Insolvency practitioners have on occasion said that regulators have criticised them for not having a 'Bribery Act checklist' for each new appointment. There is no obvious requirement in the Bribery Act that would make it mandatory to have a pre appointment Bribery Act insolvency procedure but the importance of compliance with the Bribery Act justifies reviewing this again.
The Bribery Act creates the criminal offences of bribing another person, of being bribed and of the failure of a commercial organisation to prevent bribery. The penalty for being in breach of the Bribery Act is a fine, imprisonment or both. It is serious legislation and those affected by it, including insolvency practitioners, should have procedures in place to make sure that they are compliant. But does this really mean a tick box on a pre appointment checklist?
The 'person' mentioned in S1 and S2 of the Bribery Act, dealing with the offences of bribing another person or being bribed, can include a body corporate. It is an offence to give an advantage of any type to another person, including via a third party, if this would be an improper act or would induce or be a reward for an improper act.
It is an offence for a person to receive an advantage of any type if this is itself an improper act, intending that an improper act is carried out as a result or as a reward for carrying out an improper act. Again, it is still an offence if the advantage is requested or received via a third party.
An 'improper act' for a professional person such as an insolvency practitioner can be summarised as a breach of trust or good faith when carrying out any activity connected with a business, in the course of a person's employment or performed on behalf of a body of persons whether corporate or not.
In addition to this commercial organisations, such as insolvency firms, commit a criminal offence if they fail to prevent bribery that was intended to retain or obtain business or a business advantage for that commercial organisation. Commercial organisations are responsible for the acts of their employees, agents, subcontractors and subsidiaries in this regard. There is a defence to this, that the commercial organisation had 'adequate' systems in place that were designed to prevent such bribery offences from being committed.
It could be argued that if there were procedures in place and bribery offences were still committed to keep business for the commercial organisation then the procedures cannot have been adequate in the first place. Reliance on this defence might be high risk but this could be the reference to mandatory Bribery Act procedures mentioned earlier.
All insolvency practices should have Bribery Act training sessions on a regular basis and certainly as part of induction training for new staff so that all members of the insolvency team are fully aware of the requirements and definitions of the Bribery Act 2010 and policies established as a result. Rather than have a separate procedure for each new appointment, however, it seems that it would be more effective to have one system in place for dealing with all work sources and potential work contacts and for monitoring it.
There should be procedures and policies for ensuring that employees, agents, subcontractors and subsidiaries do not give bribes in order to obtain work for your practice and these procedures can be demonstrated to regulators if necessary. For some low risk agents, subcontractors and service providers it may be sufficient to send an annual letter setting out your policy regarding the Bribery Act and towards giving and accepting corporate hospitality.
The Bribery Act 2010 is quite complex and this email just gives a summary of some of the main points. As with most legislation, however, the best way to avoid being in breach of it is to understand what the legislation is trying to achieve, how it might affect you, and then to design systems to minimise your risk of being in breach of it. A question on a pre appointment checklist that says 'Have you considered the Bribery Act 2010? is unlikely to be totally effective.
Caroline Clark's insolvency career started over 30 years ago and since 1994 she has specialised in insolvency compliance and regulation.