The Bribery Act 2010- Government guidance on adequate procedures

The Bribery Act 2010- Government guidance on adequate procedures

The Bribery Act 2010- Government guidance on adequate procedures

Introduction to the Bribery Act 2010

The Bribery Act came into force on 1 July 2011.  The Act updated the UK law on bribery and brought it into line with the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.  In addition to codifying the existing laws, it also introduced an offence of failure by a commercial organisation to prevent bribery. Further details of these offences can be found in our briefing note “The Bribery Act 2010 – An Overview”.

The offence of failing to prevent bribery

This note focuses on the defence to the offence of failing to prevent bribery. The only defence an organisation can raise is a defence of having put “adequate procedures” in place to seek to prevent the bribery. It is very important therefore for an organisation to consider if it should put in place such procedures.

What is the offence?
In essence, a “relevant commercial organisation” will be caught by the offence of failing to prevent bribery if:

  • a person “associated” with it
  • bribes another person
  • intending to obtain or retain business or an advantage in the conduct of that business for that organisation.

What is an associated person?
A “relevant commercial organisation” is a partnership or body corporate (whether incorporated in the UK or overseas) which carries on a business or part of a business in any part of the UK.  A person (whether an individual, company or other entity) will be “associated” with such a commercial organisation if it performs services for or on behalf of the organisation, regardless of the capacity in which it does so. This could cover agents, employees, subsidiaries, intermediaries, joint venture partners and suppliers to the extent they provide services.  Each relationship will need to be assessed on its particular facts.

Why have adequate procedures?
As the offence of failing to prevent bribery is a strict liability one, no negligence or intent needs to be shown on the organisation’s part.  Therefore, if an act of bribery occurs, the only defence available is for the organisation to show it has “adequate procedures” in place to prevent that bribery.

What are adequate procedures?
“Adequate procedures” are not defined in the Act but the Government published non binding guidance on 30 March 2011 available here. The guidance is formulated around six principles and is not intended to be prescriptive or a “one size fits all” The emphasis is on procedures being proportionate to the risks faced by the organisation and suggests the following:

Principle 1 Proportionate procedures: a commercial organisation’s procedures are proportionate to the bribery risks it faces and to the nature, scale and complexity of the commercial organisation’s activities.  They are also clear, practical, accessible, effectively implemented and enforced.

Principle 2 Top level commitment: the top-level management of a commercial organisation (be it a board of directors, the owners or any other equivalent body or person) are committed to preventing bribery by persons associated with it.  They foster a culture within the organisation in which bribery is never acceptable.

Principle 3 Risk assessment: the commercial organisation assesses the nature and extent of its exposure to potential external and internal risks of bribery on its behalf by persons associated with it.  The assessment is periodic, informed and documented.

Principle 4 Due diligence: the commercial organisation applies due diligence procedures, taking a proportionate and risk-based approach, in respect of persons who perform or will perform services for and on behalf of the organisation, in order to mitigate identified bribery risks.
Principle 5 Communication (including training): the commercial organisation seeks to ensure that its bribery prevention policies and procedures are embedded and understood throughout the organisation through internal and external communication, including training that is proportionate to the risks it faces.

Principle 6 Monitoring and review: the commercial organisation monitors and reviews procedures designed to prevent bribery by persons associated with it and makes improvements where necessary.

What should organisations do?

Proportionate procedures
Organisations should have in place adequate procedures with regard to the principles above.  They should:

  • undertake risk assessments on a periodic basis
  • conduct due diligence procedures in relation to associated persons
  • implement and update policies and procedures and contracts  with staff and suppliers
  • implement training programmes and  foster external and internal communication with staff and service providers
  • ensure that they have an effective system in place for monitoring and reviewing  bribery procedures, staff and suppliers.

Top-level commitment
The guidance recognises that those at the top of the organisation are best placed to foster a culture of integrity where bribery is unacceptable.  Top-level commitment therefore could include:

  • communication (both internally and externally) of the organisation’s anti-bribery stance
  • an appropriate degree of involvement in developing bribery prevention procedures
  • effective leadership proportionate to the organisation.

