The six principles

As I discussed in my previous articles on part 1 and part 2 of the Bribery Act 2010, the Act sets out six principles which should inform the procedure put in place by commercial organisations to prevent bribery. Here are the principles commented more in details:

Principle 1: Proportionate procedures

The difference between policies (statements of an organisation's stance) and procedures is highlighted in this principle. Policies are likely to:

·  Include a statement of the organisation's commitment to bribery prevention.

· Set out the general approach to reducing bribery risks.

· Give an overview of implementation strategy.

Procedures should be proportionate to the bribery risks that an organisation faces. These will be ascertained by a risk assessment and will depend on a number of factors which may be shared by large and smaller organisation, such as the size, nature and complexity of the business and the type and nature of persons associated with it. The procedures put in place to deal with the risks will vary depending on the level of the risk and size of the organisation. Procedures will need to be designed to prevent bribery by associated persons.

The guidance contains a non-exhaustive list of topics that bribery prevention procedures might cover, which includes:

·         The involvement of top-level management.

·         Risk assessment procedures.

·         Due diligence of existing or prospective associated persons.

·         Gifts, hospitality and promotional expenditure, charitable and political donations and demands for facilitation payments.

·         Direct and indirect employment, including recruitment, terms and conditions, disciplinary action and remuneration.

·         Business relationships with all other associated persons including pre- and post-contractual agreements.

·         Financial and commercial controls such as adequate bookkeeping, auditing and approval of expenditure.

·         Transparency of transactions and disclosure of information

·         Decision making, such as delegation of authority procedures, separation of functions and the avoidance of conflicts of interest.

·         Enforcement, detailing discipline processes and sanctions for breaches of the organisation’s anti-bribery rules.

·         Reporting of bribery including 'whistle blowing' procedures.

·         Detail of the process by which the organisation plans to implement its bribery prevention procedures.

·         Communication of the organisation's policies and procedures, and training in their application.

·         Monitoring, review and evaluation of bribery prevention procedures.

Principle 2: Top level commitment

This principle means that there should be top level commitment to both:

Communication of the organisation's anti-bribery stance: both internal and external communication and may be a commitment to carry out business fairly, honestly and openly, a commitment to zero tolerance towards bribery, an explanation of the consequences of breaching the policy for both employees and other associated persons, a statement of the business benefits of rejecting bribery, reference to the range of bribery prevention procedures the commercial organisation has or is putting in place, the names of key individuals and departments involved in bribery prevention procedures and reference to any collective action against bribery in, for example, the same business sector.

Involvement in developing anti-bribery procedures: selection and training of senior managers to lead anti-bribery work, leading on key measures such as a code of conduct, endorsement of all bribery prevention related publications, raising awareness and encouraging transparent dialogue throughout the organisation, engaging with associated persons and external bodies, involvement in high profile and critical decision making, assurance of risk assessment, oversight of breaches of procedures and the provision of feedback to the board (or equivalent) on compliance.

Principle 3: Risk assessment 

Risk assessment for bribery may be part of the organisation's general risk assessment or may form a stand alone process but in either case it should be proportionate to the organisation's size and structure and to the nature, scale and location of its activities. Procedures will usually involve overseeing the risk assessment by top level management, ensuring appropriate resourcing, identifying internal and external information sources, due diligence enquiries and accurately recording the risk assessment and its conclusions.

The extent of risk assessment should be monitored as the organisation's business changes. The guidance categorises external risks as follows:

·         Country risk: the guidance suggests countries are high risk where there are perceived high levels of corruption and no effectively implemented anti-bribery legislation or promotion of transparent procurement and investment policies.

·         Sectoral risk: higher risk sectors include the extractive industries and the large scale infrastructure sector.

·         Transaction risk: these could include charitable or political contributions, obtaining licences and permits and transactions relating to public procurement.

·         Business opportunity risk: these could include projects which are of high value, involve many contractors or intermediaries, are not undertaken at market prices or have no clear legitimate objective.

·         Business partnership risk: the guidance cites the use of intermediaries in transactions with foreign public officials, consortia or joint venture partners and relationships with politically exposed persons where the business relationship involves a prominent public official, as examples of high risk business partnerships.

The guidance lists common internal risks as including deficiencies in employee training, skills and knowledge, a bonus culture that rewards excessive risk taking, a lack of clarity in the policies and procedures relating to hospitality and promotional expenditure, and political or charitable contributions, a lack of financial controls and lack of a clear anti-bribery message from the top-level management.

Principle 4: Due diligence

Principle 5: Communication 

Principle 6: Monitoriing and review