Trends in anti-bribery and anti-modern slavery

Posted on: February 26th, 2020

A major global trend evolving across the legal landscape is anti-bribery and anti-slavery. As businesses take advantage of international supply chains, we take a look at the UK position and developments affecting international business.

Anti-bribery

UK

The UK’s Bribery Act 2010 has applied since 1 July 2011 and sought to comply with the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. The Bribery Act 2010 introduced four criminal offences:

  • bribing another person;
  • soliciting or accepting a bribe;
  • bribing a foreign public official; and
  • (for a business) failing to prevent bribery.

The two common threads for each offence are:

  • an advantage (financial or other) is given, promised or requested; and
  • improper performance of a function or activity.

A key point to the legislation is that the relevant function or activity may be performed outside the UK.

Where a company commits any of the first three offences listed above, senior officers of the company may be jointly liable where they consented to, or connived with, the bribery.

There is a defence to the failure of a business to prevent bribery if it can prove it had adequate procedures in place designed to prevent bribery. This defence has resulted in anti-bribery provisions being more commonly included in supply chain contracts.

The Ministry of Justice published six guiding principles which businesses can apply to bribery prevention procedures:

  • proportionate procedures
  • top-level commitment
  • risk assessment
  • due diligence
  • communication, including training
  • monitoring and review

The penalties for a breach of the Bribery Act 2010 are:

  • individuals may be subject to unlimited fines and/or up to ten years’ imprisonment.
  • companies may be subject to unlimited fines and excluded from public procurement exercises in the UK.
  • directors may be disqualified from acting as a director for between two and fifteen years.

Internationally

The US implemented the US Foreign Corrupt Practices Act in 1977 which contains two categories of provisions:

  • anti-bribery provisions – these are narrower than those in the UK’s Bribery Act 2010; and
  • accounting provisions requiring transparency of accounts in all companies that file a report with the Securities and Exchange Commission – there is no equivalent in the UK’s Bribery Act 2010.

The OECD Anti-Bribery Convention in 1997 and its subsequent implementation led to stronger legislation and measures worldwide as it sought to harmonise anti-bribery laws. Enforcement has increased globally as more cases are brought and greater fines imposed. Many of the countries signed up to the Convention have not taken sufficient enforcement action, however progress is being made.

A global response is required to prevent bribery, as deals may be made in one country and hidden from another with more stringent laws and better identification and enforcement. There is greater cooperation between countries and a more coordinated approach being taken in preventing bribery. This is shown by the US, Switzerland and Brazil taking on the Brazilian multinational construction conglomerate, Odebrecht, and the admission of $800 million of bribes being paid with a settlement of up to $4.5 billion.

An interesting development in bribery worldwide has been the rise of cryptocurrency and its use to disguise bribe payments. On the flip side, as these transactions are recorded forever on a blockchain, forensic experts and analysis may help identify ownership of digital wallets and identify payments made.

There is a global trend towards private businesses taking steps to prevent or report bribery, both in adopting measures and assisting authorities as a part of the solution. However, some major economies, such as China, India and Indonesia have not signed up to the Anti-Bribery Convention, meaning they do not meet its higher standards.

In some parts of the world it is common for officials to expect or demand payments in return for providing a service or performing a function which they are otherwise obliged to perform. These are known as ‘facilitation payments’, and they are of particular concern to businesses because such illegal payments could lead to a prosecution under the UK’s Bribery Act 2010. The joint Crown Prosecution Service and Serious Fraud Office prosecution guidance makes clear that facilitation payments are not exempt.

Anti-modern slavery

As slavery has been abolished, the concept of slavery no longer revolves around legal ownership, but around illegal control, commonly termed ‘modern slavery’.

UK

The government implemented the Modern Slavery Act 2015 on 26 March 2015, introducing laws designed to tackle forced labour and human trafficking in the UK. A duty was imposed on businesses to be transparent about their practices and policies in relation to preventing slavery and human trafficking, both in their own organisations, as well as in their global supply chains.

A major requirement is for commercial organisations (including companies and partnerships) to produce a modern slavery and human trafficking statement where they:

  • carry on a business, or part of a business, in the UK;
  • supply goods or services; and
  • have a total annual turnover of £36 million or more.

The statement must be approved and signed by an appropriate senior person in the organisation, be published on the organisation’s website (if it has one) and:

  • set out the steps the organisation has taken during the financial year to ensure that slavery and human trafficking is not taking place in any of its supply chains and in any part of its own business; or
  • state that the organisation has taken no such steps.

Looking further ahead, the Public Contracts (Modern Slavery) Bill had its first reading in the House of Lords on 3 February and makes provision for the avoidance of modern slavery in the procurement of public contracts and for connected purposes.

Internationally

Other countries are starting to adopt similar legislation to the UK’s Modern Slavery Act 2015.

Australia has brought in a statutory requirement for organisations with consolidated revenues of at least AUD$100 million to publish a Modern Slavery Statement within six months of the end of their financial year.

In France, a 2017 law introduced the obligation for global companies to create a ‘Vigilance Plan’ aimed at preventing violations to human rights and fundamental freedoms, people’s health and safety, and the environment. However, a penalty fine in the original draft of up to €30 million for non-compliance was removed.

There has also been talk in recent years of Hong Kong and Singapore adopting modern slavery laws similar to those in the UK. As other countries adopt anti-modern slavery legislation, we may see organisations requiring provisions in their contracts.

The presence of modern slavery often arises from practices to keep costs low and meet tight production windows. Suppliers may subcontract to meet these deadlines and use unscrupulous contractors as a result. Hopefully there will be some international harmonisation of modern slavery laws to set a gold standard for businesses to meet and expect from those they contract with.

Ultimately, the bad publicity arising from poor treatment of workers in a business’ supply chain can have a huge impact on sales. Increased media attention and analysis on modern slavery, and how organisations are addressing it, has helped lead to corporate social responsibility being more important than ever as businesses look to appease their shareholders.

For more information on anti-bribery and anti-modern slavery, please contact a member of the Commercial & Intellectual Property team or fill in the enquiry form.

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