Bribery Act targets corrupt firms

Companies prosecuted by the SFO must show they have adequate procedures in place to stop bribes

Legislation aimed at making it easier to prosecute companies who make corrupt payments abroad has come into force.

The Bribery Act overhauls existing laws dating back to 1889 and creates offences that carry prison terms of up to 10 years and unlimited fines.

It makes it illegal to offer or receive bribes and to fail to prevent bribery.

Both British and foreign companies are covered, provided they have some operations in the UK. The act also applies to individuals.

The government says the act will cement the UK's position as a global leader in the fight against business corruption.

Corporate hospitality

The legislation was due to come into force in April 2011, but it was delayed over business concerns about whether corporate hospitality could be seen as a bribe.

As a result, the government issued additional guidance on the act.

In its guide to the Bribery Act, the Ministry of Justice says: "Very generally, [bribery] is defined as giving someone a financial or other advantage to encourage that person to perform their functions or activities improperly or to reward that person for having already done so."

In March Justice Secretary Kenneth Clarke assured companies the act would be implemented in a "workable, common sense" way.

He has since assured companies that they can take clients to events such as Wimbledon and the Grand Prix, so long as the hospitality is reasonable and proportionate.

The government said it did not expect "genuine hospitality" or similar expenditure to fall under the act.

Companies prosecuted under the act must show they have "adequate procedures" in place to stop bribes.

"Adequate procedures" may include providing anti-bribery training to staff, carrying out risk assessments for the markets being operated in, or carrying out due diligence on the people being dealt with.

A survey released in June 2011 by the consultants KPMG suggests that a third of UK companies have not yet conducted an anti-bribery and corruption risk assessment.

The survey also found that 71% of companies believed there are some places in the world where business cannot be done without engaging in bribery and corruption.