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The Bribery Act 2010 references the controversy surrounding the practice of hospitality within business, as hospitality can be used to conceal bribery. Therefore, the Bribery Act and the Ministry of Justice have drawn a distinction between hospitality and bribery to allow the practice of hospitality to continue, but in an honest, transparent and lawful way. If an organisation wishes to engage in hospitality, then they need to have a thorough understanding of the Bribery Act to ensure compliance.
What does the Bribery Act 2010 state about hospitality?
The Bribery Act 2010 does not explicitly prohibit corporate hospitality and gifts, instead it states that hospitality and gifts which are reasonable and proportionate are allowed. However, the act does take into consideration the fine line between hospitality and bribery; therefore, the Bribery Act can be used to expose certain cases in which hospitality is used to conceal a bribe.
Kenneth Clarke, when conducting a statement on the Bribery Act, highlighted that although the new legislation could be considered as strict, it was not aimed at making it difficult for law abiding firms to treat their employees or work associates with gifts and hospitality. The act is simply ensuring this practice of hospitality is conducted in an appropriate and fair way.
The Ministry of Justice and the Bribery Act both demonstrate consideration of this, and therefore in conjunction there has been three critical factors created for organisations to consider when partaking in hospitality.
1) The intention behind the offer (is the intention to achieve a business advantage?)
2) The value of the offer (if the gift is very high in value, then it might be questionable)
3) The timing of the offer (if the gift is offered just before an important business deal is about to be processed, then it might be questionable)

How can businesses continue to offer hospitality and gifts whilst remaining compliant with the Bribery Act 2010?
For a business to offer hospitality and gifts, they need to ensure that what they are offering is appropriate, therefore a threshold needs to be established. This needs to be established in relation to the industry in which the business rests, this will ensure that gifts are not excessive for the industry. For example, a business which wants to offer reasonable travel expenses to an employee or work associate as a gesture of good work relations can do so, as long as this gesture is reasonable and proportionate to the business.
A company which wishes to still administer gifts, hospitality gestures and travel to work associates, can conduct this whilst protecting themselves, through establishing policies on this matter. For example, if an organisation creates a set of policies which reference the specific types of hospitality which are not permitted, then this written policy is a demonstration of the organisation’s compliance with the Bribery Act, as it is a form of adequate procedure. This policy needs to be well communicated amongst employees to ensure each employee understand when and how to conduct hospitality gestures correctly, if they wish to do so.
If an employee offers a gift to a contractual counterparty which opposes the organisation’s hospitality policy and standards, then that employee will be held accountable, not the organisation which has clearly demonstrated implementation of adequate procedures. Adequate procedures are in place to prevent bribery and corruption from taking place within an organisation, and this is why the Bribery Act stresses the importance of adequate procedures, because they can protect an organisation against a fine.
Furthermore, it is wise for an organisation to avoid hospitality offerings with foreign public officials as this aspect of the Bribery Act is more contentious. Bribing a foreign public official is a specific and considerable offence, therefore more analysis and investigation will be taken into the hospitality and gift offering to a foreign public official than would normally take place. Thus, to avoid the potential fine, it is probably wise to avoid engaging in hospitality with foreign public officials.
Therefore, if an organisation wishes to conduct hospitality and gift offering, then they should have a sound understanding of the Bribery Act 2010 first, to avoid any serious repercussions from bribery offences.

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The Bribery Act 2010 is the UK based law which strengthens bribery and corruption legislation, in response to the increasing rate of bribery offences. The act effectively updates the bribery offences which an individual or an organisation can be found guilty of. Subsequently, the act states the penalties which will be administered against an individual or organisation for committing a bribery offence. Compliance with the Bribery Act 2010 is of utmost importance if an individual or organisation wants to avoid the severity of unlimited fines and unlimited prison sentences.

Why was the Bribery Act 2010 introduced?

The Organisation of Economic Co-Operation and Development (OECD) criticised the UK from 2007, claiming that the UK’s treatment of bribery and corruption has been weak and ineffective. The OECD was effectively comparing the UK’s previous legislation, which was the Prevention of Corruption Act 1916, against the more robust US Foreign and Corrupt Practices Act (FCPA). The OECD’s Working Group on Bribery conducted a 2007 report which criticised the UK’s failure to align the anti-bribery laws with international obligations.

The Prevention of Corruption Act 1916 was regarded by the Secretary of State for Justice in 2009, as old and anachronistic. Therefore, it was widely agreed that a new legislative force was needed.

The reforms introduced in the Bribery Act 2010:

The act explicitly states the bribery offences as follows:

1) The action of an individual bribing another individual (for example, through money), and in return an individual accepting a bribe.

2) Bribing a foreign public official is forbidden, this is particularly new to this 2010 act.

