Backhanders that could be the undoing of your charity

Our columnist Nicola Evans, a senior associate at law firm Bircham Dyson Bell, explains the government's guidance on the new bribery law

Nicola Evans
Nicola Evans

New guidance from the government about the Bribery Act makes it clear that charities should not assume that the act, which will come into force on 1 July, does not apply to them. Indeed, it identifies charitable contributions as potentially high risk.

Bribery can arise in apparently ordinary situations, such as planning consents or school admissions. Charities need to be aware how offences under the act could affect them both reputationally and operationally: they could, for example, be barred from taking government contracts.

Individuals involved in charities, and charities themselves, can be guilty of bribing another person or a foreign official - for example, by making a facilitation payment or perhaps through excessive donor engagement. Charities could, unwittingly or otherwise, be the recipients of bribes: for example, if a charitable donation was used as an inducement for an official to grant a government contract.

Different levels of response

A much-publicised offence under the act is that of failing to prevent bribery on behalf of a commercial organisation. Charities' trading subsidiary companies could be susceptible to this offence - as could the charities themselves, if they engage in commercial activities.

The core principle of the guidance is proportionality - acknowledging that different levels of response will be appropriate, depending on the relevant risk factors and the resources of the organisation.

The other principles are: top-level commitment to oppose bribery; risk assessment, which should be periodic, informed and documented; proportionate and risk-based due diligence; appropriate communication (internally and externally) and training; and continuing monitoring and review of anti-bribery policies, procedures and their enforcement. Another theme of the guidance is transparency - the more open your procedures, the lower the risk of bribery.

The guidance attempts to be pragmatic in accepting that certain practices, particularly overseas, will not change overnight. It recognises that the eradication of facilitation payments - small bribes paid to facilitate government action - is a "long-term objective", but that all businesses have a role to play in this.

Payment under duress

The message is that it is not acceptable to assume such payments are simply part of doing business in certain jurisdictions; instead, organisations should identify whether there is a risk of such payments being demanded and, if so, provide clear procedures to explain what their employees and agents should do if the situation arises. The guidance offers suggestions, but acknowledges that individuals will sometimes pay under duress.

The guidance makes it clear that the intention is not to outlaw corporate hospitality or deter charitable contributions, but to help organisations identify and enforce criteria and standards. As the guidance notes, much of this is common sense.

The act should not be regarded as a threat to charitable organisations; the policy it seeks to drive is founded in the essentials of good governance, such as risk management, conflict of interest policies and clear lines of communication and responsibility.

Rather than another bureaucratic hurdle for charities, it could be that, in time, it enhances a charity's ability to carry out its operations successfully at home and abroad.

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