New legislation introduced today which makes it a corporate offence to not prevent bribery by those working for your company could have significant implications for retailers.
Because the new law applies to all people working on a company’s behalf, whether in the UK or abroad, it means retailers need to take extra care over their international operations.
With sales slow and space limited and expensive domestically, many traders are expanding globally especially into markets that have a culture of unofficial payments such as China.
Melanie Wadsworth, Partner at Faegre & Benson legal practice, warns retailers that ignorance will not be accepted by British courts after the passing of the new Bribery Act today.
“UK retailers may become liable under the act for the actions of third parties who provide services to them, wherever they based,” she explained.
“So, for example, if one of your overseas suppliers gives or receives a bribe which is intended to obtain or retain a business advantage for your organisation, you will be guilty of an offence under the act unless you can show that you had “adequate procedures” in place to prevent bribery.”
Even if it is local custom to give or receive bribes in a particular country companies will still be found guilty under the law change and it applies to any form of UK businesses regardless of where it is headquartered.
With retailers so reliant on suppliers and localised operators to run international branches and franchises, a review of procedures is essential.
Wadsworth added: “More than ever, it is important for retailers to carry out risk-based due diligence on the third parties who provide services to them and give careful thought to the terms of their agreements with such persons.
“Not only should you be establishing clear anti-bribery procedures for your own organisation, but you should be looking to impose these on your contractual counterparties and ensure you have the ability (e.g. a right to audit; termination rights in the event of corrupt practices being uncovered) to give them teeth.”
A criminal conviction for giving, offering or promising a bribe will now carry a maximum penalty of seven to ten years imprison with an unlimited fine.
Read more on the Bribery Act and its impact on the retail industry in Melanie Wadsworth’s Retail Gazette column later this month.