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Bribery: Are SMEs aware of the fines?

August 10th, 2015 - Posted by Annabella Cyril in Anti-Bribery And Corruption

What is the Bribery Act?

The Bribery Act passed Parliament in 2010 and took effect in 2011.  It was a comprehensive rewrite of previously scattered laws relating to the offence of bribery, which have now been replaced with clear criminal offenses covering not just making or receiving bribes, but also bribing foreign officials and, most controversially, a business failing to prevent bribery made on its behalf.

While the government issued comprehensive guidance in 2011 to help businesses comply with the rules, it recently investigated how well that guidance and publicity program worked.  A survey of 500 companies with 250 employees or fewer found that 66 percent had heard of the act.  Of the firms in this category, 72 percent said they felt they had sufficient knowledge of the act's powers.  Combine those two statistics and you discover that most businesses either do not know about the act or do not fully understand the scope of its application.

Among the firms aware of the act, only 26 percent were aware of the guidance.  Of these, 75 percent had read the guidance and of those, 89 percent found it useful.  Together, that means just 11 percent of firms surveyed got useful information from the programme.

Seeking legal advice

Of those companies that had heard of the act, a third had sought professional advice from a source other than the government.  Even though half of those paying for advice spent more than £1,000, and the average cost was £3,740, it seems to have been money well spent.  In 96 percent of cases the business rated the advice as useful and 90 percent said they got value for money.

With comparatively little knowledge about the act, it is not surprising most firms have done little to ensure they are complying.  Only one third of all the firms surveyed said they had carried out a formal assessment of the risk of bribery inherent in their operations.  Meanwhile just 42 percent have actively taken steps to implement preventative procedures.  Even among those who have taken action, less than half have a written policy for staff, and most have run no training or awareness programs at all. Firms are more likely to have heard of the act if they export to developing nations, while firms exporting to China were much more likely to have taken specific steps to prevent bribery.

The publicity programme seems to have had limited success at best, but there is definitely a positive message for the government to push.  Among companies that had taken bribery prevention measures, the average expense was £2,730 and even among medium-sized firms the cost was just £4,160.  Given the potential penalties under the act, that could be a bargain.

Where do I start?

The complexity of the regulatory landscape may seem overwhelming for small businesses, but by creating achievable and manageable due diligence objectives, organisations can ensure they have adequate procedures in place to create a responsible supply chain and minimise the risk of bribery.

The International Chamber of Commerce (ICC) has recently released a new guide in response to the Turkish G20 and B20 efforts to encourage private sector integrity and empower small businesses in the fight against corruption.  The guide, 'Anti-corruption Third Party Due Diligence', aims to help small businesses assess and manage corruption risks and is essential reading for any business engaging with third party suppliers.

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