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Are you involved in any new innovations, product developments or pioneering research? If the answer is yes then we want to hear about it. In the fast-paced working garment industry we pride ourselves on providing our members with the latest information to keep their business ahead of the game. To participate in a feature download our features list here or email us at media@director-e.com

The Bribery Act and the Working Garment Industry
Feature: 30/8/2011

By Aziz Rahman, founder of serious fraud and business crime solicitors, Rahman Ravelli Solicitors

Globalisation means that now more than ever UK companies in the garment industry can carry out business in far-flung places. Sourcing of materials worldwide, use of international labour and the targeting of distant nations as your potential buyers is ever increasing.

Yet the new Bribery Act is placing new restrictions on companies that have any UK connection, regardless of where in the world they do business. The Act came into effect last month (July 2011), making it an offence for companies to be involved in bribery anywhere in the world or to have failed to prevent such activity by an employee or any other third party connected with that company.

In short, anyone working in such a global industry as garment manufacture and supply has to be extra vigilant regarding the conduct of staff members, agents, contractors or even sub-contractors. A company can find itself facing criminal charges if anyone it has a “close connection’’ with is found to be involved in bribery - even if the company was unaware of what was happening.

With the punishments being unlimited fines and up to ten years in prison, the Bribery Act is far more than a slap on the wrist for bad behaviour. It states that companies should have “adequate procedures’’ in place to prevent bribery. And it seems that small to medium size enterprises (SME’s) – so common in the garment industry - may face the biggest struggle. They now have to use their limited resources to ensure they have adequate procedures in place.

Online training, seminars and specialist business solicitors are all available. So what should clothing manufacturers, retailers and distributors do to make sure their dealings are all above board? There must be board level involvement to make sure there is a clear assignment of responsibility and steps taken to identify all possible bribery risks. This must be regularly monitored to ensure it is working and able to respond to any new risks that may arise. Everyone in the company must be fully aware of each other’s duties and activities to ensure compliance with the Act.

Only in this way can a company make sure its procedures are adequate. If investigations uncover that a senior figure within a company has consented to bribery, or turned a blind eye to it, they can be prosecuted personally. For no other reason than this, therefore, it is essential board members are engaged in the process of complying with the Act.

They must examine the company’s activities outside of its own four walls. Is it aware what its associates working “in the field’’ or abroad are doing? Are prospective customers or trading partners being vetted thoroughly for their own vulnerability to bribery? Are staff bonus targets being set too high, thus encouraging bribery as a short cut to unrealistic success?

The Act states that a company is guilty of an offence if someone acting for it offers or gives a financial or other advantage to persuade someone to perform an activity improperly or to reward them if the improper activity has already been carried out.

A person can be guilty of an offence if they request, agree to receive or accept such an advantage. The Act also contains a specific offence of bribing a foreign official to obtain or retain an advantage in business. This Act is far more robust than the fragmented law on bribery that used to exist. Previously many held the view that it wasn’t important to know all the activities of a third party acting on your behalf in a far-flung land– now it is vital to know if you are to avoid prosecution.

Risk will be far higher in some countries – most notably developing nations – than others. Sales and marketing, procurement, exports, customs and the issuing of permits and licences for businesses are all areas where bribery has thrived in various nations and business sectors. And the scope for bribery is likely to increase with the size of the deals being brokered. But the Act now aims to reduce that scope. And those in the worldwide garment industry must make sure they do not fall foul of it.

Author: Catherine Christie
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