Bribery Act 'is stopping SMEs exporting'

The Bribery Act is discouraging SMEs from exporting.

The Bribery Act is discouraging SMEs from exporting.

This is according to Alexander Ehmann, head of regulatory policy at the Institute of Directors, who believes that the Act has led smaller companies to avoid exports because of the potential legal risks.

Ehmann told the Telegraph: “There is a perception that UK businesses could be blamed for the actions of suppliers they knew nothing about. Companies should be held accountable for their own behaviour but they cannot be global policemen.”

The Bribery Act 2010, which came into force in 2011, created new criminal offences relating to bribery, which had previously been a common law matter. It has been of particular concern to the business community as a result of provisions that could make firms liable for bribes made or accepted by others in their supply chain, even when they are abroad.

Section 7 of the Act makes it a criminal offence for a business to fail to prevent bribery carried out on their behalf. Businesses only have a defence in these cases if they had “adequate procedures” designed to prevent bribery – but there has been widespread confusion regarding what those procedures entail.

The Institute of Directors has found that just 55 per cent of its SME members export, compared with 63 per cent of large firms. It believes that the provisions of the Bribery Act are one of the factors restricting small firms’ willingness to export.

According to guidance provided by the Ministry of Justice, organisations “may be liable for failing to prevent a person from bribing on your behalf but only if that person performs services for you in business. It is very unlikely therefore that you will be liable for the actions of someone who simply provides goods to you.”

Regardless, small businesses have been concerned about the degree to which they are expected to take mitigating measures with regard to bribery in their supply chain.

The Ministry of Justice guidance provides six “principles” that it says will help businesses determine whether or not they need to do things differently if they wish to rely on the ‘adequate procedures’ defence, key amongst which is proportionality. The guidance says that “the action you take should be proportionate to the risks you face and to the size of your business.” It also indicates that businesses should carry out risk assessment to identify potential bribery risks that they might face.

The full guidance is available on the Ministry of Justice website