BIRCHAM DYSON BELL LLP,
SOLICITORS
PRESS RELEASE
January 17, 2011.
BRIBERY ACT COULD BRING DOWN A BUSINESS OR DEAL FOR THE PRICE OF A PINT.
The forthcoming Bribery Act 2010, due on the statute books in April 2011, could bring down a property business or deal for the price of a pint.
Michael Parker, Head of Real Estate at law firm
Bircham Dyson Bell, says that the range of potential “offences” under the Act is so vast and subjective that it could even generate acts of entrapment between competitors.
Companies, he says, now need to start thinking about “super-pre-emptive governance and training” to prevent exposure to bribery allegation and accusation.
“They will also need to carefully consider joint venture partners on any deal as their activities will also become their responsibility under this Act,” said Michael Parker.
“This is a very difficult scenario for all businesses. There is no escape or excuse for a business unaware of an employee considered to be offering, accepting or soliciting advantage, but then again company policy and culture may mean there is a business development budget employees are encouraged to use in the networking process but which is seen or defined as a bribery budget by another firm, or a competitor.
“The property deal may be worth many millions of pounds with correspondingly high fees, but the Act provides for the offering, promising, giving, requesting, agreeing to receive or accepting an advantage – so even buying somebody a pint or glass or wine might be seen by a malicious deal influencer, a malicious observer or a malicious competitor as an attempt to bribe. Fundamentally, it could create the opportunity for entrapment because the issue is intent.
“The key question is where does hospitality end and bribery begin?
“The property sector thrives on networking; it is so massively competitive, and good deals are so scarce, that networking has always been a crucial element not just in terms of identifying and driving deals, but also driving the UK economy.
“The question is whether buying somebody a pint or glass of wine as part of the networking process might be seen as a bribe; if the relationship is new or strained or there is animosity, then it might be considered offensive; but then not hosting a closing dinner involving partner businesses may be seen as equally offensive. It’s all subjective.
“However, ironically, I would say that next to no property deals are influenced by the simple act of paying for a round of drinks, a dinner, a night out or a day at the races. Deals are started with personal or corporate chemistry, concluded on professional performance, and celebrated vigorously given the highly stressful and challenging nature of driving through sometimes complicated and expensive property deals. At least two of those stages might be construed as being open to influence through the offering or acceptance of advantage.
“The Act says a commercial organisation will be guilty if a person associated with it bribes another person to obtain or retain business or a business advantage for the organisation.
“The offence is a strict liability offence so a company can be guilty even if no-one within the company knew of the ‘bribery’. In addition, senior managers and directors can be held personally liable under the Act for offences committed by the commercial organisation if they are found to have consented to or connived in the commission of a bribery offence.
“So, somebody buys somebody else a drink in the hope of establishing a relationship, a manager signs off the expenses claim, but the ‘somebody else’ takes offence and complains they were subject to a bribery attempt.
“The ‘offence’ could be genuine or trumped up, but the person it is claimed is offering or accepting advantage could find themselves at least suspended – thereby potentially impacting upon the operations of the company as a whole.
“Under the Act the maximum penalty for all the offences except the offence relating to commercial organisations has been increased to 10 years imprisonment and/or an unlimited fine for individuals. Commercial organisations that fail to prevent bribery face an unlimited fine. Apart from the financial penalties, a successful prosecution under the Act could leave a company permanently debarred from tendering for public sector contracts and also with serious reputational damage from the adverse publicity.
“Guidance from the Secretary of State is to be given, but as always it will be the courts who decide if the organisation had adequate procedures in place. More bureaucracy is possible.
“There’s always a tipping point. Could something as mundane as a pint of beer could be it?”
Ends
Further information:
Iain Macauley
07788 978800
