These policies and procedures relating to inducements and anti-bribery (including gifts and hospitality) seek to ensure that the PiP meets its obligations to act honestly, fairly and professionally in accordance with the Bribery Act and the Alternative Investment Fund Managers Directive (“AIFMD”). In line with this policy, it is PiP duty’s to act in the best interests of its client(s), under Principles 1 (integrity), 2 (skill, care and diligence) and 6 (customers’ interests). In the case of an AIFM, the duty to act in the best interest of your client(s) also extends to the investors in the AIF. The requirements contained in the Bribery Act, AIFMD and the Financial Conduct Authority (“FCA”) inducements rules seek to achieve much the same outcome; to prevent persons/firms from gaining improper advantage over others (including Clients and competitors) by inducing someone to do something they would not otherwise do (often to the detriment of others). However, an important distinction between the requirements is that contravention of the Bribery Act could constitute a criminal offence. The procedures detailed below address the requirements of the Bribery Act, AIFMD and the FCA’s inducement rules bilaterally. Where the Anti-Bribery Policy and inducements rules are not differentiated the procedures should be treated as applying to all. Monetary or non-monetary benefits given to or received from a third party in relation to business for a client In relation to a third party (i.e. not a client) or a person acting on behalf of a third party, PiP must not pay or accept any fee or commission, or provide or receive any non-monetary benefit in relation to business carried on for a client unless (Reg 24):
- the payment of the fee or commission, or the provision of the non-monetary benefit paid or provided to or by the AIF (or a person on behalf of the AIF) does not impair compliance with PiP’s duty to act in the best interests of the client;
- the payment of the fee or commission, or the provision of the non-monetary benefit is designed to enhance the quality of the service to the client and does not impair compliance with the AIFM’s duty to act in the best interests of the AIF it manages or the investors in the AIF; and
- the existence, nature and amount of the fee (or where the amount cannot be ascertained at the time of the disclosure, the method of its calculation), commission or benefit has been clearly disclosed to the client and investors in the AIF in a manner that is comprehensive, accurate and understandable prior the provision of the relevant service.
it relates to proper fees which enable or are necessary for the provision of the relevant service, including – custody costs, settlement and exchange fees, regulatory levies or legal fees, and which, by their nature, do not give rise to conflicts with the AIFM’s duties to act honestly, fairly and in accordance with the best interests of the AIF it manages or the investors of the AIF.
PiP will meet this disclosure obligation if it:
- discloses the essential arrangements relating to the fee, commission or nonmonetary benefit paid or provided to or by the AIF (or a person on behalf of the AIF) in summary form; and
- undertakes to the client and investors in the AIF that further details will be disclosed on request and subsequently honours this undertaking within a reasonable time of the request.
Gift and benefits (including hospitality and entertainment) PiP’s policy in relation to gifts and benefits requires that:
- all gifts and benefits given to or received from any party must be reasonable in the circumstances of the relationship in question;
- the giving or receiving of any lavish gifts or benefits is strictly prohibited;
- all gifts must be given in PiP’s name, not the Employees name;
- all gifts must be given openly, not secretly;
- gifts must not be given to or accepted from, government officials or representatives or politicians or political parties, without the prior approval of the Compliance Officer; and
- it complies with local law.
PiP’s procedures in relation to gifts and benefits require that:
- any individual gift or benefit offered or received by any one person with a value under £100 (except branded marketing materials such as pens/notepads) must be notified via email to the Compliance Officer in a timely manner (usually within 5 business days) following offer or receipt;
- any individual gift or benefit offered or received by any one person with a value in excess of £100 but under £250 must be notified via email to the Compliance Officer before offer or receipt;
- any individual gift or benefit to be offered or received by any one person with a value in excess of £250 must first be approved by the Compliance Officer. In the event that the item is not approved, it must not be provided or accepted. The item will not be approved if the intended value is not reasonable in the context of the relationship in question; and
- any individual gift or benefit to be offered or received by any one person with a value which exceeds either the £100 or £250 thresholds when aggregated with any previous individual gift(s) or benefit(s) offered or received by that person within the previous 12 month period must meet the notification or preapproval requirements outlined above.
