The launch of the UK’s Serious Fraud Office’s investigation into Airbus Group has again brought to light the use of third party agents overseas. The all too familiar situation is reminiscent of the investigation into Rolls-Royce following accusations that bribes were paid to win contracts in China and Indonesia.
Whilst it is incredibly helpful (if not pre-requisite) to have third party agents or local representatives in parts of Asia and the Middle East, their involvement can complicate oversight and create an environment for bribery. It’s not just manufacturing that face these issues, investigations have also been brought into organisations in the natural resources and pharmaceuticals sectors.
With statements being floated that the onus is on Airbus Group to prove it had a robust system for preventing abuse as well as a future voluntary ban on the use of percentage commissions to third party sales agents, we set out some best practices for reducing reputational risks:
Be aware of facilitation payments, these are illegal under the Bribery Act 2010 but incredibly common, difficult to escape in some countries and permitted under US legislation. Less obvious than a payment to secure a contract these payments are made to facilitate or expedite a pre-agreed performance. Whilst on the surface such payments may seem easy to avoid they are often cultivated to put the innocent party in a position where the consequences of not making the payment are disproportionate to the potential losses suffered.
Guidance on the Bribery Act 2010
For greater information on the offences within the Bribery Act and case study examples read the Ministry of Justice’s guidance on The Bribery Act 2010 http://bit.ly/1fmzCor .
Those familiar with the provisions may find Section 7 – “Failure of commercial organisations to prevent bribery” and “The Six Principles” as a useful tool in difficult situations.
An anti-corruption statement incorporates The Six Principles and sets out the organisation’s zero tolerance towards bribery, consequences of being convicted of bribery and indications of individual behaviours that assist the organisation in acting ethically.
Best implemented in conjunction with an organisation’s code of conduct and training scheme this combination of measures is arguably a good indication that an organisation has “adequate procedures” in place to prevent bribery, thereby avoiding facing an unlimited fine.
Mackrell Turner Garrett’s international network means that in addition to acting for a number of clients who do business globally, we are experienced and well positioned to assist in dealing with third party agents or investigations by the SFO.
If you’ve any queries about the content of this article or would like to discuss the topic in more detail please contact Kirsty Wright.