It has been widely reported that British Petroleum (BP) has been in contact with the Serious Fraud Office (SFO) over recent allegations of bribery and corruption carried out by one of its contractors in Azerbaijan. The contractor self-reported incidents of bribery to the SFO after it came to light late last year. The name of the contractor has not yet been made public, however it is understood that the contractor was working on an engineering project on behalf of BP in Azerbaijan.
Neither BP or any of its employees are believed to have paid any bribes, however if the self-reported acts of bribery occurred after 1st July 2011, BP could potentially be found strictly liable for acts of the contractor as an associated person of BP. The Bribery Act 2010 makes a company criminally liable for acts undertaken by its employees, its agents and contractors.
Azerbaijan scores poorly on the Transparency International Corruption Perceptions Index, with a rank of 143 out of 183, 183 being most corrupt. The extent of corruption is so great that it scores a low 2.3 out of 10 on the corruption perceptions index. Azerbaijan is clearly a high risk jurisdiction for BP to operate in and these risks are compounded through the use of third party entities where there is ordinarily a lack of control in respect of oversight into their activities.
This is a timely reminder that businesses should be reviewing all their business relationships with third parties. Contractual controls should be introduced so that you can sever the relationship where a contractor is involved in bribery offences.
Before engaging a third party, all companies should conduct appropriate due diligence on the third party candidate. This may involve the engagement of external companies or agents who have experience in the field. Decisions made in the appointment process should be recorded as part of the audit trail. Third parties should be informed of your company's Anti-Bribery Policy, where appropriate participate in further training, and confirm at least annually their ongoing compliance.
Third parties, if not carefully selected, pose significant legal, regulatory and reputational risks to your company.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