3) The failure of a corporation to prevent a bribe which has taken place through their contractual counterparties. This exposes that the corporation did not have sufficient anti-bribery and corruption procedures. Again, this is specific to the 2010 Bribery Act as it establishes company liability for corrupt actions committed by their employees or individuals who work on behalf of the company.

If an organisation has implemented anti-bribery and corruption procedures, then they have effectively complied with the “adequate procedures” section of the Bribery Act 2010. The Bribery Act 2010 stresses the importance of adequate procedures, as it demonstrates that an organisation has attempted to prevent corrupt activities.

Adequate procedures include:

1) Proportionality

2) Top-level commitment

3) Risk assessment

4) Due diligence

5) Communication

6) Monitoring and review

Penalties for bribery offences:

The penalties administered for a bribery offence was decided through the co-operation of the UK Serious Fraud Office (SFO) and the UK Crown Prosecution Service.

The penalties include:

– A maximum of 10 years imprisonment: This does not apply to organisations.

– An unlimited fine: As expected, the fine imposed upon an organisation which has failed to prevent a bribery offence occurring within their environment, will be a larger sum than the fine imposed upon an individual convicted of a bribery offence.

– Confiscation of property: This is enabled through the Proceeds of Crime Act 2002, which states the confiscation or civil recovery of property achieved through a crime can be taken.

– Disqualification of Directors: The Company Directors Disqualification Act 1986 states that company directors can be disqualified for certain cases of misconduct, such as bribery.

What has been the reaction to the Bribery Act 2010?

The Confederation of British Industry (CBI), which speaks on behalf of 190,000 businesses, has criticised the Bribery Act 2010 as putting British business at a disadvantage, due to the act criminalising certain behaviour which is able to exist upon the global market legally. Some UK businesses expressed reservations over the Bribery Act 2010 through referencing the corporate criminal offence of “failing to prevent a bribe by an associated person.” A corporation is only protected against this clause if they have implemented adequate procedures, which have been regarded as excessive by some organisations.

Although it seemed initially daunting, the Ministry of Justice has published guidance on the act to settle the grievances of organisation and individuals. The Bribery Act 2010 has introduced some complex procedures which were not previously exercised. However, if an organisation wants to achieve a fair and ethical work environment, then they should comply with the Bribery Act 2010 through sound education and training.

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The UK Bribery Act 2010 incorporates Section 7 entitled “Failure To Prevent Bribery.” This section has been established with the purpose to set out company liability for corrupt activity committed by their employees or associated persons, which demonstrates the intention to create an advantage in the conduct of business for their organisation. If an organisation can prove that they have implemented adequate procedures to protect against bribery and corruption, then they will be protected, if they cannot demonstrate this, then they will be at risk of an unlimited fine. Therefore, sound understanding of Section 7 of the Bribery Act 2010 is essential.
How does Section 7 of the Bribery Act work?
The Ministry of Justice has published guidance on the new Bribery Act 2010, as it anticipated confusion surrounding the new reforms. However, most of this confusion is directed at Section 7 of the act, as this has been newly introduced.
Section 7 states that a commercial organisation will be found guilty of a bribery offence if a person associated with the organisation has been found guilty of bribing another individual with the incentive to:
– Obtain or retain business for their organisation
– Obtain or retain a business advantage for their organisation.
The penalty which will be administered to the organisation will consist of:
– The individual (employee or associated person of the organisation) liable on conviction on indictment to a fine.
– The organisation will also potentially face an unlimited fine.
The only way that an organisation could protect itself from this risk, is through implementing adequate procedures, which are stated in the Bribery Act 2010 as:
1) Proportionate procedures. This states that the organisation’s procedures, which are intended to prevent bribery offences, are proportionate to the bribery risk which the organisation could potentially face.
2) Top-level commitment. This is a demonstration of an organisation’s board of directors’ commitment to preventing bribery and the creation of an environment which does not tolerate bribery and corruption.
3) Risk Assessment. An organisation needs to demonstrate that they have conducted an assessment to analyse the potential outlets which could create a risk, this risk assessment needs to take place periodically.
4) Due diligence. The due diligence procedures conducted by organisations need to be proportionate and risk based, in respect of the individuals who will be performing services for the organisation.
5) Communication. It is expected that communication and training on bribery offences are conducted, to ensure that bribery prevention is well understood and known across the whole organisation.
6) Monitoring and review. This is the demonstration that an organisation regularly reviews and updates their bribery prevention policies and procedures to ensure they are still appropriate.

