Since the Bribery Act 2010 came into force on 1 July 2011, for
the first time, anti-bribery due diligence has become a necessity
for companies undertaking mergers, acquisitions and investments.
The Bribery Act sets out a corporate offence whereby companies are
strictly liable for actions of bribery of their employees and
associated third parties. Companies and investors may find
themselves facing severe financial fines or criminal proceedings as
a result of instances of bribery that occurred before a company is
While some organisations are very thorough with their
anti-bribery due diligence prior to making an investment, research
has shown that others are not. With pressured time restrictions on
concluding transactions, the need for effective anti-bribery due
diligence can easily be overlooked or rushed.
Transparency International (the world's leading
non-governmental, anti-corruption organisation) has now published
guidance for anti-bribery due diligence in mergers, acquisitions
and investments. It sets out due diligence steps that should be
taken and also highlights reasons why companies and investors need
to be more diligent in this area. It is very significant that
almost 50% of US corruption-related prosecutions in 2007 were
connected to M&A transactions and this is a growing trend. The
guidance suggests that purchasers' manage their investment risk
in transactions "in the context of three overarching
Anti-bribery due diligence should be applied to all investments
on a risk-based approach. The level of due diligence should be
proportionate to the investment itself and the likelihood of risk
In cases where the necessary information for due diligence is
not immediately accessible (ie. the acquisition of public
companies, hostile takeovers, auctions or minority investments)
there is still a need for anti-bribery due diligence, but this may
need to be carried out post-completion.
A good practice approach characterises ethical and responsible
businesses, but is also the most effective means for companies to
manage bribery risks across multiple jurisdictions and in a
changing legal and enforcement environment.
The guidance also highlights that
factors such as changing deals, legislation, and expectations by
shareholders, can create an increasingly high risk area for
companies. Care should also be taken to ensure that bribery does
not occur during the investment or acquisition process itself. With
strict deadlines, use of third parties and the desire to obtain
information, these transactions are particularly vulnerable to
A checklist of risk models is provided in the guidance. Legal
risks are outlined, including the risk of criminal offences both
for corporations and individuals under the Bribery Act and the US
Foreign and Corrupt Practices Act, as well as sections on
considerations for obligations for minority investors and reporting
As well as an aid to those involved in certain transactions,
this guidance is welcomed by providing a standard by which
companies and investors involved in such transactions can be
The TI guidance can be accessed free of charge here
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The ramifications for those found to be in civil contempt (as presided over by the High Court), and, in particular, the court’s power to enforce such a finding against a contemnor who resides overseas, are more far reaching than many (civil) lawyers realise.
The Bribery Act has made the news again following the conviction of a would be taxi driver. Earlier this week, at Minshull Street Crown Court in Manchester, Mr Mawia Mushtaq became the second person convicted of an offence under the Bribery Act by attempting to bribe a Licensing Officer.
In the previous edition of Corporate Focus we reported that the Bribery Act 2010 (the Bribery Act) came into force on 1 July 2011 and we considered procedures that commercial organisations could put into place in order to prevent bribery.
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