Effective July 1, 2011, all U.K. businesses will be required to comply with the new Bribery Act laws. Those that fail to establish and document anti-bribery and corruption procedures could be subject to prosecution under the new law. 

A company will be liable under the act not only if it commits bribery itself, but also if persons associated with it commit bribery. The act defines “associated persons” as those performing services on behalf of the commercial organization, such as employees and agents.  Other persons may also qualify.

The law covers not only U.K. organizations, U.K. nationals, and U.K. residents operating in the United Kingdom and abroad, but also overseas entities “carrying on business” in the United Kingdom. Any corporate entity or partnership could be found guilty violating the law if it does business in the United Kingdom, even if the act of bribery itself was committed outside the country.

Directors may be subject to a significant fine and a sentence of up to 10 years in prison if they breach the act.  They may also be the subject of disqualification proceedings.

A standard directors’ and officers’ (D&O) liability policy will provide protection for directors and senior managers from the costs of defending bribery prosecutions up until the point that they are found guilty, according to Marsh U.K.

Insurers have indicated that when assessing a company for underwriting purposes, they will review its anti-bribery and corruption procedures.  The robustness of these procedures may have an impact on insurance coverage and premium terms.

The companies that already have procedures in place may wish to stress test them.