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Failure to prevent commercial bribery: what are the consequences?

Maryam Abu HusseinMaryam Abu Hussein
Last updated on:
December 16, 2022
Published on:
December 16, 2022

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Why is it important to prevent bribery?

Bribery is not a victimless crime and can have serious implications on society and general commercial activity. Victims of bribery include companies engaging in honest business practices who lose out on contracts and work due to the corruption and bribery of unscrupulous companies. Bribery also harms society at large by eroding public trust in the rule of law and setting back economic development. 

Commercial or corporate bribery occurs when a company or its representatives engage in corrupt business practices with third parties in order to obtain a business advantage. Most commercial bribery is investigated by the Serious Fraud Office. 

In the UK, the Bribery Act 2010 introduced the offence of failure to prevent commercial bribery. A company convicted of this offence is liable to pay an unlimited fine. 

Importantly, a company that is able to demonstrate that it has sufficient procedures and measures in place that are designed to prevent associated persons from engaging in bribery will have a full defence to an allegation of failure to prevent corporate bribery. 

This article provides an overview of the consequences of a company's failure to prevent corporate bribery, as well as the steps that a company can take to actively ensure that it can foster an anti-bribery culture. 

What is corporate bribery?

Per section 7 of the bribery act, a company can be held liable for failing to prevent bribery if an associated person i.e. anyone providing the company with goods or services (including its employees, agents, contractors and joint venture partners) has committed an offence of bribery under sections 1 and 6 of the Bribery Act and certain other conditions apply. The company can be held liable even if the associated person who commits an offence under sections 1 or 6 is not a UK national or living in the UK. 

An offence is committed under section 1 if an individual offers, promises or gives an advantage, financial or otherwise, to someone else and does so to induce this person to fail to properly perform a certain activity or to reward this person for failing to properly person a certain activity. 

An offence is also committed under section 1 if an individual offers, promises or gives an advantage, financial or otherwise, to someone else and knows or believes that the acceptance of this advantage amounts to improper performance of a certain activity. 

An offence is committed under section 6 if an individual bribes a foreign public official with a view to obtaining or retaining business or a business advantage. 

A company can be convicted of the offence of failing to prevent bribery under section 7 of the Bribery Act 2010 if an associated person bribes a third party, contrary to sections 1 or 6 of the act, with the intention of obtaining or retaining business (or a business advantage) for the company.

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Consequences of failure to prevent bribery

While the successful conviction of an offence contrary to section 7 of the Bribery Act 2010 is a rare occurrence, guidance provided by case law is particularly illuminating and highlights the importance of implementing robust internal anti-bribery measures. 

A company successfully convicted of failing to prevent bribery can face an unlimited fine and significant damage to its reputation. 

In April 2022, three companies were issued fines totalling £640,000 after their respective employees were found to have bribed a senior manager of Coca Cola Enterprises UK in a bid to help their companies win contracts with Coca Cola Enterprises. 

While the employees received separate sentences, the companies involved were fined for failing to prevent bribery contrary to section 7 of the Bribery Act 2010. 

How to prevent corporate bribery

There are many prevention procedures that a company can implement. Having a robust anti-bribery policy is the best place to start. An anti-bribery policy can be a valuable foundation on which to build up a culture of anti-bribery and commercial fair play. 

An anti-bribery policy can be tailor-made to reflect the level of risk a company is exposed to in the course of its business. Typically, anti-bribery policies address a company's internal approach to eliminating bribery and also outline the implementation measures put in place to achieve this end. Depending on the industry that the company operates in, this may include rules around hospitality, political and charitable donations and procurement. 

Anti-bribery policies also set out examples of bribery relevant to the company's business activities and industry, and the activities that the recipients of the policy are forbidden to engage in e.g. to accept bribes. Policies also set out the consequences of their breach, which typically include significant disciplinary measures and may result in dismissal. The aim is to ensure that such misconduct is not tolerated. 

Anti-bribery policies may not in and of themselves be enough to prevent bribery in all cases, but they are a very valuable resource and the most important means by which companies can communicate their stance on bribery to employees and partners. 

It is important that the policy be implemented in practice and not just on paper. The anti-bribery measures outlined in the policy should be practical and set out in clear language. 

The policies can be supplemented by further action steps, including regular staff training, encouraging senior staff members to take the lead on raising awareness of the harms of bribery, regular risk assessments and regular monitoring of the soundness of the company's policies. Companies can also put into place robust due diligence procedures when dealing in a country with a reputation for high levels of bribery and when dealing with a new business partner. 

Companies can also consider inserting anti-bribery clauses into commercial contracts and employment contracts. 

Taken together, these measures demonstrate that a company has put in place adequate procedures to prevent its employees, workers and agents from engaging in bribery and misconduct. This will, in turn, reduce or prevent offences and protect the company. 

The bottom line

Prevention is better than cure. Companies should ensure that they explicitly prohibit employees, partners and agents from engaging in bribery and other corruption-related misconduct. Conducting a risk assessment to gauge the level of risk a company is exposed to and utilising an anti-bribery policy as a foundation upon which to foster an anti-bribery culture are steps that every company should be taking. 

About Legislate

Legislate is a contracting platform where business owners can create contracts to help grow and develop their businesses. Legislate's anti-bribery policies are fully compliant and ensure that businesses are protected. Book a demo or sign up today to put the confidence back into contracting.

The opinions on this page are for general information purposes only and do not constitute legal advice on which you should rely.

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