Taking all reasonable steps to stamp out corruption
Businesses need to be aware of the implications of new anti-corruption legislation, says Dermot McGirr, senior associate at Pinsent Masons’ Dublin office
Dermot McGirr: “For individuals guilty of offences under the legislation, the maximum penalty is an unlimited fine and up to 10 years in prison.”
Companies should conduct a risk assessment of their anti-corruption practices and implement and maintain a robust anti-corruption compliance programme if they want to avoid being caught by new anti-corruption legislation. The new law contains stiff penalties for companies, but they can avoid those if they take “all reasonable steps and exercise all due diligence” to stamp out corruption by their staff and agents.
For individuals guilty of offences under the legislation, the maximum penalty is an unlimited fine and up to 10 years in prison and for companies guilty of an offence they can be liable for an unlimited fine. For companies, there is also the significant risk of reputational damage and the impact a prosecution could have on future business.
The offences under the new legislation are: “active” and “passive” corruption, broadly corresponding to the offering and accepting of a bribe; active and passive “trading in influence”, which is to do with promising an undue advantage to someone who claims to be able to exert improper influence over the decisions of a public official; creating or using false documents; intimidation; corruption of a public official; and facilitating corruption offences.
Most of the offences require that the individual has acted with an improper purpose. This means the intent of a gift will be examined. For corporate hospitality, for example, it will look at why the hospitality was provided. Was there any improper purpose involved?
In the majority of situations, the answer will be no, but for companies it will be important to monitor and record all gifts and to manage the risk proactively. This will particularly be the case during high-risk periods or events, such as when the company is tendering new business with the entity to which the hospitality is being made available.
Guilty of an offence
A company will be guilty of an offence if the offence is committed by an officer, employee, agent or subsidiary of the company and the offence was committed with the intention of benefitting the company. The individual who committed the offence will be personally liable but so can officers of the company if the offence was committed with their consent, tacit agreement or it was attributable to intentional inaction.
This means there can be prosecution on three fronts for the same wrongful act: the individual who undertook the corrupt act, the officer of the company and the company itself.
A company will have a defence against corruption proceedings if it is able to prove that it took all reasonable steps and exercised all due diligence to avoid the commission of the offence. This is a relatively high threshold to meet and requires the company to both implement an effective anti-corruption programme and to ensure it is enforced on an ongoing basis. Companies, therefore, need to focus on practical compliance steps.
This will involve carrying out a risk assessment of their operations in order to understand where the corruption risks arise, ensuring staff are trained on anti-corruption practices, ensuring anti-corruption policies are in place and are aligned with legal requirements, and ensuring the necessary third-party due diligence is being carried out.
At Pinsent Masons, we understand that anti-corruption compliance is not straightforward and can be time-consuming for in-house legal teams and compliance teams. To assist, we have developed an Anti-Bribery Compliance Tool. This is a suite of template documents which can be tailored and utilised in your business. These include an Anti-Bribery Strategy Implementation Plan, Pro-forma Risk Assessment, Template Policy Statements and Procedures, Due Diligence Questionnaires and Training Materials.
This article does not constitute legal advice. Specific legal advice should be taken before acting on any of the topics covered