The UK Bribery Act 2010 places requirements on all companies to devise adequate procedures to counter bribery and corruption within their business dealings.
The Bribery Bill 2010 came into force on the 1st July 2011. Oil Brokerage Ltd has created this Bribery and Corruption Policy in order to protect itself and to prevent employees and associated individuals from engaging in bribery.
The corporate offence in Section 7 of the Act states that the offence will be committed if there is a failure of a “relevant commercial organisation” to prevent bribery being committed by its employees, agents or subsidiaries. This is a “strict liability” offence, meaning that there is no need to demonstrate intent to benefit from any bribe, or negligence in preventing it from occurring.
Individuals who are found guilty of these offences could face unlimited fines and up to ten years imprisonment. Those firms found guilty of the corporate offence could face penalties that not only include unlimited fines but also confiscation orders, compensation and disqualification orders. The automatic debarring from public contract tenders is arguably the most severe penalty for corporate entities. The damage to a firm’s reputation, if it is found guilty (or even just suspected) of bribery, may have even more severe consequences. Negative press coverage may lead to loss of customers and contracts and a consequent fall in market capitalisation.
The FCA requires Firms to establish and maintain effective systems and controls to mitigate financial crime risk which includes bribery and corruption. The FCA’s financial crime rules can be found in SYSC 3.2.6R and SYSC 6.1.1R.
FCA Rules and Principles
The FCA do not enforce the Bribery Act but corrupt conduct in FSMA authorised Firms affects at least two of FCA’s statutory objectives:
- Reducing the extent to which it is possible for a financial business to be used for a purpose connected with financial crime – as bribery and corruption are financial crimes
- Maintaining market confidence – because bribery and corruption distorts competition
The FCA therefore seeks to ensure that regulated Firms adequately address the risk that they, or anyone acting on their behalf, act corruptly. The following rules and principles have particular relevance to bribery and corruption issues.
- Principle 1: A Firm must conduct its business with integrity
- Principle 2: A Firm must conduct its business with due skill, care and diligence
- Principle 3: A Firm must take reasonable care to organise and control its affairs responsibly and effectively with adequate risk management systems
- SYSC 6.1.1R: A Firm must establish, implement and maintain adequate policies and procedures sufficient to ensure compliance of the Firm including its managers, employees and appointed representatives (or where applicable, tied agents) with its obligations under the regulatory system and for countering the risk that the Firm might be used to further financial crime.
In addition other rules are also important for example SYSC 5.1.1R requires Firms to employ people with appropriate skills and knowledge for their responsibilities, SYSC 9.1.1R requires records to be kept to monitor compliance with these rules and Principle 11 requires disclosures to the FCA that they would reasonably expect. This is likely to include staff or others acting on the Firm’s behalf, engaging in bribery and corruption.
Top Level Commitment
The Board of Directors maintains a zero tolerance policy on bribery and corruption.
Oil Brokerage Ltd is ultimately responsible for ensuring that any parties that it does business with are and remain fit and proper. It is therefore crucial that the Firm carries out due diligence on all third parties (including those with existing relationships) and knows sufficient about the firm or individual that it is about to conduct business with. While this is an essential part of any business relationship, its importance is paramount in the context of Bribery and Corruption. The Firm’s due diligence should not only extend to a Firm’s clients and customers, but also to its partners, agents, intermediaries and right along the supply chain.
Oil Brokerage Ltd will assess the risks of all areas of the business to identify where bribery could be an issue, for example, in procurement or sales, where official permissions or consents were required.
In particular, the following areas will be reviewed:
- analyse which specific areas pose the greatest risks from bribery and design and implement its controls accordingly;
- be open to receiving communications from relevant interested parties with respect to those controls;
- identify and include bribery risks in their departmental risk assessment;
- show the level of risk considered in terms of both the likelihood of its occurrence and its potential impact on the business;
- location, bribery risks will vary from country to country in their nature and severity. It is important to be aware of relevant local law and any procedures for reporting bribery in those countries;
- projects, particular projects may raise their own risks associated with the nature of the bidding and contracting process as well as the partners and customers involved;
- business partners, due diligence is critical when establishing new business relationships to ascertain whether that new partner has been associated with corruption or bribery offences. Politically exposed persons (PEPs) pose a particular risk especially when they are associated with prominent public office;
- describe how that risk will be managed;
The offences are;
- A person (public official, private individual or corporate entity) offers or promises a financial or other advantage to another person
- A person (public official, private individual or corporate entity) requests or receives a bribe to obtain or retain business
- Bribery of a Foreign official
- A Corporate entity fails to prevent bribery by a person acting on its behalf.
The Bribery and Corruption Act
The Act applies to all persons (including both individuals and corporations) and a person will be guilty of an offence if they;
- Bribe another person
- Are in receipt of a bribe from another person
These offences will apply whether the maker or recipient of the bribe is engaged in functions of either a public or a private nature and regardless of whether the bribery is direct or indirect (i.e. through an agent or other intermediary). The Act applies either if any part of the offence occurs in the UK, or even if all activities take place abroad provided the person is a British national (includes all UK registered companies as well as individuals) or is ordinarily resident in the UK. The Act has also created a specific offence around bribing foreign public officials in which the definition of that public official is very widely defined. This will be of particular relevance when Oil Brokerage Ltd operates in multiple jurisdictions around the world where “facilitation payments” are common.
