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The UK Bribery Act 2010

Louise Thompson KPMG LLP 29 November 2011

Ethics, Bribery and Corruption

Co-operatives are renowned for their strong ethical practices Bribery and corruption are unethical and unfair
Grand corruption With tens of millions of dollars already missing in Kenyas Ministry of Education, the corruption scandal currently rocking Kenyas schools threatens to cost the country millions more. Voice of America, 20 June 2011 Petty corruption? I have paid bribe of Rs 25,000 at Pune, to police department to get an NOC (No Objection Certificate) to start a new petrol pump as a dealer.
ipaidabribe.com India

The UK co-operative economy 2011 - Britains return to cooperation

What kinds of bribery happen?

Big ticket grand corruption To influence high value contractual awards Supply to government bodies Petty Facilitation payments to expedite a process which a public employee should do as part of their normal employment duties Bribes to obtain something from a state official to which you are not legally entitled Grey area Hospitality, gifts and entertainment

Where do bribery and corruption happen?

Transparency International Corruption Perceptions Index 2010 www.transparency.org

Where do bribery and corruption happen?

International Enforcements by Industry 1977 June 2010
Number of prosecutions 0 Extractive Industries Aerospace/Defense/Security Manufacturer/Service Provider 10 20 30 40 50 60 70

Health Care
Industry Engineering Construction Transportation/Communications Non-Profit/Education/Consulting/Other Technology/Software Agriculture/Food Financial Services Property Development Retail Entertainment/Film
Source: Trace Global Enforcement Report (GER) 2010

Global landscape US Foreign Corrupt Practices Act (FCPA), 1977 OECD Convention on Bribery,1997 - 38 signatory countries UN Convention Against Corruption , 2005 - 140 signatory countries UK Bribery Act 2010 Entered into force on 1 July 2011 Replaces out-dated UK anti-bribery and corruption legal framework Objectives: To provide a modern, single piece of legislation criminalising bribery To enable effective prosecution of bribery offences

UK Bribery Act 2010

Four separate bribery offences Two active offences of bribing and being bribed The offer, promise or giving of a financial or other advantage The bribing a foreign public official A passive offence of requesting, agreeing to receive or accepting a financial or other advantage Corporate offence of failure of a commercial organisation to prevent bribery

UK Bribery Act 2010 (continued)

Corporate scope of liability is extreme Broad interpretation of commercial organisation A commercial organisation will be liable for the corporate offence if an associated person acting on its behalf conducts an active offence of bribery anywhere in the world An associated person includes: Employees, consultants, agents, distributors, intermediaries, joint ventures or subsidiaries Conduct all or part of a business in the UK regardless of where incorporated or where the bribe was paid Applies to non-UK organisations/individuals

Only defence = adequate procedures That an organisation did everything it reasonably could have done to prevent bribery in the conduct of its business

UK Bribery Act 2010 (continued)

Penalties For the individual: unlimited fines and up to 10 years imprisonment . For the organisation: unlimited fines and potential debarment from government contracts within the EU.
Consequential penalties Reputational damage Legal and investigation costs Loss of management time Loss of key business relationships Competitor claims

UK Bribery Act 2010 (continued)

The Serious Fraud Office has in recent years taken actions against UK corporates

Macmillan ordered to pay $17m for corruption in South Sudan

The first prosecution under the UK Bribery Act

UK Bribery Act 2010 (continued)

The Serious Fraud Office (SFO) has stated its intent to enforce the Act where prosecution is in the public interest.
We will put as much of our resource as possible into tracking down and finding the individuals and the companies that want to continue using corruption and get them before the criminal courts. Those bad cases are the ones we need to get before the courts. This will enable us to support the good ethical companies that are disadvantaged by those activities.
Source: http://www.trust.org/trustlaw/news/the-complinet-interview-richard-alderman-director-of-the-serious-fraud-office

Bribery Act Compliance Prevent, Detect, Respond

Ministry of Justice guidance

Bribery Act compliance can be summarised in a simple Prevention, Detection, Response model

Bribery Act Compliance 10 key actions

1. 2. 3. 4. 5. 6. 7. 8. 9. Take a clear anti-bribery stance sound ethics! Assess where risks lie Allocate management responsibility Have clear policies Spread awareness and keep a record of recipients Conduct risk-based due-diligence (3rd parties, employees) Monitor and audit at-risk functions, contracts, transactions Encourage reporting of misconduct Apply consistent and robust disciplinary processes

10. Have an investigation and response plan Keep procedures proportionate to your business!