Corrupting business: the Bribery Act 2010
Beyond a bribe
6 October 2018
RICS members must be proactive to avoid falling foul of the Bribery Act 2010, warns Shy Jackson
The Bribery Act 2010 came into force in July 2011. Yet in 2013, the Chartered Institute of Building published a report exploring corruption, which identified that 49% of respondents believed corruption in UK construction was common and businesses were not doing enough to prevent it.
More recently, questions have arisen about the operation of the act. As the cases discussed below show, it has had an impact on business, and RICS members need to be more aware of it.
One of the key implications of the act is that a company with a presence in the UK can be prosecuted for bribery, or for failing to prevent it, even when the alleged bribery takes place outside the UK.
In February 2016, Sweett Group PLC was the first company to be convicted under the act. It was sentenced under section 7 of the legislation and ordered to pay £2.25m in fines following a Serious Fraud Office investigation into its activities in the United Arab Emirates, in respect of bribes paid by its subsidiary company, Cyril Sweett International Limited, to secure the award of a contract with Al Ain Ahlia Insurance Company. As a result, Sweett Group was also the subject of disciplinary action by RICS, which resulted in an additional £125,000 fine and the imposition of ongoing reporting obligations.
A company can also be responsible for bribery carried out by its employees or agents without its knowledge or consent; indeed, a company can be guilty of failing to prevent bribery by those working directly for it or on its behalf, unless it can rely on the defence in section 7 of the act on the basis that it has adequate prevention measures.
a company with a presence in the UK can be prosecuted for bribery even when the alleged bribery takes place outside the UK
In April this year, Skansen Interiors Limited was convicted for failing to have such procedures in place. Two individuals pleaded guilty to bribery and were imprisoned for 12 and 20 months and disqualified from acting as directors for six and seven years, respectively. In this case, a managing director had given a developer £10,000 and promised him a further £29,000 in return for confidential information to be used to win commercial property contracts, which resulted in the company securing business with a value of more than £6m. This was to the detriment of other companies that had bid for the same contracts, and the misconduct was only discovered and reported to the police when a new managing director was employed by Skansen.
This is clearly an issue of growing importance that is being addressed worldwide. In 2016 the International Organization for Standardization published ISO 37001, a new standard that companies and organisations can use to certify their anti-bribery and corruption procedures.
In May this year, it was announced that the House of Lords has appointed an ad-hoc select committee to review and report on the Bribery Act. Its aim is to look at how effective the legislation has been, investigate whether there is still uncertainty about it, especially for small and medium-sized enterprises, and, if so, ascertain what could be done to raise awareness.
This is a clear indication that individuals and companies need to be aware of the act, and to take active steps to avoid any liability under its provisions. The select committee issued a call for evidence on 20 June and continues to collect oral evidence, with the findings expected to be published in 2019.
On 30 July this year, the Criminal Justice (Corruption Offences) Act 2018 came into force in Ireland, introducing various new offences and substantial penalties for businesses that engage in corrupt practices.
Regardless of how the 2010 act may be amended, RICS members need to be highly aware of its provisions and the impact it can have on their business. There is a particular onus on smaller businesses, which may be less familiar with how such legislation affects their operation and the steps that can be taken to avoid being found in breach of the act, such as putting in place adequate procedures to prevent bribery. However, the legislation still applies to all businesses, and its international reach means that nobody should ignore it.
Shy Jackson is Partner at Pinsent Masons