Legal Practice: Does My Firm Need an Anti-Bribery Policy?

I recently attended a talk entitled, “There’s no such thing as a free lunch” which concerned the Bribery Act 2010. It led me to consider the possible need for looking at my firm’s Anti-Bribery policy and how the Act might affect us – in particular in relation to corporate gifts and entertainment.

The Act came in to force in 2011 and makes it an offence for a citizen of the UK to pay or receive a bribe, either directly or indirectly.Partnerships and Companies can also commit an offence where a bribe is given on their behalf by an employee or agent acting on their behalf. A statutory defence is available if adequate procedures are in place to prevent bribery.

The Act creates three main offences:

• bribing a person to induce or reward them to perform a relevant function improperly;
• requesting, accepting or receiving a bribe as a reward for performing a relevant function improperly;
• using a bribe to influence a foreign official to gain a business advantage.

A “relevant function” includes any activity connected with a business trade or profession or one carried out on behalf of a body or persons. A relevant function should be performed in good faith and with impartiality.

You may be thinking that this only applies to huge partnerships operating globally and with commercial clients but………..read on!

The Law Society website sets out a not unfamiliar scenario:
A firm currently gives Christmas gifts each year to local estate agents. Is this still acceptable under the new Act?

The firm should consider:

• the purpose of the gifts – are they to cement good business relations or are they intended as some form of inducement?
• does the firm have a policy on gifts which is clear and transparent and do these gifts comply with the policy?
• is the recipient given the impression that they are under some obligation to confer business on the firm as a result of accepting the gift?
• is the gift lavish?
• is a record made of the gift and the cost entered into the accounts?

It is unlikely that a small token of appreciation sent to local estate agents at Christmas will engage section 1 of the Act. However, firms should consider carefully the intent behind gifts. They should also ensure that they have a clear policy on gifts and record both the giving and receiving of gifts.

Have a look at the Act and consider developing and putting in place an anti-bribery policy.

The policy should:

• Clearly state the firm’s commitment not to offer or accept bribes;
• Analyse any areas in which your firm might be at risk and put in place procedures proportionate to any risks;
• Check whether those you do business with have an anti-bribery policy and understand and are prepared to comply with your policy;
• Ensure members of staff are aware of the policy and reporting procedures;
• If your firm donates money to charity or carries out pro bono work, then ensure you are donating to a legitimate charity

For most small firms, a key area is likely to be that of gifts and entertainment and I can do no better than reproduce the advice the Law Society provide on their website:

3.5 Gifts and entertainment

Many firms will give gifts and provide hospitality to build relationships and to market their products. Hospitality would normally include entertaining, meals and tickets to events. If the host does not attend the hospitality then it should be considered a gift rather than hospitality. Firms may also pay expenses for a prospective client to visit part of the firm or to attend a conference or event.

There can be significant risks around gifts, entertainment and expense in relation to bribery. Gifts and hospitality are often part of the business culture and it can be difficult for staff to know what is appropriate in terms of giving and receiving gifts and hospitality. Gifts and hospitality can be used to influence and corrupt third parties and on occasion to manoeuvre employees into a position of obligation.

The firm should seek to prevent the giving or receiving of gifts, hospitality or paying of expenses if it might influence or be perceived to influence a business decision. Firms should ensure staff and other relevant stakeholders are made aware of any policies on gifts and entertainment.

Firms may wish to provide guidance on what gifts or hospitality it is acceptable to give or receive - this is often done in terms of a financial limit. Any limit should take account of the cumulative impact of several small gifts. Where firms operate internationally they may wish to provide guidance to on how gifts and hospitality might be handled in relation to local customs and culture.

Where firms offer to pay expenses, they may wish to provide guidance on what are considered acceptable expenses. Firms should be transparent about the expenses they pay and the business reason for their payment.

Many firms will be offered hospitality or gifts by other professionals who they are likely to refer work to. Firms should consider how they handle such offers or whether they need to ensure that acceptance of such offers is approved at a more senior level and whether any threshold should be applied. Firms will also need to be mindful of their duty to act in the best interest of the client when referring clients to other professionals.

Firms often offer clients hospitality. Government guidance highlights that offers of hospitality are not prohibited under the act. However, firms should consider what is appropriate in terms of hospitality.

The firm may wish to keep a record of gifts, hospitality and expenses given or received. Given the potential range of hospitality or gifts a firm might receive, the firm may wish to consider an element of materiality when deciding what should be recorded.

The advice must be that you can continue to make charitable donations and offer suitable hospitality and appropriate gifts, and indeed enjoy them when offered, but be aware and remember the old adage that “there is no such thing as a free lunch”!