Publication of New Anti-Bribery and Corruption Legislation: Practical Implications for Companies
The Criminal Justice (Corruption Offences) Bill, 2017, has been published by the Minister for Justice and Equality. This Bill is one of the actions identified by the Government last week, as part of a broader package of measures to tackle white collar crime. Enactment is scheduled for Q4 2018.
The Bill implements a number of the Planning Tribunal recommendations and will help Ireland to meet some of its commitments under international instruments. It will modernise Ireland's existing anti-bribery and corruption laws. A number of new offences and increased penalties are to be introduced.
Most significantly for companies, the Bill provides that a body corporate may be held criminally liable where one of its officers, managers, employees, agents, or a subsidiary company, has engaged in corruption with the intention of obtaining or retaining business, or business advantage, on its behalf. The only defence will be for the body corporate to prove that it took 'all reasonable steps' and exercised 'all due diligence' to prevent them from doing so. Companies operating in Ireland, and particularly those doing business in developing countries, should begin preparing for this significant change now. We set out below some practical tips on how to go about doing so.
Practical consequences for companies
The enactment of the Bill, anticipated before the end of next year, will have immediate practical consequences for Irish companies and foreign companies doing business in Ireland.
In essence, they will need to be able to demonstrate that they had in place appropriate anti-corruption policies and procedures to prevent bribery and corruption in respect of how they win, retain and conduct business (including engagements through agents and other commercial third parties), if they are to avoid criminal liability for corrupt acts by persons acting on their behalf.
No guidance has been provided in Ireland at this stage as to what might constitute 'all reasonable steps' or 'all due diligence'. On a practical level, a broad range of matters will likely need to be addressed, from corporate hospitality and entertainment, to contractual arrangements with employees, agents and third parties.
While enactment of this legislation is not anticipated before Q4 2018, now is the time for Irish companies and companies doing business in Ireland to get prepared.
As a first step, this will involve companies evaluating the specific bribery and corruption risks they face, based on the nature, scale and complexity of their activities, and designing proportionate policies and procedures, taking into account the business sectors and jurisdictions in which they operate.
Who does it apply to?
The corporate offence will apply to the Irish activities of all companies (regardless of where they are incorporated), including acts done on Irish ships or aircraft. It will also apply to corruption occurring outside of Ireland committed by persons who are Irish citizens or residents, or by Irish registered companies.
Section 18, which introduces the new Irish corporate offence, is similar to Section 7 of the UK Bribery Act, 2010, which requires commercial organisations to have in place "adequate procedures designed to prevent bribery", to avoid criminal liability if a person associated with the organisation bribes another person to obtain or retain business or business advantage for the organisation. Accordingly, Irish companies with a UK presence may already have procedures and policies in place which are sufficient to enable them to avail of the 'reasonable steps'/'due diligence' defence provided for in the proposed Irish legislation.
For companies which do not, the guidance published by the UK Ministry of Justice on 'adequate procedures' may provide a useful starting point in preparing for the introduction of this new legislation. This document sets out six guiding principles, but in essence it advocates a risk-based and proportionate approach to anti-bribery and corruption; the implementation of effective due diligence procedures; buy-in, communication and awareness at all levels of the organisation; and regular monitoring and review to ensure existing policies and procedures remain relevant and current.
Practical steps which companies within the scope of the Bill should consider range from formal due diligence processes and questionnaires when appointing agents or engaging with certain commercial third parties and the inclusion of warranties in third party contracts, to the design and operation of procedures to monitor a company's engagement with, and the conduct of and risks posed by, those third parties.
New Offences and Sanctions
More generally, the Bill will modernise Irish anti-bribery and corruption laws. Existing legislation, contained in several statutes dating back to 1889, will be repealed and replaced with a single statute, which will contain a number of new offences and increased penalties and sanctions. In particular;
- New offences of 'active' and 'passive bribery' will be introduced. It will be an offence to 'corruptly' offer or give (or accept or obtain) a gift, consideration, or advantage to a person as an inducement or reward for them doing something in relation to their office, employment position or business. Notably the Bill removes the requirement to prove the existence of a relationship of 'principal' and 'agent' between the recipient of the bribe and their principal.
- There will be a new offence of 'trading in influence' – the Bill will criminalise the promise of an undue advantage to someone who asserts he or she can exert an improper influence over a public official's decision making. The offence can be committed regardless of whether the supposed influence leads to the intended result.
- The use by an Irish official of 'confidential information' obtained as a result of their role to corruptly obtain a gift, consideration or advantage will also be criminalised.
- It will be an offence to give a gift, consideration or advantage which it is known (or ought to be known) will be used to facilitate corruption.
- There will be specific offences of 'corruptly' creating or using 'false documents', or threatening harm to a person, in order to induce or influence them to do something in relation to their office, employment, position or business.
- Sentences of up to 10 years are provided for, as well as unlimited fines for conviction on indictment in respect of the main corruption offences in the Bill.
- Public officials found guilty of a corruption offence may be removed from their public office or position.
- A Court will have a discretion to prohibit convicted persons from seeking certain public appointments for up to ten years, although this will not include election to the Dail, Seanad, European Parliament or local authorities.
We will keep you updated on material developments as the Bill passes through the Oireachtas. In the meantime, if you require further advice on getting prepared for the introduction of this significant new piece of legislation, please contact a member of the White Collar team, the Regulatory Risk and Investigations team, or your usual A&L Goodbody contact.
Date Published: 7 November 2017