When the Bribery Act 2010 came into force in July 2011, one of the most significant changes introduced was the establishment of the corporate offence of failing to prevent bribery under section 7 of the act. In summary, when a commercial organisation fails to prevent an act of bribery being committed on its behalf by a person associated with it (eg an illicit effort to obtain or retain business / an advantage in the conduct of the business), the organisation is potentially liable to prosecution. The offence is one of strict liability, which means there is no need to prove any kind of intention or positive action. Convicted organisations may be subject to a potentially unlimited fine and disbarment from public procurement tenders.
Fortunately, organisations have the benefit of a full ‘due diligence’ defence if they can show that they had in place ‘adequate procedures’ to prevent their ‘associated persons’ from engaging in bribery. The act does not elaborate on the meaning of ‘adequate procedures’, acknowledging that what is ‘adequate’ will depend on the type and size of the business concerned. However, the Ministry of Justice has published guidance to assist organisations with their policies. In 2018, the adequate procedures defence has been tested by a court for the first time.
In R v Skansen Interiors Limited, Skansen won two refurbishment tenders worth circa £6 million from DTZ Debenham Tie Leung. It later transpired that Skansen was given information during the tender process from the DTZ project manager that gave it an advantage in the process. The same DTZ project manager also persuaded his fellow colleagues to choose Skansen as the preferred contractor. In consideration of his actions, the management board of Skansen approved the payment of two bribes of £10,000 each to the DTZ project manager and a further bribe of £29,000 was offered but not paid as by this time Skansen’s new CEO had become concerned as to why such payments were being made and raised the alarm.
As its defence, Skansen argued that it had adequate procedures in place for a small and locally operating business. It had a number of separate policies that referenced the need to act with integrity, in an ethically open and honest manner, which negated the need for a specific bribery policy. One such policy was displayed on the wall of the open plan office. The contract entered into with DTZ specifically prohibited bribery and contained a right of termination where bribery had been committed. As proof that the policies worked, Skansen argued that the third and biggest payment had been caught because of its adequate procedures.
Regardless of the purported defence, and despite reporting the illegal conduct to UK police, Skansen was found guilty by the jury. As the company did not have any assets and was dormant, the court imposed the only available penalty: an immediate discharge.
With the Skansen case in mind, all companies would be well-advised to review the six principles that are set out in the Ministry of Justice’s adequate procedures guidance, and to promptly revisit and consider the effectiveness and adequacy of their anti-bribery policies. The question should be asked whether or not the anti-bribery compliance procedure and practices in place offer enough protection against section 7 claims.
Commercial organisations should ensure that they have written, and implemented, procedures in place, that are specifically designed for the business in question and are proportionate and appropriate. The policies should be communicated to staff through training programmes and copies of those policies should be provided to all. The bribery policy in place should be monitored and reviewed at regular intervals by senior managers and a paper trail kept to show the efforts of compliance.
Skansen was a relatively small company operating in the UK: it was not a large multinational operating in high-risk countries or industry sub-sectors, eg natural resources. That said, the construction industry is known to be vulnerable to such corrupt practices, so extra vigilance was warranted. Accordingly, it is a timely reminder that even small, domestic companies should carefully consider what anti-bribery policies and ongoing practices need to be put in place.