Preventing bribery in the waste industry

Written by: Thomas Webb and Nick Churchward | Published:

Waste crime is high on the agenda for the waste management industry, but recent attention has been on general waste offences, which is one of the biggest problems for the sector, rather than bribery. Thomas Webb, director of fraud and white collar crime at independent UK law firm, Burges Salmon, explains why businesses need to keep the Bribery Act front of mind and have the right policies and procedures in place to deal with its requirements.

A recent EU report on corruption says that waste management is one of the sectors “most prone to corruption”.[1] This is largely because waste management systems are often operated by a myriad of different companies and organisations, and their complexity - and multiple partner involvement - leaves them potentially vulnerable to criminal manipulation. Examples of corruption in the industry range from inducing waste operatives to deliberately misclassify or understate waste, through to bribery in the procurement of public contracts.

Bribery in the waste industry is one aspect of a larger, growing problem of waste crime. According to the former chief executive of the Chartered Institution of Wastes Management (CIWM), Steve Lee, “waste crime is now a major issue in the UK, and comes at an economic and environmental cost to UK businesses, taxpayers, and local communities.”[2] Waste crime is estimated to cost the UK economy around £568 million[3] and, unsurprisingly, bribery is often used as the facilitator.

It is therefore important that waste management or recycling companies understand the key provisions of the UK's Bribery Act 2010 (the "Act"), and continue to take the critical practical steps needed to minimise the risk of offences under it.

The Act creates one of the most stringent anti-bribery legal frameworks in the world.

Strict liability regime

First, and as discussed below, it introduces a strict liability regime in respect of corporate criminal offending. That is to say, a corporate operating in the UK can be criminally liable for bribery by its employees, agents or representatives, even if the corporate is unaware of the existence of that bribery.

Second, the Act has an extra-territorial effect. It will apply to UK persons and corporates wherever they are operating in the world. In that way, UK companies and individuals "carry" the Act around with them.

Third, the penalties applicable to the offences are severe: 10 year’s imprisonment for individuals and unlimited fines for corporates.

The Act creates four offences: three "general" offences and one "corporate" offence. The general offences can be committed by an individual or by a corporate. The "corporate" offence can only be committed by commercial organisations.

Understanding the offences

Section 1 - Giving a bribe

The Act makes it an offence to bribe someone. Specifically, under Section 1 of the Act, it is an offence for a person (P) to offer, promise or give a financial or other advantage to another person (R), where that advantage is intended to induce R to perform his functions or activities improperly, or reward R for improper performance. It will also be an offence where P offers, promises or gives the advantage knowing that its very acceptance by R would be improper.

Note that a bribe need not be given, but merely offered, in order for the offence to be committed. Moreover, the offence can be committed either directly, or via the use of third party intermediaries.

Moreover, the test of "impropriety" is an objective, "reasonable person in the United Kingdom" standard. That is to say, the question of whether or not R has behaved improperly will disregard any issues such as overseas customs or practices.

To use the example referred to above, any company, director or employee who offered or provided an advantage to a waste operative in order to induce him to deliberately misclassify or understate their waste would be guilty of this offence.

Section 2 - Receiving a bribe

The Act also makes it an offence to be bribed. Specifically, under section 2, it is an offence for R to request or accept a financial or other advantage if it is intended that, as a result of receiving that advantage, he will perform his functions or activities improperly. It will also be an offence where R's request by itself would be improper.

Again, using the example above, the waste operative, as recipient, would be guilty of this offence.

Section 6 - Bribery of a foreign public official

The Act sets out a specific offence relating to bribery of public officials. Section 6 states that it is an offence to offer or provide a financial or other advantage to a foreign public official, with the intention of obtaining or retaining business or an advantage in the conduct of business.

This offence is particularly relevant to waste management companies with overseas operations.

