UPDATE 1 July 2011: The Bribery Act is now in force – for more information and for the Ministry of Justice guidance on the Act, see this post.
The Bribery Act 2011 was due to come into force in April 2011. However, today the Government announced that commencement would be delayed to an as yet unnamed date in the future.
The section 7 offence and the need for guidance
The reason for the delay is the Government’s failure to publish its guidance on the “adequate procedures” defence to the criminal offence contained in section 7 of the Act. That section – titled “failure of commercial organisations to prevent bribery” – states that a “relevant commercial organisation (“C”) is guilty of an offence under this section if a person (“A”) associated with C bribes another person intending(a) to obtain or retain business for C, or (b) to obtain or retain an advantage in the conduct of business for C”.
This section 7 offence is very widely drawn. “Associated” could mean a company’s agents or joint venture partners – so a company could be liable for the actions of people or entities over whom it has little control. The section has extra-territorial effect – so the bribery could be committed anywhere in the world, but the UK company would remain liable. There is no minimum threshold for constitutes a bribe – so at what point does corporate hospitality risk being seen as bribery?
There is a potential defence to the section 7 offence. Section 7 continues that “but it is a defence for C to prove that C had in place adequate procedures designed to prevent persons associated with C from undertaking such conduct”. This is the “adequate procedures” defence.
The Government (in the guise of the Ministry of Justice) had stated that it would publish guidance on the adequate procedures defence by the end of January 2011. This guidance is seen as critical by business, as it should enable companies better to understand how to put in place, or frame existing, procedures so as to be able to rely on the defence.
Government fails to publish guidance within promised timeframe
However, today it became clear that the guidance would not be published yet. The Ministry of Justice was quoted in various news sources as follows: “We are working on the guidance to make it practical and comprehensive for business. We will come forward with further details in due course.” As the Ministry has previously said that the Act will not come into force until three months after the guidance is passed, this inevitably means that an April commencement date is no longer possible.
The broader context of the delay
The delay to the Act coming into force should be seen within the context of both the general pressure on the Government to be business friendly and pursue a “growth agenda” (it has been argued that the Act will make it harder for UK companies to compete for business internationally, as well as placing an increased compliance burden on companies of all sizes), as well the specific pressure applied by lobby groups such as the CBI, whose Director-General today argued that the specific wording of the Act is “not fit for purpose” due to its lack of clarity.
Against this broader picture, it seems possible that the delay to commencement of the Act may be longer than the few more additional weeks that are presumably required to finalise the “adequate procedures” guidance. It may even be the case that the Government decides to look again at the actual wording of the Act, including the section 7 offence.
Friendly Corporate PSL
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