Charities and the Bribery Act – How will it affect you?

The Bribery Act 2010 came into force on 1 July 2011 and revises anti-bribery legislation for the first time since 1916.

Four new offences

Under the Act it is an offence to actively bribe or to receive bribes. The Act introduces four categories of offence:

Offering, promising or giving a bribe to another person;
Requesting, agreeing to receive or accepting a bribe from another person;
Bribing a foreign public official
A corporate offence of failing to prevent bribery

Bribery is widely defined under the Act but in simple terms it is trying to get a person in a position of trust to do something they should not do.

The Act applies to charities

The Act applies to a relevant commercial organisation defined as a body or partnership incorporated or formed in the UK. It does not matter if the organisation pursues primarily charitable or educational aims or purely public functions. As such, charitable institutions are caught by the Act.

The Act is of wide application because the acts of all ‘associated persons’ of relevant commercial organisations can give rise to liability. A person associated with a commercial organisation is defined as a person who performs services for or on behalf of the organisation. This includes employees (who are presumed to be performing services for their employer) agents and subsidiaries.

The key concern for any organisation is the corporate offence of ‘failing to prevent bribery’ particularly because any associated person can cause an organisation to be liable.

Adequate procedures

An organisation must be able to demonstrate that it has adequate procedures in place to prevent bribery. Guidance published by the government sets out six principles that organisations should consider when putting in place procedures to prevent bribery.

The six principles provide that an organisation must:

Have bribery prevention policies and procedures in place;
Ensure top-level commitment to bribery prevention;
Carry out risk assessments to explore its potential external and internal risks;
Conduct adequate due diligence when entering into third party relationships;
Adequately communicate policies and procedures throughout its organisation;
Monitor and review its procedures.

Areas of relevance to the charity sector

Smaller charities may be concerned by the compliance burden imposed by the six principles; however, the guidance on the Act is not designed to be prescriptive. Procedures should be proportionate with the risks faced by the organisation. If your organisation is small or medium sized then the procedures required will be less onerous than those required for a large multinational organisation. There is a degree of flexibility in how an organisation adopts the Act and applies it in its specific context.

International Aid charities will have to be particularly careful when considering facilitation payments in their worldwide activities. Small bribes paid to facilitate routine government action in some third world countries could trigger the third offence of bribing a foreign official. Where there is an intention to induce improper conduct, this could also amount to a bribe under the first offence (offering a bribe) and bring the organisation itself into the frame under the corporate offence. Organisations may find it hard to avoid what is technically an offence under the Act. The government is realistic however and sees the eradication of facilitation payments as a long term objective.

The Act also impacts on corporate hospitality and donations which can be a feature of the charity sector. The Act is designed to stamp out lavish hospitality which tends to suggest duress or an attempt to influence a person in a position of trust. It is not the intention of the Act to eradicate proportionate, reasonable and bona fide hospitality and promotional expenditure which support the aims of the organisation. The guidance provides helpful case studies on what will be regarded as proportionate hospitality.

What should charities do?

You should start by reviewing your existing policies and procedures, commercial contracts with third parties and employment documentation.

There is a need to ensure that all members of your organisation at all levels understand what bribery is, how to detect it and if necessary how to report it. It may be sensible to review your existing contracts of employment to incorporate anti-bribery provisions.

A key principle of the guidance is for an organisation to have a clear anti-bribery policy but it is not enough simply to have a policy. The need to effectively communicate the policy within your organisation is of paramount importance.

For more information visit www.thomasmansfield.com.

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