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How can retailers avoid being next on the Serious Fraud Office’s list?

Posted: 29/09/2017

Bribery and corruption are firmly in the spotlight for 2017 with an ever-increasing commitment from regulators in the UK and abroad to work together and take a harder line against companies falling foul of anti-corruption laws. The recent fines that have been imposed on household names such as Rolls Royce evidence this tougher approach. 

So how can retailers avoid being next on the Serious Fraud Office’s list? The answer is that a business can potentially have a full defence if it can demonstrate that it had “adequate procedures” in place to prevent bribery.

Adequate procedures

In a nut shell, the definition of bribery under the Bribery Act covers the offer or acceptance of anything of value (including gifts and hospitality) in exchange for influence on a government/public official or employee.

The Ministry of Justice has published the “adequate procedures” guidance below which provides a helpful list of what’s expected of businesses:

  • the procedures in place need to be proportionate to an organisation’s size and to the risks that it faces;
  • those at the very top of an organisation are expected to foster a culture where bribery is unacceptable;
  • organisations should take steps to assess the risk of bribery occurring, so that they can decide how to manage the risk and put procedures in place;
  • organisations should undertake due diligence when dealing with their clients and other organisations;
  • anti-bribery policies and procedures must be regularly communicated throughout the organisation (including to those based abroad). Procedures should also be in place to allow staff to whistle blow without fear of reprisals;
  • organisations should continually monitor and review the risks they face to adjust policies and procedures accordingly.

Risk assessment

In order to achieve this, a stringent plan of risk assessment needs to be carried out to identify which areas require attention.

A retailer’s risk assessment should include whether all agreements with suppliers and franchisees contain anti-bribery provisions, whether their suppliers’ agreements include anti-bribery provisions, whether the business is making any facilitation payments that need to be eradicated and whether it has set upper limits for corporate hospitality, gifts and expenses that can occur without line management authorisation.

Once this risk assessment has been carried out, tightly worded policies and agreements must be drafted and communicated to the business to establish a paper trail which proves that the risk of bribery has been considered and actions have been taken to prevent it.

Care is needed when carrying out risk assessments and putting adequate procedures in place as the penalties for getting it wrong are severe and include substantial prison sentences, unlimited fines, debarment from tendering for public sector contracts, serious reputational damage, and criminal records for the individuals in question, as well as disqualification from being a company director.

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