"There's no such thing as a free lunch"

You may have heard about the arrival of the new Bribery Act which has been ruffling feathers since its publication last year. Well, not to worry if you're not totally up to speed with its implications just yet - the Ministry of Justice announced this week (as reported in the Telegraph) that the Act's planned April launch has been postponed to give companies more time to prepare.  So what's it all about?  And why have people been getting so hot under the collar about this particular piece of legislation? The concern stems from the fact that the scope of the new Act is really very wide indeed.

There are four basic offences under the new Act: (i) bribing someone else (ii) being bribed (iii) bribing a foreign public official and (iv) - the offence which is causing the most sleepless nights – a corporate offence of failing to prevent bribery. The Act goes beyond your straightforward brown envelope payment and catches any form of "advantage" (so not just money) which is offered, accepted, received or which a party agrees to receive - which constitutes or induces the ‘improper performance' of a business activity. The test for "improper performance" is an objective one based on what a reasonable person would expect in relation to the performance of that activity. Expectations are judged by UK, not local standards. The performance must breach an expectation of good faith or impartiality, or a position of trust.

The first three offences apply to acts of bribery committed in the UK by any person or corporate; or acts of bribery committed outside the UK by a person or corporate which has a "close connection" to the UK ("close connection" meaning broadly UK companies, partnerships, citizens or individuals ordinarily resident in the UK).

So what about the corporate offence - how does an organisation commit the offence of failure to prevent bribery? If a person associated with an organisation bribes another intending to retain business or achieve an advantage for that organisation – that’s an offence. Crucially, the corporate offence is what's known as a strict liability offence - the associated person may have paid the bribe without the knowledge, authorisation or involvement of anyone else in the organisation.

This means effectively that a foreign company with only a branch office in England can be guilty of an offence (and have its officers imprisoned and/or receive an unlimited fine) for an act of bribery they knew nothing about that was committed by a joint venture partner operating in Russia, China or any other foreign jurisdiction. So for those of you with offices abroad, you'll need to think carefully about who you work with, and where, and what corruption risks you might consequently be exposed to.

What about defences? The only defence available to an organisation charged with the corporate offence will be for it to demonstrate that it has adopted, applied and enforced “adequate procedures” to prevent bribery. The MOJ was due to issue guidance on the meaning of “adequate procedures” early in January; its non-appearance to-date is one of the main reasons for the delay in the Act's implementation. The MOJ has recently confirmed that the Act will not come into force until 3 months after the guidance is published.

A final point to mention is the vexed issue of corporate hospitality. In principle, all gifts or other types of corporate hospitality may be caught by the Act, if they are given to gain financial advantage with an improper intention. Now of course the natural reaction is to ask, well what is an improper intention? Is it improper to invite someone to a concert, for a spa day or even for a swanky lunch in the hope of securing a large contract? Well, unfortunately, we do not yet have any guidance what is or is not ok. So it's all a bit vague at the moment, and has been widely criticised - by the Law Society among others. While we wait for the official MOJ guidance, Fashionista suggests applying a common sense test of "Would your competitors think that this gift/day out is unusually lavish?