This short piece of guidance provides a summary and introduction to ‘adequate procedures’ a guidance document issued by the UK Ministry of Justice designed to help organisations prevent bribery and corruption. We set out the key principles of the guidance, procedures that organisations should be thinking about and the role that internal auditors can play in helping organisations to build and maintain these procedures.
The UK Bribery Act, which came into force on 1 July 2011, introduces an offence of corporate failure to prevent bribery. The defence for a company against this liability is to prove that it had ‘adequate procedures’.
The Ministry of Justice has issued guidance and case studies to clarify the meaning of ‘adequate procedures’ following an extensive consultation process that began in September 2010. The guidance is high level, principles-based and non-prescriptive in character formulated around six “principles”:
- Proportionate procedures
- Top level commitment
- Risk assessment
- Due diligence
- Monitoring and review
The objective of the Bribery Act is not to bring the full force of the criminal law to bear upon well run commercial organisations that experience an isolated incident of bribery. Organisations are encouraged to develop preventative procedures appropriate and proportionate to their circumstances taking into account their size, structure, complexity and risk exposure. This involves applying a risk-based approach to focus effort according to the organisation’s jurisdictions, business sectors, business partners and transactions.
The Bribery Act contains two general offences (under section 1 and 2) covering the offering, promising or giving of a bribe (active bribery) and the requesting, agreeing to receive or accepting of a bribe (passive bribery). It also sets out two further offences which specifically address commercial bribery related to bribing foreign officials (section 6) and failing to prevent bribery (section 7).
To be liable under section 7 a commercial organisation must have failed to prevent conduct that would amount to the commission of an offence under sections 1, 2 or 6. Where the prosecution can not prove that an offence has been committed the section 7 offence will not be triggered. The precise nature of what is an offence and what is not is quite complex so further reading of the detailed explanations and case studies within the government’s guidance is recommended (these can be found on pages 8 to 19).
Provided the organisation is incorporated or formed in the UK, or that the organisation carries on a business or part of a business in the UK (wherever in the world it may be incorporated or formed) then UK courts will have jurisdiction.
We have a detailed fact sheet that supports the Bribery Act available to anyone who is interested. It’s a bit long to blog, but if you email us, we’ll be happy to send you a copy