Are your agents in Africa “entertaining” your clients? Are your distributors in Denmark “helping” your customers? Do you know what they are doing? Do their actions amount to bribery? Are they going to make you into a criminal?
Kay Miles, an Associate in our Commerce & Technology Team, looks at how the actions of your agents or distributors could constitute bribery and how that could land you in hot water.
What are your representatives doing?
You may have already considered the new UK Bribery Act within your own business and you may even have put policies and procedures in place to help your employees stay on the right side of the law. However, the Act extends beyond your own personnel - have you considered what your agents, distributors and any other representatives are doing?
Are you actively preventing bribery?
There is a new offence under the Bribery Act for commercial organisations who fail to prevent bribery by an “associated person”. Your representatives could cause you to commit this offence if they bribe another person intending to obtain or retain business for you or to obtain or retain an advantage in the conduct of business for you. And you may not even know they are doing it.
A person is “associated” with you, if they perform services for or on behalf of your business. They could be your employee, but also may be your agent. It is less clear whether this could also apply to your distributors but, depending upon the closeness of ties and exactly what they do for you, this may be a possibility and we would advise that preventative measures are put in place. At the very least, if your representatives are guilty of, or even suspected of, bribery or corruption, it could still adversely affect your business and its reputation.
Is there any defence for you?
You do not have to know what your representative is up to in order for you to be guilty as well. There is only one defence under the Act and that is if you can show that you have “adequate procedures” in place designed to prevent bribery by your “associated persons”. The Act does not set out what “adequate procedures” are but the Ministry of Justice has published guidance which is helpful. However, each business and its risks are different and the procedures will therefore be different to deal with your particular circumstances.
What can you do?
Some things you can do are:
- Have an anti-bribery policy
- Vet your agents and distributors carefully
- Ensure anti-bribery provisions in your contracts with appropriate sanctions
- Provide training (this could be on-line)
- Ensure your own internal policies and procedures are robust
- Monitor compliance
We have experience in assisting businesses to draft policies which are appropriate to their individual risks and needs and this is one that should be added to your armoury. You should also clearly ensure that you adequately investigate your representatives before appointing them, train them on your business policies (including relating to anti-bribery), monitor their compliance and ensure it is fully covered in their contracts with appropriate sanctions for any breach.
We can help!
This article has only looked at the actions of your agents or distributors. The Act is of course wider than that and emphasises the need for good policies and practices and getting these in place, known and active as soon as possible.
It is always advisable to take legal advice, whichever country you are dealing in and whatever means of agency or distribution you are considering, as there can be a fine line between good business, client entertaining and criminal bribery. It could be damaging and costly not to have a handle on what your representatives are up to. Give us a call and get your procedures in place.
For any further information on agency or distribution relationships or the impact of the Bribery Act, please contact Kay Miles by emailing Kay or call her on 08450 990045, or speak to your usual contact in the Commerce & Technology Team.
This document is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from taking any action as a result of the contents of this document.
