New Bribery Act clarification welcomed

I welcome new guidelines explaining firms’ liabilities under the forthcoming Bribery Act. I believe the revised guidancewill be make it easier for smaller companies to understand their obligations under the new Act, which comes into force on July 1.

I also welcome the new guidance as a way of clearing up confusion and apprehension surrounding the introduction of the Act and the impact it could have on small to medium-sized enterprises (SMEs).

Widespread concerns had been raised over the legality of corporate hospitality under the Act, with questions over whether or not business owners could fall foul of the new laws simply by entertaining their clients.

Many business owners were also worried that they may have had to put in place time-consuming internal procedures in order to comply with the new legislation and guard against prosecution, irrespective of the nature of their business.

However, the new guidance for businesses states that these concerns are unfounded.

It explains that normal methods of entertaining clients will not be outlawed and SMEs only need to put new anti-bribery processes in place if they believe they are at high risk of exposure to bribery – for example, if they carry out a lot of overseas work in countries with a known culture of corruption.

I think it’s fair to say that the new guidance is a big improvement on the previous draft guidelines published last September and will make it much easier for SMEs to understand their obligations.

Obviously, the guidance around any new legislation has to have a certain degree of vagueness because the law is often highly dependent on particular circumstances, and the Government has to be careful not to make businesses think they are complying with the law when they are not.

However, as far as is possible, the new guidance explains what businesses do and don’t need to do in plain and concise English. It also emphasises a ‘common sense’ approach to complying with the legislation, which will come as a breath of fresh air to the many business owners who spend a lot of their time trying to interpret confusing legalese in regulatory literature.

I have expressed concerns that the Act itself could have a disproportionate impact on smaller firms due to the costs associated with ensuring compliance.

While larger businesses often have in-house legal and HR expertise which can be used to interpret and implement their requirements under the Act, smaller companies rarely enjoy such resources, placing them at a competitive disadvantage.

If found guilty of an offence through the Bribery Act, company directors could be jailed for up to 10 years and the business itself can be hit with an unlimited fine.

As a result, I am urging SMEs owner-managers to familiarise themselves with the guidance and take any necessary steps to ensure they do not fall foul of the new legislation.

The intentions behind the new Act are understandable – it’s about ensuring business is won on merit, rather than going to the companies with the deepest pockets, and a lot of smaller firms will welcome that.

However, as with other legislation, the Act is likely to have a disproportionate impact on smaller businesses – particularly SME exporters who, after much recent encouragement from the Government, are just starting to promote their products overseas and trying to break into foreign markets.

The new Bribery Act guidance can be found via the ‘guidance’ section of the Ministry of Justice website.

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Phil Orford joined the FPB in February 2008 as Chief Executive. Following a brief spell as a sales executive, Phil set up his first company in 1983 at the age of 21. In the years that followed, he was involved in a number of start-up companies, which eventually formed a small group employing more than 100 staff and which had a turnover in excess of £10m. In 2005, Phil left the group and set up a new business to assist small companies comply with environmental legislation through the use of Web-enabled apps and tools.