Bribery Act – Law Society Response

The Law Society has issued a response to the Bribery Act telling the Government that proposed rules on what companies have to do to avoid prosecution under new bribery laws are not detailed enough and that clarification, particularly for smaller companies, is necessary.

The Bribery Act, which was passed earlier in 2010, places a new burden on organisations to ensure that their staff or representatives are not engaging in corruption. Under the laws, an organisation can be liable for illegal activity if it does not have “adequate procedures” in place to deal with the issue. The last Labour Government was lobbied by business groups seeking greater clarity on what those “adequate procedures” might be. The Government responded by inserting a requirement that the they and successor governments would provide “guidance about commercial organizations preventing bribery”. This guidance will be indicative, setting out principles and illustrative good practice examples rather than prescriptive standards.

Prior to the Bribery Act, existing US, OECD (Organisation for Economic Co-operation and Development) and related UK guidance gives a good indication of the procedures and processes companies will need to have in place. Importantly, there is a clear message from Government that “adequate procedures” are not intended as a safe harbour. Whether adequate procedures are in place will ultimately be a matter for the courts to determine based on the facts of a given case.

The Law Society’s report is in response to a consultation on that guidance and calls for further detail.

The Law Society considered that the guidance is helpful. However, there were specific areas where more detail and clarification would be helpful.” “The Law Society recognises the importance of prosecutorial discretion in legislation such as this. However, this does mean that there will be a lack of certainty in the early days of implementation and this is a concern for many of our Members and their clients. Clear and swift guidance from the prosecuting authorities would, in our view, help to allay fears and assist firms to ensure compliance with the new Act.

The Law Society said the approach taken by the Ministry of Justice’s guidance is too vague.

Much of the guidance sets out issues for a business to consider rather than practical guidance. We are concerned that, particularly for smaller firms, the lack of practical guidance will make putting in place adequate procedures difficult,” it said. “While we recognise the difficulty with providing detailed guidance, it would be helpful if the guidance could signpost businesses to other more practical sources of information.

The Law Society also said that the guidance should advise on how companies can deal with bribery that is ongoing, and how they can deal with bribery that occurs in the UK.

[The guidance’s practical examples] are overly complex; they only consider overseas bribery, which may cause firms to overlook the fact that bribery can occur in the UK,” said the Law Society response.

A review of the guidance reveals a distinct lack of procedural details; it merely outlines six principles which do not set out what a company should actually be doing in practical terms. The guidance poses many questions but supplies few answers, putting an unfair burden on corporate entities.

Gregory Abrams Davidson LLP

If you or your business have any questions relating to The Bribery Act or related compliance of corporate governance matters and would like a free consultation with a member of our Corporate  Law Team for a free 30 minute consultation, please contact us on 020 8209 0166. If you prefer, you can contact us by email at jabrams@gadllp.co.uk.