Section 7 - The corporate offence: failure to prevent bribery

This creates the most controversial offence under the Act. Section 7 provides that an offence will be committed by a commercial organisation if a person associated with it bribes another person with the intention of obtaining or retaining business, or an advantage in the conduct of business for the organisation. It will be no defence that the commercial organisation had no knowledge or suspicion whatsoever of the bribes. However, it will be a defence for the organisation to prove that it had “adequate procedures” in place to prevent the bribery conduct.

A "commercial organisation" is broadly defined to include a UK body corporate or partnership carrying on all or part of its business in the UK. An "associated person" is very widely defined. It includes any employees, agents, sub-contractors or subsidiaries of the commercial organisation.

Accordingly, bribes given by any employee, agent or sub-contractor, whether in the UK or abroad, in order to help the business of an otherwise perfectly legitimate waste management company will result in that company being criminally liable, facing unlimited fines.

Ministry of Justice Guidance: Best practice

A starting point for anyone concerned about bribery and corruption and ensuring they have the right measures in place should be the Ministry of Justice Guidance on adequate procedures[4] and its useful “Quick Start Guide”.[5]

The Guidance highlights six key principles that should shape the procedures that businesses put into place in order to seek to protect against the commission of the corporate offence (as well as the general offences):

1. Proportionate Procedures

2. Top-level Commitment

3. Risk Assessment

4. Due Diligence

5. Communication

6. Monitoring and Review

Practical steps for the waste management sector

While many responsible waste management businesses may already have some form of anti-bribery procedures in place, it would be sensible to review and revise them now, especially in light of the fact that the Serious Fraud Office (SFO) has obtained its first convictions under the corporate offence.[6]

Some practical steps to consider include:

  • Coordination - Appoint a person (e.g. compliance officer) to be responsible for leading efforts to ensure that you have proportionate and adequate procedures in place. This person should report directly to senior management and may also be given the task of being the primary point of contact for corruption issues.
  • Engagement from the top - Draft and issue an all-staff memorandum from senior management reminding staff of the business's zero tolerance approach to corruption.
  • Risk assessment - Carry out a documented risk assessment programme in order to identify key areas of vulnerability and high risk practices (e.g. exporting waste in higher risk jurisdictions). Draft a report setting out these risks, current risk mitigation measures and what further action needs to be taken.
  • Policies and procedures - Draft and disseminate a clear, overarching bribery policy document. Such a policy may refer to existing procedures and policies. Update existing policies where necessary (e.g. any employee code of practice).
  • Due diligence - Conduct due diligence of any potential "associated persons", especially if they may be considered to pose a higher risk of corruption (e.g. agents located in higher risk jurisdictions).
  • Contract review - Review existing and proposed contractual arrangements and amend where necessary in order to specifically prohibit bribery and include bribery as a ground for termination (e.g. sub-contractor contracts).
  • Training and awareness - Develop a training and awareness programme to be delivered to relevant staff.
  • Whistleblowing and investigation - Develop whistleblowing and investigation mechanisms to ensure that corrupt activities can be safely and confidentially reported to a nominated individual who will be able to instigate an independent and comprehensive investigation.

Businesses in the waste sector must be proactive in their approach to reducing exposure to bribery. In a worst case scenario, for example where an associated person had been providing bribes, the business will need to demonstrate that it had adequate procedures in place to seek to prevent that activity, but that the individual subverted those procedures. Failure to be able to demonstrate this will result in criminal consequences for the business.

About the authors:

Thomas Webb is a director in Burges Salmon’s fraud and white collar crime team.

Nick Churchward is a partner in the firm’s energy, power and utilities team.



[1] European Commission, EU Anti-corruption Report, COM (2014) 38, page 28

[2] http://resource.co/article/ciwm-launches-waste-crime-guide-11065

[3] ESAET, Waste Crime: Tackling Britain’s Dirty Secret, page 4

[4] https://www.justice.gov.uk/downloads/legislation/bribery-act-2010-quick-start-guide.pdf

[5] https://www.justice.gov.uk/downloads/legislation/bribery-act-2010-guidance.pdf

[6] https://www.sfo.gov.uk/2016/02/19/sweett-group-plc...


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