The UK Bribery Act 2010 is effective from 1 July 2011. Among the new offences under the Act is the failure of a commercial organisation to prevent bribery. The Act has extra-territorial application and as such will apply to Irish companies/partnerships that are “carrying on a business or part of a business” in the UK. Offences under the Act may be prosecuted regardless of where the act or omission which constituted the offence took place.

The final guidance on what companies need to do to comply with the Act was published on 30 March 2011. Publication was delayed due to concerns raised by the business community in response to the draft guidance published in September 2010.

Although what constitutes “carrying on a business or part of a business” for the purposes of the Act remains to be interpreted by the courts, the final guidance has clarified that organisations that do not have a demonstrable business presence in the UK will not be caught by the Act. It also states that the mere fact that a company’s securities have been admitted to trading on the LSE would not automatically qualify that company as carrying on part of a business in the UK.

The guidance also clarifies that having a UK subsidiary will not in itself mean that a parent company is carrying on a business in the UK, as a subsidiary may act independently of its parent or other group companies. Whether it acts independently is a question of fact, left to the determination of the courts. It is likely that the level of control over the subsidiary will be a key consideration. It would be prudent to assume that the corporate offence could apply to foreign parent companies of a UK subsidiary and a robust anti-bribery policy should be established for a corporate group. 

The guidance advocates a risk based approach and acknowledges that there is no “one size fits all” policy that can be implemented to ensure that “adequate procedures” are in place. Policies will vary depending on the size of the organisation, the perception of risk and the jurisdictions and sectors in which it operates. The guidance sets out the six main principles for companies to follow including the need for proportionate procedures to be put in place.

Clarification has been given in the guidance as to whether corporate hospitality is completely forbidden. The guidance recognises that bona fide corporate hospitality is an important part of doing business and stresses that it is not the intention of the Act to criminalise such behaviour provided it is reasonable and proportionate.

Companies that may be caught under the Act need to review the guidance, conduct a risk assessment, and ensure they have implemented measures to ensure that they have adequate procedures to prevent bribery in place before the Act enters into force on 1 July 2011.

Contributed by Laura Dunne.

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