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The new Bribery Bill, how will it affect companies and their directors?

On 28 July 2009 the Parliamentary Joint Committee on the Draft Bribery Bill published its first report. The Committee welcomed the new offence that targets companies and partnerships that fail to prevent bribes being paid on their behalf.

The Bribery Bill creates an offence in respect of a relevant commercial organisation if a person performing services for or on behalf of the organisation bribes another person in connection with the organisation’s business and a responsible person, or a number of such persons taken together, was negligent in failing to prevent the bribery.

It is a defence to a charge under the section (except where the negligence was on the part of a senior officer of the organisation) to prove that the defendant organisation had in place adequate procedures to prevent persons performing services for or on behalf of the organisation from committing bribery offences.

It will fall to the defendant organisation to establish that the defence applies on the balance of probabilities. The legal burden in respect of the defence therefore will fall on the defendant.

The UK is bound by the OECD Anti-Bribery Convention which requires that every person charged with a criminal offence shall be presumed innocent until proved guilty according to law. The Government considers that placing the legal burden on the defendant to establish the defence is compatible with the Convention.

The Government considers that the reverse burden pursues a legitimate aim – namely ensuring that an organisation whose responsible person (or persons) has failed to prevent bribery being employed on its behalf should be guilty of an offence unless the organisation had adequate procedures in place to prevent bribery being employed on its behalf – and is proportionate to achieve that aim.

Two key points emerge. Firstly companies must put in place detailed policies on the prevention of bribery, and implement them fully, to be able to establish the defence of having had adequate preventative procedures in place. Secondly directors should note that the defence does not exist where the negligence was on the part of a senior officer of the organisation. That negligence would almost certainly amount to a breach of statutory duty by that director and thereby expose him to the possible personal liability for the financial consequences of his actions (in addition to any criminal sanction on the company).