How the Bribery Act affects IT contractors

What is the Bribery Act and why should I care?

That’s a question I’ll be looking to answer in this article.

The Bribery Act 2010, which became law in April this year (but does not take effect until April next year) is a piece of legislation designed to prevent bribery and corruption in the private and public sector and which creates four new criminal offences.

Which are?

Bribery (or offering to bribe) someone, receiving (or offering to receive) a bribe, bribing a foreign official or (more controversially) the failure by a commercial organisation to prevent bribery by a person associated with that company.

Does that mean me?

Yes, I’m afraid it does – contractors, sub-contractors, agents, employees, directors and even joint venture partners and franchisees are likely to be considered “associated” with a company if they carry out activities on behalf of that company.

That sounds fairly wide. So what does ‘bribing’ someone mean?

If that sounds wide, so is the definition of bribery under the act, which includes offering a financial “or other” advantage to someone, either with the intention that they improperly perform their function or where the acceptance of a bribe (by its very nature) constitutes the improper performance of that function.

What about small gifts? Does this mean the end of expenses-paid trips, free lunches and corporate entertainment? Where’s the fun in that?!

Unlike US legislation, the Act does not set out a level at which a bribe becomes significant so “facilitation payments” (small sums to get jobs done) and corporate hospitality are all potentially covered. As you might imagine, there are a lot of vested interests concerned about the potential effect of this legislation (not least providers of corporate hospitality).

What’s the penalty if I or my company fail to comply? Can I ignore this?

If you, or the company you act for are guilty of an offence, both you and your employer might face an unlimited fine. There is also a potential prison sentence of up to ten years. Companies found guilty are likely to be excluded from acting on public sector contracts and directors found guilty of an offence are also likely to be disqualified from acting as a Director. You’re unlikely to be able to ignore this completely.

Cripes, so what does that mean for me as a contractor?

Well, for a start it’s likely that employers will seek to ignore compliance with an anti-bribery policy. Employers will need (in order to avoid one of the offences) to show they have “adequate procedures” in place to avoid corruption. Expect to be required to sign up to a policy along these lines as part of your terms of engagement.

But what if I work in an area or country where bribes are a cost of doing business – expected even?

Unless expressly permitted by national laws it is unlikely this will provide any defence. This may mean you, as an English contractor suffers a disadvantage compared to contractors from other countries.

Is there anything else I can find out about this?

Yes – there is draft guidance on offer, which is currently under consultation, though it is available on the Ministry of Justice website.

A final form of the guidance will be released in the New Year. If you want to be kept up to date with progress please drop me a line - [email protected] - as we will be advising on the new guidance when it comes out and on compliance with the Act specifically - for directors, employers and sales people.

Richard Nicholas, an IT lawyer and partner in the commercial practice at legal advisory Browne Jacobson LLP.

Tuesday 19th Oct 2010