Please note that:
- the known (or reasonably ascertainable) value of, say, any event ticket and related travel will be relevant to the monetary thresholds above; and routine business lunches, dinners and social functions of a reasonable nature are permitted without the need for notification or prior approval. The Compliance Officer will maintain records of all gifts and benefits reported and approved and also proposed gifts and benefits not approved. If an Employee has any query in relation to gifts and benefits, such as what PiP considers to be “reasonable” and “lavish” etc, they should consult the Compliance Officer. If ever in any doubt, pre-approval of a gift or benefit should be sought.
- Disclosure of gifts and benefits The requirement to disclose to clients permissible fees, commissions, and non monetary benefits does not arise in relation to small gifts and minor hospitality received by an individual in their personal capacity. Generally, PiP will seek to ensure that only small gifts and minor hospitality are given and received. Gifts and benefits above this threshold given or received in relation to business of a client must be disclosed to the client in accordance with the disclosure of Inducements rule outlined above. Record keeping All records created further to these policies and procedures relating to inducements, gifts and benefits must be retained for 5 years from their creation. All information disclosed to a client must be retained for 5 years from the date on which it was disclosed.
- Employees must ensure that all expenses claims relating to hospitality, gifts or expenses incurred to third parties are submitted in accordance with the PiP’s expenses policy and specifically record the reason for the expenditure. • All accounts, invoices and other records relating to the dealings with third parties should be maintained. No accounts must be kept “off-book” to facilitate or conceal improper payments.
Bribery Act statutory offences:
Gifts, Benefits, Inducements and Anti-Bribery Policy Offences of bribing another person “The active offence” (Section 1) It is an offence to offer, promise or give a financial or other advantage (“bribe”) to another person where it is intended to induce the improper performance of a relevant function or activity or to reward for such an improper performance. Maximum penalty: 10 years and or unlimited fine Offences relating to being bribed “The passive offence” (Section 2) It is an offence for a person to request, agree to receive or accept a bribe. It does not matter whether the recipient of the bribe receives it directly or through a third party. Maximum penalty: 10 years imprisonment and or unlimited fine. Bribery of foreign public officials (Section 6) It is an offence to bribe a foreign public official (“FPO”), where it is intended to influence the FPO in the performance of his or her official functions in order to obtain or retain business or an advantage. Maximum penalty: 10 years imprisonment and or unlimited fine. Failure of commercial organisations to prevent bribery (Section 7) It is an offence for a commercial organisation (including a body corporate, partnerships conducting business in the UK) to fail to prevent bribery by persons performing services on its behalf (“associate persons”). Such an offence will arise where a person associated with the organisation bribes another person intending to obtain or retain business for the organisation or to obtain or retain an advantage in the conduct of business for the organisation. Persons “associated” with the organisation could include employees, agents, contractors and joint-venture arrangements and subsidiaries. However, a subsidiary will only be an associated person if the bribe obtained is intended to benefit the Parent directly. Penalty: unlimited fine. Offences under sections 1, 2, and 6 by bodies corporate (Section 14) A senior officer of a commercial organisation will be personally liable if the offence under section 1,2 and 6 has been committed with his/her consent or connivance which in the absence of a technical definition shall be taken to mean participation, involvement, responsibility or collusion. Maximum penalty: 10 years imprisonment and or unlimited fine.
The Six Principles – Bribery Act
Gifts, Benefits, Inducements and Anti-Bribery Policy The Ministry of Justice Guidance sets out six principles intended to assist firms in ensuring that the adequate procedures are proportionate to the nature, scale and complexity of the firm and to assist them in complying with the Act. 1. Top-Level Commitment 2. Risk Assessment 3. Proportionate Procedures 4. Communication (Including training) 5. Due Diligence 6. Monitoring and Review
PiP Internal Procedures
1. Top-Level Commitment
The board of directors take collective responsibility for setting a culture within the company in which corruption is not tolerated, and for the effective design and implementation of the company’s anti-corruption programme. Employees may face internal disciplinary proceedings if they breach this policy, in addition to any legal action that may be taken by the Serious Fraud Office (See penalties under the offences outlined above). The board of directors has taken reasonable steps to ensure that all Employees are aware of this policy in respect of corruption and that it works along-side existing policies which, in sum, is considered to be the anti-corruption framework of PiP. Extra-Territorial scope An offence under Sections 1, 2 and 6 of the Act apply to acts committed overseas (where the act or omission would have been an offence if done or made in the UK) and the person has a “close connection” with the UK. Those with a close connection are defined to include British citizens, individuals ordinarily resident in any part of the UK and bodies incorporated under UK law. Adequate procedures defence It will be a defence (under section 7 (2)) for a commercial organisation to prove that it had in place adequate procedures designed to prevent persons associated with it undertaking offences under the Act.
