HFW can draft and review your anti-bribery and corruption policies and agency agreements to ensure that you are adequately managing your anti-bribery and corruption risks. Agreement – the agency agreement can be drafted to manage the risk of breaches of any relevant legislation.If the business is in a higher risk jurisdiction, then the KYC undertaken should reflect this. In addition, country risk should also be considered. In addition, your due diligence should be more detailed when your agent is dealing with governments, government agencies, public officials and public international agencies. KYC – the same level of thorough due diligence that you would apply to a counterparty should apply to any agent.Follow up on any “red flags” and ask for detailed invoices and full reports of activities from agents. Further you should not ignore any behaviour that causes you any concern about any agent’s actions. Understand your agent’s involvement – you should ensure that the agent is not giving/receiving bribes on your behalf or on behalf of others.If it remains necessary or desirable to employ an agent, there are several steps you can take to manage the risks identified: Even if it is an agent, and not the trading principal, that is responsible for giving or receiving a bribe, the trading principal can still be held responsible.Īgents are a key part of international trade and it may not be practical to exclude their use. It is a defence to any action that the company has adequate procedures in place to avert bribery.Īny potential involvement in corrupt practices can have serious consequences, especially for companies with subsidiaries or headquarters in England and Wales. The consequences for breaching this legislation include up to ten years’ imprisonment for individuals or an unlimited fine for corporate entities. There is no need to show motive or intent on the part of the company. The consequences of being embroiled in a bribery or anti-corruption scandal are so grave that some trading principals have adopted a “zero tolerance” attitude towards bribery and corruption and have elected to stop using agents altogether, employing only specialist service providers in specific jurisdictions.Ī company commits an offence under the UK Bribery Act 2010 if a person “associated with” it (including an agent acting on behalf of that company) bribes another person intending to obtain or retain a business advantage for the company. At the other end of the spectrum is a very broad scope where the agent is granted a wide discretion to act as it sees fit to bind the trading principal. At one end of the spectrum is a very narrow scope with a tightly defined role which does not allow the agent to act without the input of the trading principal. The range of services an agent may perform for a trading principal can vary widely. It is often difficult to complete transactions or projects in these jurisdictions without engaging local agents. Trading principals often rely on agents to perform a number of local services in jurisdictions which are far from the trading principal’s centre of operations or which require local actors on the ground to ensure effective performance. Allegations of bribery and anti-corruption can lead to the trading principal facing legal action, reputational damage and could impact upon bank financing arrangements (which will often include anti-bribery and corruption representations and warranties). The recently reported stories concerning alleged bribes to secure oil cargoes and purported payments made to employees of a Brazilian state controlled company by agents of well-known commodities traders have led to a number of trading principals tightening their policy towards agents. This could lead to an agent breaching anti-bribery and corruption laws that are applicable to the trading principal without the trading principal’s knowledge. We look at what trading principals can do to manage this risk.Īgents are third parties that are engaged to execute business and to liaise with and maintain relationships with government authorities, counterparties and individuals on various aspects of a project or a particular transaction.Īs a trading principal, it is difficult to be fully aware of the actions an agent is performing in a distant jurisdiction, particularly if the jurisdiction is better known to the agent than the trading principal.
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