25 June 2020: Would following the lead of the UK's Bribery Act 2010 help to eliminate modern slavery and human trafficking?

Under the UK's Modern Slavery Act 2015 (the 'MSA') any organisation operating in the UK and with an annual turnover of £36 million (wherever it arises) must publish a Section 54 Transparency annually in Supply Chains Statement.

The statement is a means for organisations to identify the risk of slavery or human trafficking occurring within their supply chains, take steps to mitigate risk and then detail what they have done or will do to reduce the risk. It is not a statement or confirmation that slavery does not exist or that they have prevented it, merely that they have assessed whether there is a risk that it could arise.

As an exercise in evaluating the risk of modern slavery within the supply chain and raising awareness of this risk, the section 54 statements have proved to be a useful and in many cases a painful reminder that slavery is still very much in existence. But is this enough and should organisations be taking a more proactive role in eliminating slavery and human trafficking in their supply chains?

Pressing questions

If it is not the organisation's (i.e. the buyer's) responsibility, then whose is it? Should the onus remain solely with the supplier? Is there a danger that if a buyer's (or indeed a consumer's) only response is to change supplier? The slavery and human trafficking will still exist, but the buyers and consumers will have washed their hands of the problem.

As the anti-slavery campaigner, William Wilberforce, famously remarked in 1791: "You may choose to look the other way, but you can never say again that you did not know." The section 54 statements prove that organisations are aware of slavery in their supply chains, and most organisations say they do not condone slavery. But are they still looking away? Are they doing enough to mitigate modern slavery risks? Should the consumer expect them to do more? What if they don't?

Some organisations have reported slavery to the authorities. One supermarket chain, for example, has reviewed and amended its oversight of companies that use its premises, such as those performing car washing services. In many cases, the employment of workers was a type of slavery as their passports had been confiscated, and they were unable to leave the job.

Why the Bribery Act works

In one recent case, however, involving the manufacture of beds and mattresses that were supplied to well-known department stores, the latter was apparently unaware of the employment conditions of the workers within their supplier's factories. As these were in the UK, there seems to be little excuse for someone within the organisation, not knowing what was going on or simply turning a blind eye.

The UK's Bribery Act (the Act) is an excellent example of a different approach. The Act includes a corporate offence for failing to prevent bribery. It also provides for the prosecution of any director, manager, secretary or similar officer of the entity for the same crime, if it was committed with that person's consent or connivance.

While acknowledging that bribery cannot be eliminated, Section 9 of the Act does say that an organisation should have in place' adequate procedures' to try to prevent bribery occurring and not merely turn a blind eye. Moreover, the Act makes it clear that anyone associated with an organisation should be made aware that bribery will not be tolerated, and this includes agents acting on the organisation's behalf, not just direct employees.

How it works

The Ministry of Justice has provided some guidance on the "procedures which … organisations can put into place to prevent persons associated with them from bribing." These are based on the following six principles that should inform the procedures deemed necessary by an organisation to prevent bribery being committed on its behalf:

1. Proportionate Procedures
2. The tone from the top/top-level commitment
3. Risk assessment
4. Due diligence
5. Communication and training
6. Monitoring and review.

The six principles are designed to be flexible, and outcome focussed. There is no excuse for an organisation not to implement 'adequate procedures' to reduce the risk of bribery.

But why is the prevention of bribery so important? As Kenneth Clarke, the then Secretary of State for Justice said in 2011: "Bribery blights lives. Its immediate victims include firms that lose out unfairly. The wider victims are government and society, undermined by a weakened rule of law and damaged social and economic development." The same could be said of the harm caused by modern slavery and human trafficking. 

Clarke also said, in answer to the criticism that the Bribery Act would make things more difficult for businesses, that the opposite was true as it would create a level playing field. Perhaps more crucially: "It also establishes a statutory defence: organisations which have adequate procedures in place to prevent bribery are in a stronger position if isolated incidents have occurred in spite of their efforts." Again, the same could be said if organisations had to impose adequate procedures to prevent modern slavery and human trafficking.

The principles set out by the Ministry of Justice to inform the 'adequate procedures' required to prevent bribery can easily be adopted by an organisation to prevent modern slavery and human trafficking within their supply chains. They are very similar to the type of things organisations should be included in their section 54 statement. The first principle of 'proportionate procedures' is a recognition that not all organisations are at risk of bribery, and the same applies to the risk of modern slavery.

