OC Bribery Act Guidance

Overview

New anti-bribery legislation – the Bribery Act 2010 (‘the 2010 Act’) – comes into effect in the UK from 1 July 2011. This is part of a world-wide drive by the World Trade Organisation (‘WTO’) and Organisation for Economic Co-operation and Development (‘OECD’) to eliminate bribery because of its negative impact on fair competition, economic and social development.

The new law is intended only to cover acts of bribery – which are illegal. (It does not cover matters such as fraud, theft, money laundering, offences under the Companies Act, or competition law.) The Optical Confederation supports the anti-bribery measures set out in the 2010 Act and the promotion of good corporate governance. As the Ministry of Justice has stated these measures are directed at making life difficult for the mavericks responsible for corruption; and not designed to be burdensome on the vast majority of decent, law-abiding firms.

However there is little scope for bribery in the optical sector and, indeed, little or no evidence of any ever having taken place. Members will also be aware that there are already a number of safeguards already in place to detect and discourage improper conduct of this nature.

Nevertheless there is a clear expectation in the material produced by the Ministry of Justice that commercial organisations will have assessed the risk for bribery and have developed, following that risk assessment, a proportionate set of policies to address and mitigate the risk, if any.

It is against this background that this guidance has been produced to clarify matters for Optical Confederation members, and to set out what the Optical Confederation believes to be good corporate governance in retail practice, referrals, domiciliary services, manufacturing and import/export in the optical sector, under the 2010 Act.

What is Bribery?

This is defined as seeking or intending to seek to induce any person

• who is in a position of trust
• who is expected to act impartially
• and in good faith

to act in a way that they would have not otherwise have done in that position without an inducement – and vice versa (i.e. it is also an offence for such a person to seek such an inducement).

Employers also have a duty under the 2010 Act to ensure that in so far as is reasonable that their employees do not commit acts of bribery.

Where a bribe is paid for the benefit of a commercial organisation i.e. an organisation carrying on business such as a partnership or incorporated body – whether by an employee, agent or representative, the organisation itself might be guilty of a criminal offence unless ‘adequate procedures’ have been put into place to prevent bribery (please refer to ‘minimising the risks of bribery’ below).

Optical businesses and professionals should be aware of the broad requirements under the 2010 Act and what would be considered an offence under the Act. An outline of the 2010 Act is produced in Annex A.

What Bribery is not

As the Ministry of Justice has stated the 2010 Act is not intended to prohibit normal, honest business practices such as

• seeking and receiving discounts and deals
• marketing and other support for specific product lines
• small marketing “memo” items such as mouse mats, key rings, pens, memory sticks, note pads, desk furniture, umbrellas
• small conference “give-aways” such as goodie bags, refreshments at events, drinks receptions
• sponsorship of conferences, events and training sessions (provided they are not held in unnecessarily exotic locations with disproportionate free time and entertainment)
• taking clients to events like Wimbledon or the Grand Prix
• normal business hospitality g. Christmas gift of bottle of whisky, occasional lunch, dinner or lecture when these are appropriate, reasonable and proportionate for the particular circumstances

Sanctions under the Act

Individuals, including company directors, found guilty of offences under the Act are liable to a sentence of up to 10 years imprisonment or a unlimited fine or both.

Corporate Hospitality

The Ministry of Justice has stated that ‘bona fide hospitality and promotional, or other business expenditure which seeks to improve the image of a commercial organisation, better to present products and services, or establish cordial relations, is recognised as an established and important part of doing business and it is not the intention of the Act to criminalise such

behaviour’.¹ The Ministry of Justice is not therefore seeking to prohibit reasonable and proportionate hospitality, or promotional or other similar business expenditure intended for these purposes.

Hospitality and promotional or other similar business expenditure that goes beyond what is reasonable may be captured. Case law has not yet been established in this area as the law is new and prosecuting authorities will have to use their discretion on a case by case basis. They will consider for example the scale of the offence, the role and seniority of the recipient and the context within which the hospitality is provided.

However the more the lavish hospitality, the more this could be seen as having potential to influence or obtain business advantage, although this would also depend on norms for a particular industry. Lavish hospitality might be considered to be a disproportionately large gift (e.g. a car, a yacht, a five-star holiday, expensive jewellery, a shopping trip) for someone from whom a deal or business benefit is obtained or expected would be deemed to be bribery.

