by Alistair Maughan

Bribery and the CIO

Feb 22, 2011
CareersFinancial Services IndustryIT Leadership

In April 2011, the new UK Bribery Act will come into force. The new Act will have implications for UK firms not just because it has extraterritorial effect (so you can get into trouble here for offences committed abroad) but also because it contains the new offence of failing to prevent bribery.

This new offence, which takes its place alongside the offences of bribing, being bribed and bribing a foreign public official, imposes liability on companies for the acts of their employees, agents and subsidiaries.

In order to prosecute an organisation for an offence, prosecutors will only need to prove that the bribe was committed by an individual connected to the organisation.

Imagine a US-based technology company with a very limited sales and marketing function in the UK and other European countries. If one of the company’s employees or representatives pays a bribe or receives a kick-back for arranging the sale of software to a customer in Eastern Europe, the firm could still face prosecution in the UK.

The Act allows as a defence that a firm has taken “adequate procedures” to prevent bribery. The Ministry of Justice has specifically refused to define exactly what constitutes “adequate procedures”.

Final guidance is due to be released before the Act comes into force but draft guidance sets out six principles for bribery prevention:

– Regularly conduct a risk assessment – Establish a culture of bribery prevention involving top-level commitment from the board and relevant functional leads – Have in place due diligence procedures which cover the organisation’s supply chain, agents and intermediaries, all forms of joint venture and all markets in which the commercial organisation does business – Promote clear, practical and accessible policies and procedures – Implement anti-bribery procedures – Monitor the success of its procedures.

Some CIOs will feel that existing compliance policies are in keeping with the new Act, but it remains important to be able to show that adequate anti-bribery procedures are in place. Part of this involves preventative maintenance in terms of IT procurement and sales and marketing functions. The Act’s extraterritorial effect means the more far-flung outreaches of CIOs’ networks need to be paid more attention.

With thanks to Kevin Roberts and Keily Beirne, specialists in Bribery Act issues at Morrison & Foerster.

Alistair Maughan is a partner at Morrison & Foerster, an international law firm