Bribery law spells scrutiny for contractors

Contractors will come under unprecedented scrutiny from small and medium-sized enterprises they supply, now and until the UK's Bribery Act comes into force in April 2011.

Although final guidance on the law is yet to be published, lawyers say SMEs should already be taking steps towards compliance, as prosecutors will argue that they have had "ample time" to prepare.

Solicitors at Winston & Strawn added that, from April, SMEs will therefore receive "little sympathy" if they breach the anti-bribery provisions, which the government proposed in July.

They make all UK-based SMEs responsible for ensuring that any agent or contractor connected to their business complies with the act, irrespective of where the agent/contractor is in the world.

Under the act, bribing, receiving a bribe and, most problematically, failing to prevent bribery, are all offences - wherever they take place - for a UK firm with outside connections.

As a result, SMEs are being advised to run due diligence tests on their trading partners, ranging from probing questions to new policies or procedures for those who provide services to their business.

This advice from lawyers appears to stem from their expectation that there will be a statutory defence for SMEs that have adequate procedures in place to prevent the bribery offences.

However, "if you get it wrong you risk prison," Winston & Strawn said. "Your business risks unlimited fines, blacklisting from EU contracts and forfeiture of proceeds of illegal deals.

"Whether you know about it or not on top of your own obligations, you will be criminally responsible for bribery by business partners worldwide if your business was intended to benefit or benefits, directly or indirectly."

Reflecting on the implementation of the act, another legal advisor said it would definitely cause contracts to "unravel" because suppliers would resist the imposition of new procedures and policies.

Sunday 26th Sep 2010