Anti-Bribery and Anti-Corruption Policy


Background

It has always been implicit that we do not, at any level of our business, make or condone the making of corrupt payments, whether to “officials” in order to buy favourable treatment for our matters, or to clients in order to buy their custom.

We have to comply with the anti-corruption laws in the various countries where we have offices and conduct business. Whilst their precise format may vary, all provide that obvious acts of making corrupt payments constitute criminal offences. So, for example, we know we would be committing a criminal offence if we paid a bribe to a Judge in order to ensure that he decides a particular case in our favour. That sort of behaviour is wrong, we know it is wrong and we don’t do it.

Extra-territorial laws

Some anti-corruption laws, however, impose additional burdens which transcend national boundaries. Two of these are particularly relevant:-

(a) US – Foreign Corrupt Practices Act 1976

The Foreign Corrupt Practices Act (FCPA) applies to US corporations and partnerships, many of whom count as our clients (it also applies to many non-US corporations who have some connection with the US). It criminalises corrupt acts done by businesses both by themselves and via their agents (i.e. us) wherever those actions may take place. Enforcement of FCPA offences has been extremely topical over the last couple of years with a massive increase in the number of entities and individuals being prosecuted in respect of acts committed in countries other than the United States. This activity and attendant publicity explains why many of our US clients have been contacting our offices around the world insisting on receiving assurances from us that we do not make corrupt payments when conducting business on their behalf.

(b) UK - Bribery Act 2010

UK parliament recently passed the Bribery Act 2010. Its provisions will come fully into effect on 1 July 2011. The Act imposes obligations on us as an organisation, on any agents/associates acting on our behalf and on any UK citizens in their personal capacity. The Act extends worldwide.

There are, broadly, 4 offences created by the Act:-

(a) Making corrupt payments is prohibited. Corrupt payments fall into 2 categories:-

First, where by making the payment we are seeking to induce someone to perform a function improperly, or rewarding them for such improper performance

And second, where the person making the payment knows or believes that the acceptance of the payment in itself constitutes the improper performance of the recipients role (section 1).

In assessing “improper performance” we can take account of what is permitted or required under local written law, but must disregard anything which is merely customary.

(b) Similarly, requesting, agreeing to receive or accepting a bribe is prohibited (section 2).

(c) The Act also includes the offence of bribing a foreign official (section 6). This offence is clearly seeking to outlaw companies and individuals, and those working for them, engaging in corrupt practices in foreign countries. There is a defence if the making and receiving of the payment is permitted under the written law of the country in question (mere custom is not sufficient).

(d) Finally, there is a corporate offence of failing to prevent bribery (section 7). An obligation is placed on us as an organisation, by the UK Bribery Act, to put in place measures to seek to ensure that everyone acting on our behalf (which means all our employees worldwide and all agents/associates we instruct) is aware that they should not make corrupt payments and to seek to ensure that they don’t. Having “adequate procedures designed to prevent” our employees and associates committing acts of bribery is the only defence to us as an organisation should anyone in our network be found to have made an improper payment. It would not, however, be a defence for the individual concerned, of course.

Who does the law apply to?

As indicated above, the Act applies to Rouse and other UK organisations – however it goes much further than that. It also applies to any companies or partnerships which “carry on business in the UK”. So it has the potential to catch acts carried out by, or on behalf of, a great many of our clients who – although they are headquartered in the US, continental Europe, Japan or elsewhere – nevertheless carry on business in the UK. Consequently, actions that we take as their agents anywhere in the world have the potential to create liability for them too.

Guidance

So, we have to have guidelines for our staff, and we have to notify the associates we instruct and seek assurances from them. Our guidelines are set out below. They fall into 3 categories – “corruption” generally, and then 2 specific types of corruption, namely facilitation payments and gifts/hospitality. Please read these carefully.

Corruption generally

The making of corrupt payments is prohibited. We consider a payment to be corrupt if it is made with the intention of inducing or rewarding someone for performing his job improperly to our or our clients’ advantage.

Obvious examples would be:-

  • Paying a judge to decide a case in our favour.
  • Paying an Examiner to improperly allow a trade mark or patent application through without objection.
  • Paying an employee at a bank to reveal details of a defendant’s bank account.

Such payments are simply forbidden.

Facilitation payments

“Facilitation payments” have always been a difficult area. Whilst not specifically defined in the Bribery Act 2010 they are generally accepted to be small cash payments made to officials in order to secure or expedite the performance of a routine or necessary action to which the payer has a legal entitlement.

In certain circumstances they are permitted under the FCPA and this has helped guide the approach of both ourselves and many of our clients in the past.

The Bribery Act, however, takes a more restrictive position. Facilitation payments will constitute bribes under section 6 of the Bribery Act (which covers bribery of officials in countries other than the UK), if the payment is made with the intention of influencing the official to whom the payment is made, andwith the intention of obtaining or retaining an advantage in the conduct of our (which includes our clients’) business. Given the nature of facilitation payments, this will usually be the case.

Facilitation payments will also breach section 1 of the Bribery Act where they are intended to induce or reward a person - usually a public official - to give preferential treatment, or to refrain from doing something they should do, or to perform a task improperly. The Act makes it clear that mere acceptance of a payment by a recipient will itself amount to “improper performance” (unless it is specifically permitted).

