Bribery laws: nearly half of companies do not vet suppliers’ compliance

New research has revealed that nearly 50 percent of companies failed to vet suppliers’ compliance with the Bribery Act, which came into force in July 2011.

Bribery occurs when an inducement or reward is given with the purpose of influencing someone improperly to carry out their duties.

The research by Ernst and Young found that 48 percent of the “mid-market” firms surveyed (those with a turnover of between £5 million and £50 million), did not check if suppliers were compliant with the law.

60 percent of those surveyed said they did have processes in place to assess whether suppliers’ business practices complied with the new rules, however, 16 percent said they would do nothing if they uncovered wrongdoing.

According to the survey, only 40 percent of larger firms (those with turnovers above £50 million) would remove suppliers from their supply chain if they uncovered evidence of non-compliance.

The Bribery Act created a new offence if a business fails to prevent bribery by people working on its behalf, unless the business can show that it has “adequate procedures” in place to prevent bribery. If bribery is alleged, it is a statutory defence for the business to demonstrate that it has a policy of carrying out due diligence to ensure suppliers are fully compliant under UK law.

Ernst and Young also point out that many directors are still unaware that they can be held personally accountable for breaches of the law. This means that directors and senior managers can risk significant sentences or fines for non-compliance of the Bribery Act, even if the breach is caused by a third party.

At Palmers, we offer specialist legal services for all matters relating to white collar crime, including the prevention of fraud and bribery.

For more information on any of these services, please contact Jeremy Sirrell or BJ Chong.