(It would be different of course if this were a gift, say on retirement, to a trusted trading partner after many years of business and when no further business benefit could be obtained – as long as it were not promised or offered in advance in return for business favours or could be construed as such.)

¹ Ministry of Justice (2011) The Bribery Act Section 9 Guidance www.justice.gov.uk/guidance/bribery.htm

Dealing with public officials

Particular care should be exercised in dealing with public officials. There is also a specific offence in the 2010 Act relating to bribery of foreign officials. In the United States for example any gifts or hospitality to public officials is banned. In the UK public officials are governed by more flexible codes of conduct but again reasonableness and proportionality are key.

For instance

• it is perfectly reasonable to offer a public official a meal or refreshment during a visit but there may be a world of difference between, say, a good local restaurant and a Michelin starred restaurant some distance away
• equally in some circumstances it might be helpful for an official or officials to visit, say, a manufacturing plant, distribution centre or retail outlet. In this case this should be at the nearest location ideally within the UK unless there are overriding reasons for, say, an overseas trip. In the world of modern communications it should rarely be necessary to fly officials around the globe.

Retail Practice

The 2010 Act is not intended to prevent

• the usual business practices of negotiating discounts and other business-to-business incentives
• a business opting to provide a limited range of products (provided they meet the

majority of patients’ needs and , in exceptional cases, practitioners can supply outside this range to meet a patient’s needs).

Moreover, in the case of optical retail practice, the General Optical Council’s Codes of Conduct for Corporate and Individual Registrants, the College of Optometrists’ Code of Ethics and Guidelines for Professional Conduct² and the ABDO’s Advice and Guidelines³ as well as NHS rules include duties that

• optometrists and dispensing opticians must make the care of their patient their first and continuing concern
• optical practices ensure that optometrists and dispensing opticians are free to exercise their professional judgement in the best interests of their patients.

² College of Optometrists (2011) www.college-optometrists.org/en/professional- standards/Ethics_Guidelines/index.cfm

³ABDO Advice and Guidelines (2008) www.abdo.org.uk/adviceandguidelines.php

The Optical Confederation believes that in the majority of circumstances by abiding by these Codes, principles and rules, optical retailers, community optical practices and registered practitioners will simultaneously be complying with the principles of the 2010 Act.

Incentives to practitioners by manufacturers or suppliers to influence the performance of a service or prescription of a particular appliance or product however would not comply with these guidelines and might also fall foul of the 2010 Act.

It is particularly important therefore that practitioners pay particular attention to ensuring that they can meet all patients’ reasonable and appropriate needs and do not allow financial considerations to distort any clinical decisions they make with patients in individual cases.

More specifically, practitioners should not accept an inducement to recommend a particular product or service, or to prescribe a specific appliance.

Referrals

Inducements for clinical referrals are already prohibited under the Code of Practice for the promotion of NHS-funded services⁴ and would cast doubt on whether a practitioner or business were acting exclusively in the patient’s best interest. The same applies in the case of private referrals. The Optical Confederation would recommend that in all cases of referring a patient, a record should be kept of the individual grounds as to why the particular referral was made to the specific service provider, and why the patient would benefit from that referral.

Domiciliary Services

Inducements to care home staff are already prohibited under GOS regulations⁵ and under the Code of Practice for Domiciliary Eyecare⁶. The Optical Confederation believes that, in the majority of circumstances, by abiding the code, regulations and guidelines for Retail Practice above, a domiciliary provider would also generally be complying with the principles of the 2010 Act.

⁴ Code of Practice for the promotion of NHS-funded services, Department of Health, 2008

⁵ Under Schedule 2 of General Ophthalmic Services Contracts Regulations 2008

⁶ Code of Practice for Domiciliary Eyecare, ABDO, AOP, College of Optometrists, FODO, 2006

Manufacturing and Supply

Similar requirements will apply in respect of optical manufacturers and distributors, and these members should note the points above which relate to Retail Practice.

Multinational Companies

 It should be noted that all commercial organisations that operate in the UK, even if headquartered overseas, come within UK jurisdiction (for this purpose) and can be prosecuted in the UK under the 2010 Act in respect of any of their activities whether within the UK or overseas.

