New bribery laws, which could put workers behind bars and hit companies with unlimited fines, received Royal Assent last week (8 April 2010), and mark the start of a tough new era for corporate Britain, according to international law firm Eversheds. The laws will bring significant responsibility to company directors, and companies could face prosecution for failing to prevent bribery in their organisation under the new regime.

If bribes are paid by or on behalf of an organisation, the company will have to demonstrate that it has ‘adequate procedures’ in place to prevent corrupt business practices or face the penalties. Guidance on these procedures is likely to be issued by the Ministry of Justice in June or July but will not be prescriptive. The guidance is likely to cover anti-bribery policies, training of staff, corporate entertainment and gifts, and better due diligence on agents and business partners.

Having been pushed through Parliament before the election, the Act is likely to come into force on 1 October 2010. This gives businesses a short window of opportunity to review their systems and procedures to avoid falling foul of the new law.

The Bribery Act introduces a general offence of offering or receiving bribes, a specific offence of bribing a foreign public official, and a corporate offence of failing to prevent bribery. According to recent research by Eversheds, which canvassed the views of almost 700 executives, 60% of businesses are unaware of the corporate offence of failing to prevent bribery and one in four board directors don’t know that they could face prosecution.

Neill Blundell, Head of the Fraud Group at Eversheds, comments:

“The Bribery Act is now a reality and businesses need to be aware of the penalties they could face if they don’t comply. The UK has previously been criticised for its approach in dealing with major bribery cases, so this is a significant step change that will go far beyond the scope of the US Foreign Corrupt Practices Act. This truly is a wake-up call for corporate Britain.”

Eversheds’ Corruption Clampdown report reveals a lack of knowledge and understanding about the new laws, even at the top of UK businesses. The report found that one in five (20%) organisations don’t have robust systems to prevent bribery from taking place and there is also confusion about what constitutes bribery.

While three quarters (73%) of those surveyed understand more explicit forms of bribery – giving or receiving an illicit payment – there was a lack of awareness of the more discreet forms that will be covered by the Act.