Most company directors worth their salt have heard of the UK Bribery Act. But many do not do enough either to protect themselves (including as business owners or directors) and their companies from the risks or to unlock the benefits of a robust compliance programme.
In the financial services arena, many firms (large, small, even nano) authorised by the Financial Conduct Authority are blissfully unaware of their duty to have ’adequate procedures’ in place to prevent bribery. They are often surprised when we tell them the FCA may fine them for not having such procedures regardless of whether or not their firm or an employee has been party to a bribery offence. And when the FCA hands over a bribery allegation to the boys and girls in blue, the decision on whether to pursue the case will often be swayed by the presence, or lack, of adequate procedures.
It’s a bit like not wearing a seatbelt. You can flout the law and get away with it until you are spotted by the police and pulled over to the hard shoulder. That’s disruptive enough, but if you crash and are found not to have been wearing the seatbelt it becomes a serious problem indeed… that is if you actually survive the accident!
The Bribery Act and its potential outcomes are similar. The Act sets out a corporate offence of failing to prevent bribery. The most effective legal defence is to demonstrate that you had adequate procedures in place.
Your company can be in the spotlight even if the directors and employees are not directly implicated in the alleged bribery. Both Aon (fined £5.25m in 2009) and Willis (fined £7m in 2011) were carpeted by the then Financial Services Authority for compliance failures in dealing with ‘associated persons’ – in both cases their sales agents.
Since then, regulators and enforcers have become even tougher. In late 2014, Sustainable AgroEnergy’s directors were sent down for a total of 28 years in a fraud and bribery conviction arising from their illicit promotion of a biofuel investment. One of them, Stuart Stone, an independent financial advisor, was sentenced to six years.
Yikes! So, what do I do now?
So, sipping a G&T on the 18.26 from London Bridge to Reigate, you might be thinking it’s time to find out about this stuff.
A good first step is to learn a bit more about adequate procedures. Take a look at the Ministry of Justice’s perfectly readable guidance to the six key principles of the Bribery Act.
Come on, this just stops me doing business
So you may be thinking that, since you’ve had a great day and nearly made the quarterly bonus in bond sales through your Far East agent why bother? The cost of jeopardising the big deal far outweighs the chances of being caught let alone the cost and effort of all this compliance stuff!
Not so. The answer is simple. You already comply with most of this anyway, be that through market regulation or following anti-money laundering procedures or the new UK beneficial owner rules. At your fingertips, as a consequence of these Know Your Customer compliance requirements, you have a goldmine of market and deal knowledge that most consign to the compliance and tick-box bin! By bringing these compliance processes into the business and making compliance a part of the business thinking, it will help you better know your customers, counterparties and markets; where to take and avoid ethical and criminal risk; and, importantly, where to grow.
And if that all goes according to plan, you can crack open the champagne instead!