The UK Bribery Act 2010

1. The UK Bribery Act 2010 Louise Thompson – KPMG LLP 29 November 2011

2. Ethics, Bribery and Corruption Co-operatives are renowned for their strong ethical practices “The UK co-operative economy 2011 - Britain’s return to co-operation” Bribery and corruption are unethical and unfair Grand corruption “With tens of millions of dollars already missing in Kenya’s Ministry of Education, the corruption scandal currently rocking Kenya’s 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

3. “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 What kinds of bribery happen?

4. Where do bribery and corruption happen? Transparency International – Corruption Perceptions Index 2010 www.transparency.org

5. International Enforcements by Industry 1977 – June 2010 Where do bribery and corruption happen? Source: Trace Global Enforcement Report (GER) 2010

6. Background 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

7. 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

8. 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)

9. 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)

10. The Serious Fraud Office has in recent years taken actions against UK corporates Diageo Agrees to Pay $16 Million to Settle Corruption Claims UK Bribery Act 2010 (continued) Macmillan ordered to pay $17m for corruption in South Sudan Johnson & Johnson feels pain of $75m bribery fines The first prosecution under the UK Bribery Act Clerk to be first prosecuted under Bribery Act

11. 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 UK Bribery Act 2010 (continued)

12. Bribery Act Compliance – Prevent, Detect, Respond Bribery Act compliance can be summarised in a simple Prevention, Detection, Response model Ministry of Justice guidance The Ministry of Justice’s (MoJ’s) Six Principles focus primarily on these two elements of procedure

13. 1. Take a clear anti-bribery stance – sound ethics! 2. Assess where risks lie Bribery Act Compliance – 10 key actions 3. Allocate management responsibility 4. Have clear policies 5. Spread awareness and keep a record of recipients 6. Conduct risk-based due-diligence (3rd parties, employees) 7. Monitor and audit at-risk functions, contracts, transactions 8. Encourage reporting of misconduct 9. Apply consistent and robust disciplinary processes 10. Have an investigation and response plan Keep procedures proportionate to your business!