i

Photo: Michael Goodine | Attribution 2.0 Generic (CC BY 2.0)

Protect your NGO against bribery

9 August 2017
Author: David Mears

David Mears, solicitor at MDY Legal, answers questions on how bribery risks and the Bribery Act can affect your organisation.

Is our funding at risk?
NGOs working in international development risk being barred under procurement rules from receiving funding from the UK government and other public sector bodies if they fall foul of the UK Bribery Act 2010.  

Why is this a risk for us?
Under the Bribery Act, a commercial organisation can be prosecuted if a person associated with it bribes another person, intending to obtain or retain business for the organisation, or obtain a business advantage for the organisation. The offence is known as failure of commercial organisations to prevent bribery.  

The relevant bribery can be carried out in the UK or overseas. The official guidance confirms that organisations with charitable or educational aims or public functions can be treated as commercial organisations for these purposes. The associated person could be an employee, agent or subsidiary, such as a company you set up to run your operations in a particular country.

Can individuals also be prosecuted? 
The legislation covers other offences including giving or accepting bribes and bribery of foreign officials. In some cases individuals within an organisation, not just the organisation itself, could be prosecuted. In the event of a conviction, penalties – and reputational damage - could be severe. Note that “facilitation payments” are regarded as bribes under UK law.
                                  
How do we stay on the right side of the law?
In relation to the offence of failure to prevent bribery, there is a defence if the organisation can show that it had in place adequate procedures designed to prevent persons associated with it from bribing. So it is really important to establish effective policies and procedures on these issues and ensure that people are fully trained in them and understand their responsibilities. 

Any particular issues for charities?
Charities have particular governance structures in which trustees, serving usually in a voluntary capacity, have strategic oversight. Trustees need to ensure their charity is taking all reasonable steps to minimise bribery risks. Inadequate oversight of the use of your charity’s funds could also put your charity’s tax exemption at risk.  

Check key commercial arrangements: your organisation’s contracts or grants with funders may well include terms which put that funding at risk if you were found to have breached anti-bribery laws. Ensure that:

  • your organisation has a zero-tolerance policy on bribery
  • the tone is set from the top
  • the message is fully reinforced through policies, procedures and training throughout the organisation.

About the author

David has over 20 years extensive  experience at Senior Legal Counsel and Partner level in the charity sector. At MDY Legal, David focuses on governance and commercial issues in the development and wider not-for-profit sectors.