Policy Q&A: Bribery Act - A reward not given in good faith

The introduction of the Bribery Act 2010 heralds a significant change to UK anti-bribery law. The Bribery Act, originally due to come into effect in April 2011 but delayed, will replace the current piecemeal legislation, seen as being overly lenient and out of date.

Most nurseries would not expect the Bribery Act to affect them or their business practices, certainly not at 'ground level'. However, directors and owners of the large groups of nurseries that operate in the early years sector (together with suppliers to the sector) do, as with all businesses, need to be aware of the changes.

'Bribery' generally covers one person giving (or attempting to give) a benefit to another person as a reward for acting illegally, or in a way that breaches an obligation of good faith.

Some nursery groups and suppliers to the nursery sector employ very large numbers of staff and may be as susceptible to committing offences under the Bribery Act as other employers.

The Bribery Act creates corporate offences and penalties, as well as offences for individuals. The 'corporate offence' should be of particular interest to employers, as it will cover every member of staff, agent and consultant.

Although the focus for some of the legislation is on overseas activity, which may not be relevant for many providers and suppliers in the sector, an awareness of the pitfalls by management and owners is still required.

Q: What new offences are created by the Bribery Act?

Four new offences created by the Bribery Act are:

• - offering, promising or giving a bribe (section 1)
• - requesting, agreeing to receive or accepting a bribe (section 2)
• - bribing a foreign public official to obtain or retain business (section 6)
• - failing to prevent bribery but not having in place 'Adequate Procedures' (sections 7, 8 and 9).

Q: Are there any defences available?

A company can escape liability for the unlawful actions of its staff if it can show that it had 'adequate procedures' in place, designed to prevent those persons acting on its behalf from committing bribery. What will constitute 'adequate procedures' has not been finalised, although Kenneth Clarke has recently moved to reassure honest businesses that they will not need to spend millions on new systems to comply with the Bribery Act. However, the draft guidance issued highlights the following six principles of good practice.

Top level commitment - owners and directors should take a leading role establishing a culture in which corruption is seen as unacceptable. They should ensure that anti-bribery practices are adopted.

Effective implementation - staff should be made aware of policies and procedures and where to find them.

Risk assessment - activities should be riskassessed to identify potential problem areas.

Due diligence - businesses should assess their business partners for their own compliance regimes, given that they may be liable for all 'associated persons' (such as agents, sub-contractors etc) and their activities to the extent that they have an impact on the business.

Policies and procedures - businesses should set out the overall framework under which anti-bribery measures can be implemented.

Review - a monitoring and review programme should be put in place to ensure that the implementation strategy remains fit for purpose.

There is no guarantee that undertaking these steps will absolve a company or its directors of responsibility if they faced an investigation by the Serious Fraud Office following an allegation of corrupt activity. However, these steps will certainly help, and the more prepared and thought-out a nursery's Bribery Act awareness approach is, the less likely corrupt activities will occur.

Q: What are the penalties for non-compliance?

The penalties for non-compliance are serious. If a company is found guilty of corporate bribery, both the company and its directors could be subject to criminal sanctions including fines and imprisonment. In addition, the corporate activity of the business going forward could be curtailed.

Q: In what sort of scenarios do you envisage nurseries being affected?

To be honest, the risk for the sector is likely to be limited, and this article is really simply intended to ensure that readers and owners of large organisations who operate in the sector are aware of the changes. However, if there is any risk of commiting an offence, it may be around inducements to enter into large-scale and valuable contracts, say in respect of contracts with corporate employers or supply contracts.

Q: When is it to be implemented?

Although the new legislation has been delayed from coming into force, Kenneth Clarke, the Justice Secretary, has confirmed that it does remain on the Government's agenda and has sought to provide comfort to honest businesses.

Kenneth Clarke has said that he hopes 'to put out very clear guidance to save (businesses) from the fears that are sometimes aroused'.

He has also said he is working with organisations including the British Chambers of Commerce and the Federation of Small Businesses (FSB) to examine the Act and added that 'ordinary hospitality to meet and network with customers and to improve relationships is an ordinary part of business and should never be a criminal offence'.

FURTHER INFORMATION

You can contact Robert Collier or another member of the Early Years Team at Veale Wasbrough Vizards on 0117 314 5472 or rcollier@vwv.co.uk.