A number of multinational companies may have long-standing procedures in place which were designed to meet the requirements of the US Foreign and Corrupt Practices Act (FCPA) which is focussed on bribery of government officials. We would strongly encourage companies to revisit these programs as the provisions of the 2010 Act are much broader and also cover commercial bribery.

Import and Export

Commercial organisations already carry out due diligence checks on overseas providers and sub-contractors. The 2010 Act adds another dimension to this by requiring the same level of

care and due diligence in dealing with commercial partners and transfers of value as they would with government bodies and public officials.

The same arguments apply in respect of product importers and exporters. Indeed other countries have also moved to tighten anti-bribery and corruption legislation, although we expect that compliance with the 2010 Act should be sufficient for Optical Confederation members that operate overseas.

As a matter of policy, manufacturers and product importers should only do business with properly registered businesses operating within the laws of their own countries. We would advise members to consider this a core element of due diligence when choosing overseas partners and to take reasonable steps to ensure trading partners are compliant.

In cases of doubt, Optical Confederation members should seek legal advice when drawing up contracts with overseas suppliers.

Associated Persons

As noted above, a commercial organisation can be liable under section 7 of the 2010 Act if a person (or agent) associated with it bribes another person to obtain advantage for the organisation. However, the Ministry of Justice has stated that the commercial organisation will have a full defence if it can demonstrate that, “despite a particular case of bribery it nevertheless had adequate procedures in place to prevent persons associated with it from bribing.”

Specific paragraphs dealing with the potential exposure of parent companies and joint ventures for the activities of agents, subsidiaries or a person acting for another member of a joint venture are contained in the guidance produced by the Ministry of Justice.

The Ministry of Justice has outlined that in such cases, without proof of the specific intention required for a bribery offence, liability will not automatically accrue to the commercial organisation owing to simple corporate ownership or normal corporate financial dealings, investments and relationships.¹

Each case will depend on the relevant facts including matters such as the level of control of the commercial organisation over the associated person and the degree of risk requiring mitigation. Commercial organisations should seek to minimise and address this risk, as above, through risk- based due diligence and the use of anti-bribery terms and conditions.

What employers should do to minimise the risks of bribery?

Annex B sets out the six principles for bribery prevention contained in the guidance published by the Ministry of Justice. Members should be informed by these principles when assessing the risk for bribery within their own organisations and taking steps to address the risk through policies and procedures to prevent bribery being committed on their behalf.

In brief, the six principles can be summarised as follows.

For optical practices and practitioners

Ensuring that professional staff and management are aware of their professional duties and any risk of bribery

As above ensuring that optometrists and dispensing opticians are free to exercise their professional judgement in the best interests of their patients

For optical supplier companies

Review corporate practices and commercial activities.

Where appropriate, review contracts with overseas suppliers.

The Ministry of Justice has particularly advised that commercial organisations should review their policies on hospitality and promotional expenditure to ensure they are seen to be acting both competitively and fairly.¹

Members are advised to retain a documented account of any steps taken to review, and where necessary minimise, their organisation’s risk of bribery.

For further information, please refer to Ministry of Justice ‘Best Practice Guidance for Commercial Organisations’ in Annex B.

Members should note that this guidance cannot cover every eventuality, and a case would be considered in the light of the relevant facts and circumstances.

What to do if you suspect bribery in your company or organisation?

If you or a member of staff suspects a problem within your company or organisation you should alert your (internal) senior management, who will be in a position to investigate the matter.

Care is required before making any disclosures to the authorities. We would strongly recommend that management take legal advice on these matters as it is also possible to fall foul of the laws on defamation, breach of confidentiality, data protection or tipping off.

It is also important to note that if you come across activity in your firm that might be considered to be suspicious, management should seek to stop the activity immediately and to investigate the matter thoroughly.

We would recommend keeping a record the investigation, conclusion and any actions taken in every case.

Further Information

The detail of the legislation is set out at Annex A and the summary of the Ministry of Justice’s ‘Best Practice Guidance for Commercial Organisations’ is at Annex B.

Status of this Guidance

This guidance is intended as guidance only and does not claim to be a comprehensive statement of the law. We will keep this guidance updated as case law develops.

If in any doubt, an optical business, contractor or practitioner should contact their representative body and take further independent legal advice.

This guidance was published in June 2011 and will be reviewed from time to time as case law develops.

Optical Confederation June 2011