2. Risk Assessment
Gifts, Benefits, Inducements and Anti-Bribery Policy PiP has undertaken a risk assessment to assess the likely risks of corruption arising in the organisation’s business, taking into account the jurisdictions in which it undertakes its activities and any relationships with associated persons (i.e. those performing a service on behalf of PiP).
3. Proportionate Procedures
The Bribery Act states that firm’s procedures should be proportionate to the risks faced and the size and complexity of the business. They should also be clear, practical, accessible, properly implemented and enforced. PiP has assessed the risk of bribery as low and has prepared proportionate procedures.
4. Communication and training
The Bribery act requires that firms have a zero-tolerance approach to bribery and corruption and that it must be communicated to all third parties that provide a service to the firm at the outset of the business relationship. PiP will provide Employees with training on Anti-Corruption and Inducements to ensure that they remain fully aware of these procedures and the current regulatory and legislative regimes. PiP’s training and awareness arrangements include the following:
- upon joining PiP all Employees are provided with a copy of PiP’s Compliance Manual and access to this and other compliance policies;
- any subsequent revised versions of the manual will be circulated to all Employees;
- Employees confirm their understanding of and adherence to the procedure contained in this policy and the compliance manual, upon joining PiP and periodically as required; and
- Anti-Bribery/inducements training will be provided to new Employees upon joining PiP and existing Employees as necessary.
5. Due diligence
The PiP will adopt a risk based approach when considering whether or not it will conduct appropriate due diligence upon its service providers prior to the commencement of the engagement of services. Where such due diligence on the service provider is conducted it will for example do this by undertaking general research into the history and performance of the service provider, utilising business and or character references, and assessing the jurisdictions in which the service provider operates with regards to the service it provides to PiP.
6. Monitoring and Review
Gifts, Benefits, Inducements and Anti-Bribery Policy PiP will assess the risk of corruption arising in the business on a periodic basis. Further, an additional test shall be included in the Compliance monitoring programme to ensure routine and regular appraisal of any new arrangements affected in the period or new jurisdictions entered.
How to Raise a Concern PiP’s Employees must raise a concern if they are offered a bribe/inducement by a third party, asked to make one or have a suspicion of malpractice at the earliest possible stage to the Compliance Officer. Further guidance can be found in PiP’s Whistleblowing Policy. Any concerns raised will remain confidential. The Following is a list of possible “red flags” which must be reported promptly if encountered (not limited to):
- the third party has a reputation of engaging in improper business practices;
- the third party insists on receiving a commission or fee payment before committing to sign up to contact;
- the third party requests payment in cash or refuses to sign up a formal commission or fee agreement;
- the third party requests that payment is made to a country or geographic location different from where the third party resides or conducts business;
- the third party requests an unexpected additional fee to facilitate a service; and
- Employees are offered an unusually generous gift or offered lavish hospitality by the third party.
Responsibilities of the Compliance Officer – Bribery Act
In relation to reports of bribes or suspicion reports made by a member of Personnel, the Compliance Officer shall be responsible for analysing the basis of these reports. Where a decision has been made not to contact the Serious Fraud Office (“SFO”), a record should be kept internally. The SFO encourages self-reporting by firms. If you have been a victim of fraud, please call Action Fraud on 0300 123 2040. Click here for details of the SFO’s confidential service for individuals. However, PiP should consider the obligation to report any suspicions to SOCA as per PiP’s Anti-Money Laundering procedures. The benefit gained by virtue of a payment of a bribe will be tainted by the act of illegality through which it was obtained and is likely to constitute criminal property under the Proceeds of Crime Act 2002 (“POCA”), the main UK anti-money laundering legislation. Under POCA, criminal property is property that represents a benefit from criminal conduct. A person who did not commit an underlying offence can still commit a money laundering offence where he/she holds property that represents a benefit under that offence. Therefore, it does not matter who engaged in the criminal conduct; where criminal property is generated a money laundering offence will be committed. PiP’s Compliance Officer will determine whether or not to report the matter to SOCA.