Aims and Objectives
This policy applies to all employees of Oil Brokerage Ltd, associated entities and individuals acting on Oil Brokerage Ltd’s behalf. The objective is to ensure that the Firm its employees or associates do not make or accept any bribes.
Oil Brokerage Ltd has a zero tolerance policy and all forms of bribery are prohibited, whether they take place directly or through a third party. Employees are also prohibited from arranging or accepting bribes intended for their personal benefit.
A facilitation payment (or “grease” payment) is a small unofficial payment made as a way of ensuring that a firm or individual performs their duty either more promptly or at all.
This policy strictly prohibits all forms of Facilitation Payments made by Oil Brokerage Ltd or a third party on behalf of Oil Brokerage Ltd.
Third Party Suppliers or Agents
Any arrangements with third party suppliers, (including Introducing Broker agreements) requires prior approval from a Director or the Compliance Officer. All third party suppliers, affiliates or agents of Oil Brokerage Ltd are covered by this Policy and are required to comply with our zero tolerance stance on paying or accepting bribes.
Any business that Oil Brokerage Ltd wishes to bid for must be conducted in a legitimate and transparent fashion.
Authorised payments involved in relationships with third parties will include fees or commission and invoices supplied for work undertaken, as these fall under the category of normal business practice.
Oil Brokerage Ltd is required to carry out appropriate due diligence on any third party supplier, affiliate or agent that is to enter into a contractual arrangement with it. Due diligence must be enhanced for those third parties who are based overseas, with further enhanced due diligence required for those persons or entities that are based in jurisdictions that have higher risks of bribery or corruption occurring within it.
The Firm must ensure that due diligence checks of associated third parties are properly documented.
Third party relationships should be regularly monitored using a risk based approach to ensure that there is a solid business case for the relationship to continue and to ensure that changes to the nature and risk profile of the relationship are appropriately identified and signed off. The frequency and depth of the reviews should match the risk profile of the third party relationship.
Gifts, Hospitality and Expenses
A gift can include money, goods, services or loans given by one party to another without any expectation of return. The role of a Gift in a business process deals with marketing and enhancing relationships. Commonly they incorporate a logo or message on a promotional item, such as a calendar or pen.
Hospitality includes entertaining, meals, tickets to sporting events and in all instances the host (a representative from Oil Brokerage Ltd) is required to be present. If an employee of Oil Brokerage Ltd is attending an event a representative from the host company must be present otherwise it will be regarded as a gift.
Expenses are the provision or reimbursement by Oil Brokerage Ltd of travel and other related expenses that may be incurred by a prospective client, customer or employee.
These three areas are typically open to abuse and present risks associated to bribery. Oil Brokerage Ltd therefore prohibits the giving or receipt of gifts, hospitality or expenses that could influence or be perceived to be capable of influencing a contractual transaction. This policy is applicable both to the giving of gifts, providing hospitality or payment of expenses and also to the receipt of gifts or hospitality or having expenses paid.
Any third party supplier, affiliate or agent of Oil Brokerage Ltd is covered by this Policy and is required to comply with our zero tolerance stance on paying or accepting bribes.
The Financial Controller will maintain a register of all gifts, hospitality and entertainment and expenses that relate to business transactions regardless of the sums involved.
Oil Brokerage Ltd have effective systems and controls in place to ensure payments to third parties are in line with what is both expected and approved.
Client Entertainment and Benefits
As all client entertainment and client benefits (such as payment of client’s Bloomberg, internet service provider etc) are covered by the act, employees must seek prior approval from either the Finance Director or the Compliance Officer. These are normally permissible provided they are reasonable and proportionate.
The Financial Controller will maintain a register of client entertainment and client benefits regardless of the sums involved.
Effective internal monitoring will be carried out by both Compliance and the Finance Departments to ensure that the Firm deters and detects any breaches of the law. The Finance Department will review all financial controls to ensure funds were properly accounted for.
Management Information will be used as part of this internal monitoring to ensure that the Firm’s senior management are able to effectively access the risk of bribery and corruption.
The Compliance Department is required to receive appropriate ongoing training in Bribery and Corruption.
All employees will receive a copy of this policy, a Key Facts Document and a PowerPoint presentation relating to this topic.
Records of all staff training will be maintained by Compliance.
If an employee of Oil Brokerage Ltd or a third party associate believes, or has reason to believe, that another employee or third party has been involved in the issuing or accepting of a bribe, they must inform the Compliance Officer or MLRO immediately. Any details passed to the Compliance Officer or MLRO will be kept strictly confidential and every effort will be taken to ensure that they are safeguarded under the Firm’s Whistleblowing protocol.
If you have any questions relating to this policy then please contact Oil Brokerage Ltd’s Compliance Department.