, the size and types of contracts you have and what, if any, third-party involvement there is in securing orders. In a nutshell, you need to understand your business relationships and how sales are achieved, both in the UK and any overseas. Most UK based businesses will have nothing to fear and the risks will be negligible. For those who do business abroad, especially in countries where bribery is prevalent, the risks will be greater.

What procedures should I have in place?

It’s important to show that you have procedures in place that can be deemed proportionate to the risk your business is exposed to. The type of steps you should take include:

• Ensuring that all your staff are fully trained and aware of their obligations to report bribery or any attempts at bribery.
• Include anti-bribery clauses into your standard commercial contracts.
• Carry out all the appropriate checks before entering into agreements or signing contracts with a third party.
• Regularly review your anti-bribery procedures.
• Be clear about how you will deal will allegations of bribery in the public arena or within the company.

Have an anti-bribery policy

The prospect of producing an official anti-bribery policy may seem daunting to a small business but you don’t have to come up with a complex document. So long as you have something in writing to say you’ve assessed the risks, issued guidelines to staff on the issue and put the appropriate measures in place which you review on an annual basis, that will be enough to satisfy the Ministry of Justice. If you are concerned about bribery or feel you need help complying with the legislation, it’s always best to seek legal advice.

For further information, download this free guide on the Bribery Act from the Ministry of Justice.