Even minor payments made only to secure the proper performance of any given task by an official, (where non payment would lead to an official acting improperly against the interests of us and our clients) are prohibited. Such payments are so small they may feel like tips rather than bribes. But the Act and the official Guidance issued by the UK Government is clear, that such payments. however small and inconsequential they may seem, are illegal. The prosecuting authorities in the UK have also issued guidance indicating that they will be looking to prosecute in cases where facilitation payments are made on a regular basis (ie as part of a way of doing business),.

However, the official Guidance also recognises that small facilitation payments have become customary in many parts of the world and it is impossible to eradicate them overnight. Their eradication is viewed as “a long term objective that will require economic and social progress and sustained commitment......in those parts of the world where the problem is most prevalent. It will also require collaboration between international bodies, governments, the anti-bribery lobby, business representative bodies and sectoral organisations.”

For our part, we also recognise that in those countries where the payment of small facilitation payments is customary we could cause serious harm to the interests of our clients and our business if we were suddenly to stop paying them in the absence of clear and effective communication to the authorities involved. We take some comfort from the Guidance that the UK Government appears aligned with this.

Accordingly, it is our policy not to make facilitation payments, and we need to approach their eradication in a planned, structured way. We will work with front line staff in relevant jurisdictions to put in place training, support, education materials and lobbying efforts through which we hope and expect that, with the support of our clients and other firms in the same position as us, we will effect a change in attitudes.

Gifts/hospitality

The law applies not only to financial payments, but also to offering or giving “other advantages”. These can include gifts and hospitality, for example.

Gifts and hospitality, whether to clients or officials, are permitted only in so far as they are transparent, proportionate, reasonable and bona fide.

By contrast, what is not permitted is gifts or hospitality which are excessive and thereby leave the recipient with a sense of obligation or which could influence the recipient (who could be a client or an official) to treat us favourably.

What is excessive (as opposed to proportionate and reasonable) is a matter of judgment in all the surrounding circumstances. But to take a simple example, it would be proportionate and reasonable for our CEO to entertain the Head of IP of a major multinational to dinner at a restaurant in a 5 star hotel where they eat fine cuisine and drink a bottle of fine wine. Such a level of entertainment would cost a fraction of the weekly salary of the recipient and thus would not leave him/her with any sense of obligation. By contrast, such a lavish dinner would be excessive for the clerk who receives our trade mark applications.

We ask our staff to use common sense within these guidelines and seek guidance from your line manager and/or country manager before incurring cost if in doubt.

As with facilitation payments, we will provide training, guidance and materials for our staff.

Payments to reimburse legitimate expenses of officials

The mere re-imbursement of necessary and reasonable expenses incurred by officials will not constitute bribes/facilitation payments. Where, however, payment are made for unnecessary expenses, or for unreasonable amounts, such payments are most likely to constitute facilitation payments and are not allowed.

So, for example, it would be reasonable to pay for a standard room in a standard hotel for a Police Officer who has travelled 200 miles from home to conduct a raid which didn’t finish until 2am. It would not be reasonable, however, to pay for a suite in a five star hotel. Nor would it be reasonable to pay for any hotel if the raid was only 10 miles from the Police Officer’s home. Nor would it be reasonable to pay for any hotel if the raid was 100 miles from the Police Officer’s home but finished at 2pm.

We expect our staff to exercise sensible discretion in this area, and seek guidance from line managers and country managerswho in turn should seek assistance from the Deputy CEO and/or CEO.

In any event, where expenses are paid we should wherever possible obtain receipts. If receipts cannot be provided by officials that is a strong indication that the sum they are requesting “reimbursement” for is unreasonable.


Other issues

Client Policies

The obligations set out in these guidelines are what is required from us in order to comply with the law. It is possible that some of our clients will impose even stricter standards. If that is the case, we need to decide whether we can comply with such standards and if so then we need to put in place procedures to ensure that we act to those stricter standards when carrying out tasks on behalf of those clients. This will be the responsibility of GCMs working with local Client Managers and Country Managers.

All requests for us to give assurances of compliance with the Bribery Act and/or other similar legislation must be referred to the Deputy CEO.

Associates

We are writing to all the associates we instruct around the world informing them of our policy and asking them to confirm in writing that they will also comply with it when carrying out any work on our behalf. Failure to provide such a written assurance is likely to lead to us having to cease instructing that associate.

Reimbursement to staff

It is a consequence of this policy that staff will not be reimbursed for making payment and/or incurring costs which fall outside what is permitted.

Reporting suspicious requests/payments

Staff should report to their line manager and/or country manager any instances they become aware of where:-

  • A payment is requested/demanded which is suspected of being forbidden by our policy
  • A colleague is suspected of having made a payment which is not permitted. In this instance you may prefer to report directly to the Deputy CEO. You are assured that any such report will be treated in the strictest confidence.

Training

Training on our anti bribery policy will be provided to all staff and repeated/updated regularly. Such training will also form part of the induction process for new employees.

Appraisals

Appraisals will take account of how staff have dealt with bribery/corruption under this policy.

Review/audit

Compliance with our anti bribery policy will be reviewed/audited annually.

Frequently asked questions

A dedicated Anti Bribery and Corruption area will be set up on Polestar, where we will post frequently asked questions (and answers) as a ready source of guidance. As mentioned on numerous occasions above, however, staff are encouraged to seek guidance from line managers and country managers who in turn should seek assistance from the Deputy CEO or CEO. If in any doubt, please make sure you ask first.
 
Anti-Bribery and Anti-Corruption Policy (372kb)