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New anti-corruption laws come into force today, giving companies more certainty over what constitutes bribery but placing greater obligations on companies to tackle corruption.

A company could be responsible for bribery carried out by its employees without its knowledge or consent under the Bribery Act. It creates a new offence of failure to prevent bribery by people working for or on behalf of a business, but companies can escape liability if they show that they have "adequate procedures" designed to prevent bribery in place.

Under the Act, the maximum penalty for individuals found guilty of bribery will rise from seven to 10 years' imprisonment and an unlimited fine.

Previous anti-corruption laws were criticised as being too complicated and for not giving a clear enough definition of what constitutes bribery. The new law has been welcomed for its clarity.

In addition to creating new obligations for companies to have anti-corruption policies in place, the Act also creates the offence of bribing a foreign public official, even if that person has demanded a bribe.

UK companies and partnerships could be breaking the law no matter where the alleged acts of bribery take place. Foreign companies which operate in the UK could also face prosecution regardless of where the alleged bribery has taken place, unless the suspect activities are permitted locally.

The Act was due to come into force in April, but was delayed to give the government more time to review its guidance (45-page/390KB PDF) on the adequate procedures companies can put in place to prevent people associated with them from bribing.

The guidance provides six essential principles for companies to follow in order to ensure they comply with the new law: proportionate procedures; a top-level commitment ensuring that directors and staff are unified in fighting bribery; undertaking occasional risk assessments; checking out third parties such as intermediaries and subcontractors to ensure that they are honest; communicating anti-bribery policies to staff and providing staff training, monitoring and review.

A company could also be liable for the actions of associated people, which the Bribery Act lists as including recruitment firms, commercial agents, partners, consultants and subcontractors.

Last month a survey by business information company Thomson Reuters revealed that almost 40 per cent of UK businesses think their senior executives and board members are unprepared for the new law.

However, in order to be adequate, a company's procedures need only be proportionate to the risks that business faces as well as its size and resources.

"Much has been written about the draconian effects of the Bribery Act and the risks that it poses to UK businesses," said Barry Vitou, bribery law expert with Pinsent Masons, the law firm behind OUT-LAW.COM. "However, businesses that try their best to comply with the provisions of the Act, and which behave in an ethical manner, will have nothing to fear."

Copyright © 2011, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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