Risk assessment
The guidance suggests that risk assessments should be periodic, in writing and conclusions documented.  Businesses, for example, dependent upon obtaining licensing from foreign officials or in perceived high risk sectors such as energy, mining, pharmaceuticals, defence and construction may need to undertake a more robust approach. The types of issues to consider could include:

  • country risk
  • sector  risk
  • transaction risk
  • business opportunity risk
  • business partnership risk
  • internal and external risks.

Due diligence
The guidance highlights the fact that due diligence policies and procedures are part of bribery risk assessment and also a means of mitigating any risks that are identified.  Due diligence provides a mechanism by which an organisation can assess all parties to a business relationship and the markets in which business is carried out.  Depending on the risk profile of parties in a business relationship (particularly individuals operating as local third party intermediaries) or of certain markets, due diligence may include asking direct questions, carrying out indirect investigations and background research. 
Due diligence should be proportionate to the perceived risk attached to an individual or market, and the higher the suspected risk profile, the more stringent the due diligence that needs to be carried out.  For example, an organisation might want to make enquiries about the risks of bribery in a particular market and the types of bribery most frequently encountered.

Communication (including training)
The guidance suggests communication and training appropriate to the different levels of personnel within the organisation, including:

  • highlighting awareness of the business’s policies on anti bribery and corruption
  • revising and implementing staff policies and procedures e.g. for expenses and corporate hospitality and facilitation payments
  • internal communication, for example to employees
  • external communication, for example to suppliers
  • training.

Monitoring and review
The guidance highlights that the bribery risks which a commercial organisation faces may change over time, as may the nature and scale of its activities, so the procedures required to mitigate those risks should be kept under review and adapted as appropriate.  Review mechanisms can include:

  • internal financial control systems
  • staff surveys, questionnaires and feedback from training
  • formal periodic reviews and reports for top-level management, drawing on published information from other organisations such as trade bodies or regulators
  • where appropriate, conducting some form of external verification.

Corporate hospitality and gifts
The guidance indicates that the Act is not intended to prohibit reasonable and proportionate bona fide hospitality. The guidance recognises that promotional or other similar business expenditure which seeks to improve a business’s image or establish cordial relations is an established and important part of doing business. However, documenting the hospitality procedures and expenses and verifying these may be helpful in showing that no bribery was involved.

Facilitation payments
These can include payments to officials to facilitate or expedite a routine government process, for example issue of a licence. The guidance stresses that facilitation payments are already prohibited under existing law as well as under the Bribery Act and that to create any exemptions under the new Act would undermine the current position.  The guidance stresses that, before deciding to prosecute a case, prosecutors must consider if sufficient evidence exists and if prosecution is in the public interest.  The issue of prosecutorial discretion referred to in the Joint prosecution guidance of the Director of the Serious Fraud Office and Director of Public Prosecutions may give a degree of flexibility.  The guidance also suggests that, in circumstances in which individuals are left with no alternative but to make payments in order to protect against loss of life, limb or liberty, the common law defence of duress may be available.

Application of the corporate offence to organisations carrying on business in the UK

The guidance seeks to address concerns as to the potentially wide categories of overseas businesses that could be caught by the corporate offence by virtue of the wide interpretation that they are carrying on a business or any part of a business in the UK.  It provides that a common sense approach should be taken.  Whilst the final arbiter will, in each case, be the court, the guidance suggests, for example, that the mere fact that an overseas company’s securities have been admitted to trading on the London Stock Exchange would not, in itself, mean that the company is carrying on business in the UK.  Likewise, an overseas parent company having a UK subsidiary will not, in itself, mean that a parent company is carrying on business in the UK, since a subsidiary may act independently of its parent or other group companies.

Small Businesses
The Government has published a separate “Quick Start Guide” for smaller businesses to give them a more concise introduction as to how they can meet the requirements of the Act available from the Ministry of Justice website.


The onus will remain on the organisation, to assess what it considers to be adequate procedures.  Ultimately, whether such procedures meet the adequacy requirement will be assessed by the SFO and the courts.

If you would like to discuss further the Bribery Act 2010 and its implications for you and your business, please contact Richard King, Beverley Flynn or Gustaf Duhs on  +44 (0)1483 302264.


This information is necessarily brief and is not intended to be an exhaustive statement of the law.  It is essential that professional advice is sought before any decision is taken.

© Stevens & Bolton LLP February 2017

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