Company and commercial: Anti-bribery due diligence; Transparency International draft guidance

CoCo: Transparency International is consulting on good practice guidance for anti-bribery due diligence in mergers, acquisitions and investments.

Summary. Transparency International (TI) is consulting on good practice guidance for anti-bribery due diligence in mergers, acquisitions and investments (the guidance).

Background. The Bribery Act 2010 (2010 Act) came into force on 1 July 2011.  TI is a non-governmental organisation aimed at reducing international and national bribery and corruption.

Facts. The guidance is intended to provide a practical tool for companies wishing to undertake anti-bribery due diligence in the course of transactions and reflects the approach for anti-bribery programmes set out in TI’s Business Principles for Countering Bribery.

The guidance notes that, for the first time in the UK, the proper conduct of transactional due diligence will form part of a company’s response to the 2010 Act. It is likely that effective anti-bribery due diligence during transactions will be viewed as being an “adequate procedure” to prevent bribery by associated persons; this is a defence against the non-principal offence under the 2010 Act.

While much due diligence will be driven by legal obligations, taking a best practice approach will be the best way to avoid both legal liabilities and the potential financial and reputational damage that may result from investing in or buying a company associated with bribery. In addition, anti-bribery due diligence is most effective when the buyer has in place an anti-bribery programme.

Good practice principles for anti-bribery due diligence include the following:

• It should be conducted for all but the smallest investments.
• It should be conducted with sufficient depth and resources to ensure that it is undertaken effectively.
• It should be conducted sufficiently early in the due diligence process.
• The partners or board should provide oversight to the due diligence reviews.
• Bribery detected through due diligence should be reported to the authorities.
• Information gained through due diligence should be passed on efficiently and effectively to the company’s management once the investment has been made.

The guidance also includes a checklist of indicators as an aid to the anti-bribery due diligence process. It asks respondents to consider whether it provides practical help and guidance for anti-bribery due diligence, whether additional information should be provided, and also welcomes details of any relevant case studies. The final text of the guidance will be published in October 2011.

Source: Draft Guidance Consultation, www.transparency.org.uk/publications/250-ti-uk-due-diligence-consultation/download; Business Principles for Countering Bribery, www.transparency.org/content/download/43008/687420/. Responses should be received by 15 September 2011.