Zero tolerance
The six guiding principles set out in the current Bribery Act consultation cater mainly for the private sector – Katherine Smithson reminds charities of its implications.
In last month’s Caritas, John Taylor gave an excellent overview of the Bribery Act 2010 and introduced some of the potential implications that the new legislation will have for charities.1 CFDG has been aware for some time of growing concern amongst our members regarding the application of the Act and how it will impact on their work, both at a strategic level, and on the ground. Over the past few months there have been some developments concerning the application of the Bribery Act – including some interesting contributions to the debate and some clearer indications of how the sector should move forward with regard to this new policy.
Where are we now?
Currently the Ministry of Justice is consulting on the draft guidance of section 7 – ‘failure to prevent bribery’, which is targeted specifically at commercial organisations. In light of this, on 21 September 2010 CFDG held a special open meeting enabling attending charities to discuss the Act and air out the issues, some of which seem obvious, others less so.
This was a unique opportunity to hear the person responsible for leading the Ministry of Justice’s work on bribery, Roderick Macauley, addressing charities specifically. This gave a fascinating insight into the policy drivers and intended reach of the Act, which further clarified the intended emphasis on commercial business activity. Ultimately however, ensuing discussion showed that there are still many steps the sector needs to take to achieve clarity on their position with prosecutors, and to ensure that charities are aware of the risk management steps they will have to take.
Charities and the Bribery Act
Compliance with the Bribery Act is not only about the law. Charities have as much of a role as anyone in taking a stance against corruption and in counteracting a ‘culture of bribery’. Refusing to participate in acts of bribery, such as facilitation payments, is important in this endeavour. At the same time the Act is not intended to obstruct charities and NGOs from carrying out important humanitarian aid and development work. The Act also does not apply to circumstances involving extortion. This is something Roderick Macauley was quite clear on.
However, it is apparent, that the way the MoJ perceive the Act to impact on charities, is based on simplistic assumptions concerning charities financial processes and functions, presuming that charities do not partake in any business or ‘commercial’ transactions to which section 7 applies. Charities are used to referring to their ‘business’ and ‘non-business’ activity for tax purposes. With this in the back of our minds, why should it be assumed that there are not charitable activities that could come well within the remit of the Bribery Act – including the conundrum that is section 7?
Activities carried out under charity trading subsidiaries will certainly be considered as commercial, something which many charity professionals will need to bear in mind when advising their trustees on how they should respond to the Act organisationally.
Be prepared
The Bribery Act 2010 is criminal legislation, and whether or not investigating or prosecuting a charity under the Bribery Act is appropriate or ‘in the public interest’ is ultimately a decision for prosecutors, not the Ministry of Justice. At the moment it is advisable for charities to be conscientious and thorough in the lead up to the implementation of the Bribery Act in April 2011. The fact that designers of the new legislation may have underestimated the implications for charities is not justification for us to do the same. We know that there are bribery related risks for charities and their staff; with this in mind the sector should respond accordingly.
It is no surprise that the six guiding principles set out in the current consultation have not been put together with charities in mind. The Act itself only provided for consultation for commercial organisations. They are however broad and flexible, probably too much so for organisations feeling around in the dark for the right way forward. Currently this is as good a place to start as any for charities looking at how they should be approaching this problem. In summary the guidance principles are:
- Risk assessment – know where your bribery risks are.
- Top-level commitment to anti-bribery – zero-tolerance strategy.
- Due diligence – approach funding relationships with bribery risks in mind.
- Clear, practical and accessible policies and procedures – ensure staff are well-equipped.
- Effective implementation – beyond ‘paper compliance’.
- Monitoring and review – regularly reviewing procedures and transparency in auditing areas sensitive to bribery.
There is a very real need to ensure that the implications are fully understood both within the sector and in the government in order to inform discourse with the Crown Prosecution Service, the Serious Fraud Office and the Charity Commission. Eventually there needs to be clearer, sector specific guidelines. This is a challenge for umbrella organisations such as CFDG, and also the Charity Commission.
1. See Caritas, issue 35, October 2010, page 26
Author: Katherine Smithson
Katherine Smithson is policy officer at Charity Finance Director’s Group and joined the CFDG team in April 2010, following two policy internships within the sector and an interim position as volunteer manager for the charity Body & Soul.
She has also in the past worked for Warwickshire Probation Service and the NHS.
Katharine is currently working part-time towards a master’s in public policy from King’s College London, which she is due to complete later this year.
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