Catrin Rees from Collyer Bristow outlines what housebuilders need to know about corporate bribery.
Corporate hospitality is often a grey area. Many do not consider hospitality bribery or attempt to legitimise with transparency and uses of ‘hospitality registers’. So when does an invitation become a backhander or bribe?
Both individuals and commercial organisations can face legal sanction under The Bribery Act 2010. But for commercial organisations no intention or knowledge has to be proved on the part of the company and there is strict liability where there has been a failure to prevent bribery or an offence by an ‘associated person’ of the organisation.
Crucially, an associated person does not necessarily have to be an employee of the company; the term encompasses anyone who provides services on a company’s behalf – if the bribe is paid to or from the associated person with the aim of benefiting the company, the company is liable. That means organisations can face criminal liability and unlimited fines for actions by persons or companies they do not control.
There are a number of sanctions available under the Bribery Act including unlimited fines for companies, up to 10 years’ imprisonment for individuals, the disqualification of company directors, and the confiscation of property.
It should also be remembered that corruption and bribery will have an impact on any relevant contracts in relation to developments or works. Secret dealings between parties, such as members of the professional team and contractors, will be a fraud on the employer and will entitle the employer to recover any monies paid by bribe or secret commission, set aside the relevant contract and recover damages.
Companies should have in place adequate procedures to actively manage risk, train staff, undertake necessary due diligence and continuously monitor and review. Practical measures might include:
- Appointment of a person responsible for ensuring that proportionate and adequate procedures are in place.
- Issue a memorandum for all staff to outline the business’ approach to corruption.
- Issue training and awareness programmes for staff.
- Carry out a risk assessment process and identify key areas.
- Do due diligence on all potential associated persons. Review and amend any existing and/or future contracts to prohibit bribery.
- Create clear policies and make them known and available to all staff.
- Develop and implement a whistleblowing and investigation procedure and ensure it allows for confidentiality.
The Government has made clear its intention to crack down on corruption in the commercial world. Real estate businesses would be advised to take the sensible and practical steps outlined above to avoid a bad apple upsetting the apple cart.