Bribery Act: When are 'adequate procedures' adequate enough?

Love it or loathe it, the Bribery Act 2010 has put anti-corruption compliance on the boardroom agenda like nothing has done before.

When the Act was introduced into the UK in 2011, the most significant change to the pre-existing law was the establishment of the corporate offence of failing to prevent bribery. An organisation is now liable to prosecution if an associated person (who performs services for or on behalf of the company) bribes another, intending to obtain or retain business or an advantage in the conduct of business for that organisation.

Significantly, where organisations can prove that they have 'adequate procedures' in place designed to prevent such unlawful conduct, a full defence is available. But five years on, the question remains - how can a company ensure its 'adequate procedures' are adequate? What has become clear is that this is far more than just a 'box-ticking' exercise.

No one can doubt that the Act (and, in particular, the threat of the corporate offence) has had a huge impact on how bribery and corruption compliance is now viewed by most companies that carry on any of their business in the UK. Indeed, it is now common practice for companies to assess their high-risk areas and develop a myriad of procedures and processes to mitigate their risks as far as possible, and ensure 'adequate procedures' are in place.

Wide jurisdictional reach

Compliance with the Bribery Act has not only impacted those companies that operate in the UK. The jurisdictional reach is extremely wide. But even businesses which are strictly beyond that reach can no longer easily work with those that are within it. Due to the sometimes extensive due diligence carried out on third parties by UK companies, the Act has significantly affected how overseas companies now view their own bribery risk profile.

There has been a particular focus on third-party companies that act as agents or introducers for businesses and on foreign public officials, where the risk of bribery and corruption is arguably at its greatest. The impact of the corporate offence of the failure to prevent bribery (and the potential defence of adequate procedures) is viewed as very significant in achieving better compliance practices.

Limited judicial interpretation

But how has the defence of 'adequate procedures' been tested so far, and what does it mean to say procedures are 'adequate'? Given that the Ministry of Justice's guidance is just that (guidance), the law can only be developed by way of case law or legislative intervention.

The recent case of Sweett Group plc, the first company to be sentenced and convicted for the corporate offence, in February 2016, did not take the analysis of adequate procedures any further, since Sweett pleaded guilty and did not try to avail itself of the defence.