The Bribery Act 2010 and the construction industry

Sweett Group plc (“Sweett”) was recently fined circa £2.3 million for failing to prevent its UAE subsidiary from paying a bribe in the region of £680,000.00. Sweett’s UAE subsidiary made a series of inflated payments to a consultant in order to win a project management contract for building a hotel in Abu Dhabi. Sweett was prosecuted under section 7 of the Bribery Act which allows companies to be pursued if they fail to prevent “associated persons” from committing bribery. An “associated person” is defined widely by section 8 of the Bribery Act as being anyone who performs services on behalf of the company and it is further worth noting that a lack of knowledge of an “associated person’s” bribery is no defence.

The overarching rationale behind section 7 of the Bribery Act is to impose a duty upon companies with overseas concerns to properly supervise those overseas concerns. Its application to the construction industry is, therefore, obvious, given that the construction industry is an international one where there is frequent bidding for public sector contracts.

The only defence to a prosecution brought pursuant to section 7 of the Bribery Act is that the company in question has in place “adequate procedures” to prevent its “associated persons” from undertaking bribery. In practical terms this means that companies need to have proportionate compliance practices in place i.e. should carry out due diligence on its business associates, provide anti-bribery training to employees, have a transparent gifts policy and have anti-bribery clauses in its contracts.

The importance of ensuring that such compliance practices are in place is highlighted by the fact that companies sentenced under the Bribery Act will be subject to heavy fines and may be prevented from bidding for public contracts. In addition, directors and employees who are found personally liable can be subject to a custodial sentence of up to 10 years.