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12 Sep 2017
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Getting to grips with bribery laws

Bribery and corruption are in the spotlight following stronger measures introduced in April this year to tackle such practices. Aaron Zoanetti, solicitor, commercial at asb law outlines what you need to know.

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"Bribery is not just about brown envelopes stuffed with cash, it can take the form of gifts; hospitality etc..."

In April this year, the Criminal Finances Act achieved royal assent (when the Queen formally agrees to make the bill a law), bringing with it stronger anti-bribery measures. This, along with new anti-money laundering regulations (which came into force in June), are just a few of the measures the government is adopting to tackle corruption. They serve as a timely reminder of the importance of having robust anti-bribery and corruption measures in place.

 

What is corruption?

Given its international nature and the number of third parties that are involved, bribery and corruption are a particularly high risk for the travel and aviation sector. It is important to understand that corruption can take many forms, such as bribes, fraud or extortion, and occurs on different scales. Bribery is not just about brown envelopes stuffed with cash, it can take the form of gifts; hospitality; misuse of loyalty/reward programmes; honours/awards; or endorsements. Knowingly accepting a bribe is just as much an offence as offering a bribe in the first place.

 

Consider the following example: You are responsible for selecting accommodation for inclusion in a holiday package deal and have shortlisted three hotels. In discussion with one of the managers you are offered loyalty points, which have no cash value but can be redeemed against a free stay in a luxury suite.

 

There may not be any implication that the points are conditional on your choice, but if it is perceived that this may influence your decision, you could be guilty of accepting a bribe. Additionally, it is not just your own actions that you must consider. As a business, you are also accountable for the actions of your employees and that of third parties (including suppliers and partners) – whether you know about their actions or not.

 

This is referred to as corporate bribery. It is your responsibility to take steps to educate employees and prevent bribery and corruption.

What are the implications?

Although the definition of what constitutes corruption varies from country to country, the UK government takes a hard line on the issue and in January it was ranked 10th in the Transparency International Corruption Perceptions Index 2016.

 

Over the past few years, there have been several high-profile investigations into the practices of organisations, from aircraft manufacturers and airlines through to government tourism bodies. If found guilty, there can be serious consequences. An aviation company had to pay a $107 million penalty as part of a deferred prosecution agreement, while two businessmen who pleaded guilty to bribing foreign aviation officials were imprisoned for 18 months.

What action should you take?

With Brexit negotiations under way, there has been speculation that the uncertainty will lead to a “business at all costs” mentality. But as temptingas it may be to gain a competitive advantage, the legal, financial and reputational consequences of stepping out of line can be far-reaching.

 

For more information, contact Aaron Zoanetti, solicitor, commercial at asb law LLP aaron.zoanetti@asb-law.com or 01293 603647

Avoiding falling foul of anticorruption laws

  • Undertake a risk assessment to identify high-risk areas.
  • Take a top-down approach to anti-corruption.
  • Put in place appropriate policies and procedures.
  • Ensure staff receive regular training on anti-corruption measures.
  • Conduct due diligence (including checks for sanctions and politically exposed persons) on new and existing suppliers and customers.
  • Ensure contracts include anticorruption clauses to protect your business from corrupt acts committed by a third party.
  • Monitor compliance with anti-corruption measures.

Readers' questions

 

Davidk: Are, for example, Love to Shop gift vouchers seen as bribery or a reward?

Aaron Zoanetti, Solicitor, asb law LLP: Without getting into the technicalities, incentives based on the level of sale of certain product to end-clients would generally not be considered to be a bribe as the sales agent wouldn’t be expected by the end-client to perform impartially - a sales agent can legitimately promote a product over others because the reward from the sale is greater. However, if for example you are employed by a company in procurement and you are offered a personal incentive by a supplier that could lead you to improperly choose that supplier over others, then this would more likely be considered a bribe because you have a duty to act impartially and to achieve the best outcome for your company.

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