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Bribery laws – nearly 50% of companies do not vet suppliers’ compliance

New research has revealed that nearly 50% of companies failed to vet suppliers’ compliance with the Bribery Act, which came into force in July 2011.

The research by Ernst and Young found that 48% of “mid-market” firms surveyed (those with a turnover of between £5 million and £50 million), did not check if suppliers were compliant with the law.

60% of those surveyed said they did have processes in place to assess whether suppliers’ business practices complied with the new rules, however 16% said they would do nothing if they uncovered wrong doing.

According to the survey, only 40% of larger firms, with turnovers above £50 million, would remove suppliers from their supply chain if they uncovered evidence of non-compliance.

The Bribery Act created a new offence of failing to prevent bribery by people working on or on behalf of a business, unless the company can show that it has “adequate procedures” in place to prevent bribery. Companies who do not carry out due diligence to ensure that their suppliers are fully compliant under UK law can thus be found guilty under the offence.

Ernst and Young also point out that many directors are still unaware that they can be held personally accountable for breaches of the law. This means that directors and senior managers can risk significant sentences or fines for non-compliance of the Bribery Act, even if the breach is caused by a third party.