 Business 'Backhanders' Set to Become Outlawed
 Peter Billyard Peter Billyard, a corporate services lawyer with Charles Lucas &Marshall, reports on new legislation which will make business backhanders a thing of the past.
The Bribery Bill is a major piece of new legislation that is currently in the final stages of its passage through Parliament. Its aim is to modernise and consolidate the law on bribery and corruption in the UK which currently consists of common law offences and legislation which dates back to between 1889 and 1916.
The Bill is designed to raise the awareness of bribery by all types of businesses although it is expected to have greatest impact on large companies in 'high risk' areas such as defence and construction. It will, however, cover not only payments made in multi-billion international defence contracts but also smaller companies where informal 'backhanders' or gifts might be offered by existing or potential suppliers.
The current law on bribery is commonly considered to be unsatisfactory. This is illustrated by the fact that the UK has so far failed successfully to prosecute any bribery case against a company. The respected international think-tank, the Organisation of Economic Co-operation and Development (OECD), has been a particular critic. It heavily criticised the judicial handling of the recent investigation into bribery allegations against BAE Systems.
For some years the Law Commission has been working on proposals for reforming the existing law on bribery. Its first report in 1998 was eventually followed by a full report and draft bill in November 2008. This has formed the basis for the Bribery Bill which received its first reading in the House of Lords in November 2009.
The Bill creates two general offences of bribing and being bribed, together with a specific offence of bribing a foreign public official. Significantly for companies (and partnerships), the Bill also introduces a new, corporate-only offence of failing to prevent bribery.
However there is a defence for a company if it can show that it had implemented adequate procedures to prevent such conduct taking place. The government has said that it intends to publish non-statutory guidance on 'adequate procedures', which are not defined in the Bill. It is expected that the majority of cases brought before the courts will be under the corporate-only offence.
The Bill covers offences which take place in the UK or by British individuals or corporates abroad. Maximum penalties for individuals are 10 years' imprisonment and an unlimited fine. Companies will be liable for unlimited fines.
The practical implications of the Bill, when passed, for all commercial and public sector organisations is that they should specifically prohibit bribery in any form within the organisation.
Larger companies will be advised to additionally implement systems to counter bribery, to include codes of conduct, training and guidance together with risk management and auditing of compliance and also consider introducing such clauses into their commercial contracts.
For smaller companies and owner-managed businesses in 'low risk' sectors it is to be hoped a correspondingly low key, proportionate response to the Bill will suffice.
For more information contact Peter Billyard on 01635 521212 or peter.billyard@clmlaw.co.uk
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