Tough new bribery regime forces corporate rethink

The UK’s new Bribery Act, which is expected to come into force later this year, will introduce tough new laws to replace the current mishmash of rules.

Covering a wide range of activities, across the UK and beyond, the new legislation is set to go further than its US equivalent by also addressing bribery in the private sector, such as bribes given by business partners on the company’s behalf.

With punishing corporate fines and life-altering personal sanctions, the impact of breaching the law can be severe. The new regime aims to come at the offence from all angles, holding not just the individual who gives or receives the bribe responsible, but also senior officers who turn a blind eye to what is going on.

Bribery and corruption have long been part of business life and the food and drink sector is not immune to the temptation to gain a commercial or personal advantage through corrupt actions. It is a practice Robert Watson, a buyer at Kraft Foods, found to his cost, as he was forced to pay his former employer $1.8 million in damages and sentenced to 27 months in prison for accepting bribes from a supplier.

To provide an incentive to implement appropriate anti-bribery and corruption compliance procedures, the new regime is set to offer as a carrot (to avoid the stick), the possibility of putting in place adequate procedures to prevent illegal practices. With adequate systems in place, even if bribery does occur, the company may be off the hook.

While no compliance system can be entirely failsafe, a defence will be available where it can be demonstrated the company’s procedures were adequate, even though they failed to prevent the illegal practice occurring.

The Act is also expected to sound the death-knell of lavish corporate hospitality. Legitimate relationship building will of course continue but employees’ ethical antennae should alert them when this verges on excessive generosity, which could suggest improper influence.

The specific circumstances will determine where the line should be drawn. Taking a new customer to lunch to discuss how best to work together is likely to be fine, whereas the same lunch might raise concerns in the immediate run-up to a tender process.

Food and drink companies should be thinking now about how they would shape up if they had to show their procedures were adequate – but failed – to prevent bribery. Have they carried out a risk assessment? What has been done to address the identified risk? Are they comfortable that their business partners are compliant with the Act? Are staff clued up about what to look out for and when and with whom to raise the alarm?

There is no ‘one size fits all’ and companies should be preparing now to meet the challenges ahead.

Catriona Munro is a partner in the EU competition and regulatory team at Maclay Murray & Spens LLP and a member of the firm’s Food & Drink group. [email protected]