Setting the tone from the top

Many studies have demonstrated that the 'tone from the top' is the key determinant to an organisation's ethos and workings. It applies equally to an organisation's tolerance for bad practices or encouragement of good practices. Hence the emphasis on top-level commitment in both the Bribery Act and the MSA. Requiring that section 54 statement to be signed off by a senior member of the management team demonstrates high-level commitment.

According to the NGOs that have performed reviews of the published section 54 statements, this is the one thing that most organisations have not done. Perhaps they would be keener if failure to do so would imply connivance with acts of modern slavery. 

Risk assessment is again a crucial part of good business practice. One would expect all organisations to do some research into the markets they operate in and the people they deal with, especially if you are entering into new business arrangements and new markets overseas.

Supply chain risks

All organisations caught by the MSA are required to provide details of their assessment of the risk of modern slavery occurring within their supply chain. There are many sources of information that highlight countries where slavery and human trafficking are prevalent and also the particular industries that are more prone to both.

The latter includes fruit and vegetable picking, low paid jobs such as office cleaning, drivers, security guards and factory production such as garment making or novelty goods. The risk assessment needs to be regularly reviewed and updated.

There is some concern that the disruption to trade caused by the COVID-19 crisis will mean that the risk of slavery and human trafficking will be heightened and manifest itself in other areas previously considered to be less of a risk. The production of PPE is one example of an area where the increased demand may increase the risk.

The Ministry of Justice defines due diligence as "Knowing exactly who you are dealing with" by asking questions and checking before engaging others to represent you in business dealings or before doing business with them. You could also check out suppliers to understand whether there is a risk of modern slavery – do you know the working conditions in their factories or how they recruit employees?

Issues with section 54 statements

One of the problems with many of the section 54 statements published to date is they only consider 'tier 1 suppliers' and do not drill down further into the supply chain. Further down the suppliers may be small scale operations, but the risk of slavery remains. As with risk assessment, due diligence needs to be performed on a case by case basis and reviewed regularly.

Without communication of policies and staff training, all the due diligence and risk assessment will come to nothing. It is essential that regular and updated training is provided to enable all staff (including contractors, agents, and other third parties) to recognise when wrongdoing, be it bribery or modern slavery, has occurred. For this to work, however, organisations also need a means for staff to report such wrongdoing. If the experience of many whistleblowers is anything to go by, they routinely suffer detriment, and this discourages many others from reporting.

As without compliance programme, it needs to be monitored and reviewed regularly. A section 54 statement is supposed to include details of what an organisation has done, what has worked, what hasn't and what they will be doing in future. There is an expectation that future statements will report back on whether these intentions were met or what steps were taken instead.

Lack of effort 

Unfortunately, as the Business and Human Rights Resource Centre has noted, very few organisations have 'demonstrated a genuine effort' to mitigate the risks. Most organisations merely state that they do not tolerate slavery within their supply chains and are committed to eradicating it but give little explanation as to how they intend to do this.

Legislation aside, there are other ways that organisations can be encouraged to be more vigilant in their fight against modern slavery. The way favoured by many governments is that of consumer and stakeholder pressure. So the rationale behind making organisations publish a section 54 statement is to enable consumers, investors and other stakeholders to know what an organisation is doing or not doing. 

If a section 54 statement suggests a lukewarm or non-existent commitment to identifying the risk of modern slavery let alone eradicating it, then it is beholden on consumers to boycott the organisation's products and for investors to put pressure on the board. But this is dependent on organisations publishing a very detailed analysis of their risk of slavery and what they intend to do about it as if consumers or investors do not know of the risks how can they act?

How can consumers know that many rubber gloves used for washing up are produced in Malaysia by migrant workers living in cramped dormitories with meagre wages and some cases with their passports confiscated? Even if the produce is locally sourced, how would shoppers buying English strawberries from a leading supermarket chain know that the pickers were kept as slaves in rural Lincolnshire until the case came to court?

So to go back to my original question: Would following the lead of the UK's Bribery Act 2010 help to eliminate modern slavery and human trafficking? The answer is a resounding yes. There have not been many prosecutions under the Bribery Act, primarily because bribery cases are notoriously complex and take years to investigate. But its emphasis on making everyone within an organisation responsible and aware of the implications (such as hefty fines and prison) of turning a blind eye can only be to the good.