Why is Section 7 incorporated into the Bribery Act 2010?
The rate of bribery offences and avoidance of bribery and corruption law has been increasing, and therefore there needed to be a concerted effort by legislative bodies to respond to this issue. Therefore, through holding companies liable for corruption exercised by their employees, it will promote a culture which is conscious of anti-bribery and corruption.
The reaction to Section 7:
The reaction to Section 7 has certainly been mixed. The “failure to prevent” model, which Section 7 is based upon, has been regarded as widely attractive, and this model has now formed the basis of other legislations in the UK, for example the “failure to prevent” facilitation of tax evasion. Moreover, Ireland and Australia have exposed how they are considering similar legislation to this, and Kenya has even adopted “failure to prevent” corporate offences.
However, Section 7 is not so popular amongst the business sector, as they have had to tackle the confusing aspect of this new reform. For example, there has been suggestions that Section 7 violates the principle of fair warning, and organisations are entitled to have this fair warning. Furthermore, there has been questioning over what defines “failure” of prevention.
Ultimately, organisations will have to comply with the Bribery Act 2010, and subsequently Section 7 of this act, if they want to avoid prosecution. Therefore, education and training of how to implement Section 7 properly, will be beneficial to organisations if they want to create a fair business culture.

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Bribery is the action of offering another individual something of value, notably money, in exchange for something which will be beneficial to the briber. Corruption can apply to a large range of actions, which are essentially conducted with illegitimate and dis-honest intentions. Bribery and corruption can offer an individual within the business sector the opportunity to speed up certain processes, as well as achieving targets or deals which they would not have been able to achieve lawfully. Therefore, bribery and corruption has become rife in the business sector, and consequently there have been demands to control this type of deceitful activity.

Bribery and corruption today:

The Bribery Act 2010 came into effect due to the increasing number of bribery offences. The Bribery Act 2010 effectively states the most notable forms of bribery:

1) The act of bribing another individual (with money or something of value). Then, in-turn the act of being bribed (you are guilty for accepting a bribe).

2) The act of bribing a foreign public official.

3) The act of organisations failing to prevent a bribe from taking place in their environment, which is an indication that they do not have precautionary anti-bribery and corruption procedures in place.

4) The act of senior officials within organisations consenting to and partaking in bribery and corruption.

Corruption, which is more widely applied to a range of deceitful activities within an organisation, occurs due to individuals who are willing to enhance their personal profit, through illegal measures. Corruption can occur because no individuals or set of procedures have been implemented to stop it. Therefore, corruption can assume the form of:

1) Bribery

2) Extortion

3) Fraud

4) Money-laundering

5) Embezzlement

Why has the rate of bribery and corruption increased in recent years?

The rise of technology and the expansion of organisations into new markets has facilitated the rise in corruption rates, as organisations and individuals have been exposed to new technologies and opportunities which can enable corruption. This has been followed by the new anti-bribery and corruption laws which have been introduced, such as the UK Bribery Act 2010, which has cast light upon bribery and corruption scandals which have previously been covered up. However, tighter controls now ensure that these scandals cannot be covered up so easily.

Organisations and businesses have been renowned for their lack of commitment to implementing anti-bribery and corruption procedures, perhaps because they have assumed it will take up too much time and money. A study conducted by HR Magazine found that notable companies were not risk aware, with almost 1 in 5 of organisations questioned stating that they do not have an anti-corruption policy. Moreover, 43% of the organisations questioned do not conduct a bribery and corruption risk assessment more than once a year, and 17% of the organisations have never conducted an anti-corruption risk assessment at all.

The failure to implement anti-bribery and corruption procedures is careless, as anti-bribery and corruption procedures are far more beneficial than they are a burden. These procedures will protect an organisation from the threat of an unlimited fine for allowing bribery and corruption to occur within their environment, therefore they are necessary.

What attempts have there been to control bribery and corruption?

The Institute of Chartered Accountants in England and Wales (ICAEW) has allied with other similar professional organisations with the mutual goal of tightening controls on bribery and corruption, through using anti-corruption summits. The corrupt activity which is currently plaguing corporations and governments includes bribery, money laundering, financing of terrorism and tax-evasion. Therefore, for corruption to be tackled properly, there needs to be a concerted effort from corporations and governments.

The Chief Executive of ICAEW, Michael Izza, during a statement in 2018, declared that this concerted effort to tackle corruption was going to take place, in order to achieve a high standard of ethics and integrity.

KPMG, a professional service company based in the Netherlands, advise multinational companies with regards to Anti-Bribery and Corruption (ABC) risks and concerns. KPMG do this through working in conjunction with the UK Bribery Act 2010 and the Foreign Corrupt Practices Act (FCPA). Through utilising KPMG’s advice and ABC risk guidelines and assessments, it ensures that an organisation can demonstrate whether they have effectively implemented anti-bribery and corruption procedures. Therefore if a risk did occur, an organisation will have the power to demonstrate they have attempted to prevent bribery and corruption. KPMG offer advice on ABC risk assessments, ABC due diligence and ABC third-party risk assessments.

Therefore, it is certainly wise for organisations to make sure they enforce anti-bribery and corruption procedures to protect their workplace against corruption.