BIS Apprenticeship Pay Survey Case study

SMEs, Exports and The Bribery Act

Small and medium sized enterprises (SMEs) play a vital role in the UK economy accounting for more than half of employment and almost half of turnover in the UK private sector.

To boost the economy the Government are pursuing an export-led recovery, key to which is stimulating those SMEs already exporting to export more and those whom are not exporting (but have the potential) to start. It is estimated that around 20% of UK SMEs are exporting compared to the EU average of 25%. As UK SME exports are estimated at £100 billion a year increasing the percentage of UK SMEs exporting up to the EU average level would have a tremendous benefit to the overall UK economy.

Understanding the Bribery Act

Any exporting business needs to understand the legal framework it is operating in. A significant aspect of this is the international drive to address bribery. The Government is committed to ensuring that the UK makes a significant contribution to tackling corruption and the creation of a level playing field in international business.

The Bribery Act 2010 modernized the domestic and foreign offences of bribery and has extra-territorial reach. British citizens and companies trading in the UK can be prosecuted for offences committed under the Bribery Act anywhere in the world. Described as the toughest anti-corruption legislation in the world, concerns have been raised that the Act may harm British industry’s competitiveness in the global market with SMEs being the most harshly affected. As a result of these concerns the Department for Business, Innovation & Skills (BIS) and Ministry of Justice (MoJ) are working with industry to help small businesses fully understand the appropriate application of the Bribery Act 2010 so as not to spend unnecessary time and money on disproportionate compliance measures. To assess this work BIS and MoJ needed to develop a good understanding of:

  • SMEs’ existing level of knowledge and understanding of the Bribery Act;
  • Bribery prevention procedures currently have in place; and
  • Resources devoted to prevention activities.

IFF’s Findings

To help develop this understanding IFF Research was commissioned to conduct a telephone survey of 500 UK SMEs that were either already exporting or considering whether to export. Encouragingly the research showed a good level of awareness and understanding of the Act and its global reach and that many businesses had assessed the bribery risks they face and taken steps to mitigate them:

  • Two-thirds (66%) of the SMEs surveyed had either heard of the Bribery Act 2010 or were aware of its corporate liability for failure to prevent bribery;
  • Around eight in ten SMEs (81%) that had heard of the Bribery Act were also aware that the Act has extra-territorial reach (i.e. it encompasses bribery offences committed overseas);
  • Of all SMEs that were aware of the Bribery Act, almost three-quarters (72%) perceived that their company had sufficient knowledge and understanding to be able to implement adequate anti-bribery procedures;
  • A third of SMEs (33%) had assessed the risk of being asked for bribes, leaving just under two-thirds that had not assessed the risk of being asked (59%);
  • Around four in ten SMEs (42%) said that they had put bribery prevention procedures in place; defined as anything that they thought helped prevent bribery;
  • The majority of SMEs aware of the Bribery Act (89%) felt that the Act had had no impact at all on their ability or plans to export. When prompted as to whether they had any other concerns or problems related to the Bribery Act, nine in ten (90%) had no specific concerns or problems.

Our research shows that SMEs are generally taking a proportionate, pragmatic and low-cost approach to winning business without bribery. Our report of the key findings from the research can be found here:

Insight into awareness and impact of the Bribery Act 2010