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EXPERT VIEWS: Guidance on UK Bribery Act published

Source: Thomson Reuters Foundation - Wed, 30 Mar 2011 12:00 GMT
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LONDON (TrustLaw) – Britain’s justice ministry published its long-awaited guidance on strict new bribery legislation on Wednesday.

The UK Bribery Act was initially due to be implemented in April 2010, but was postponed after business associations and others complained it was overly broad and ambiguous.

In January, the head of the Confederation of British Industry, a business lobbying group, described the legislation as "not fit for purpose".

In line with expectations, the guidance is principles-based and does not set out exact criteria for what is and is not permitted.

But Britain’s Justice Secretary Ken Clarke reiterated in today’s Financial Times that business fears over corporate hospitality are unfounded.

"Bribery is one of those things we all know when we see it. It is a cynical attempt to manipulate someone’s judgement by financial or similar means ... So under this law no one is going to try to stop businesses taking clients to Wimbledon, or a Grand Prix," Clarke wrote.

The Bribery Act will enter into force on July 1, around three months after the publication of the guidance.

TrustLaw has gathered reaction to Wednesday’s announcement from experts:

Graham Hand, chief executive, British Expertise, and co-ordinator, UK Anti-Corruption Forum

"As co-ordinator of the UK Anti-Corruption Forum, I welcome the publication by the Ministry of Justice of the guidance document for business on the Bribery Act 2010. The hue and cry raised by some newspapers and business organisations against the act has been utterly misplaced. 

"The ethical businesses and organisations that are our members believe that the Bribery Act will benefit their operations internationally, and they will now use the guidance to ensure that their policies and procedures are as good as or better than the expectations set out.  Bribery is bad for business and bad for economic development, and the Bribery Act can only help us in the fight for honest business."

Katya Hall, chief policy director, Confederation of British Industry (CBI)

"We strongly support the principles behind the Bribery Act and welcome this much-improved final guidance.

"The government has listened to concerns that honest companies could have been unwittingly caught out by poorly-drafted legislation and has clarified a number of important areas. These include the extent of liability through the supply chain, joint ventures, due diligence and corporate hospitality.

"Businesses now need to use the next three months to revise their anti-bribery policies ready for the act’s implementation. Meanwhile, the Serious Fraud Office must take a common-sense approach to enforcement, ensuring it is reasonable and risk-based. This will help avoid creating a culture of fear that could undermine UK competitiveness."

Chandrashekhar Krishnan, executive director, Transparency International UK

"The Bribery Act, as passed by the last Parliament, is one of the best anti-bribery laws in the world. But the guidance will achieve exactly the opposite of what is claimed for it. Parts of it read more like a guide on how to evade the act, than how to develop company procedures that will uphold it.

"It is deplorable that changes made to the draft guidance since late last year, and now enshrined in the published version, depart from international good practice in several areas. The Ministry of Justice has exceeded its brief with this final guidance which undermines the act and will limit its effectiveness. There is now a significant risk that bribery will go unpunished.

"For instance, foreign companies could be listed on the London Stock Exchange, pay bribes and get away with it. This will disadvantage all honest companies and perversely turn on its head the government’s stated aim of creating a level playing field through the act’s extra-territorial reach."

Monty Raphael, special counsel Peters & Peters, and author of Blackstone’s Guide to the Bribery Act

"No one thought there would be many prosecutions under the act, but now I believe there will be fewer still. Prosecutors, judges and juries are all sent a clear message: 'British business must be allowed to entertain and promote to remain competitive', and perhaps that is uncontroversial if it is reasonable and proportionate.

"What will worry anti-corruption campaigners and the OECD is the wiggle room unethical businesses will have to structure their corporate activities to take themselves outside the ambit of the legislation and still maintain their right to raise money on the London capital markets. Transactional lawyers will be in greater demand than compliance officers."

Alexandra Wrage, president & founder, TRACE

"After years of pressure from the OECD, they finally drafted a robust anti-bribery law - arguably the broadest and most draconian in the world - and now it’s as if they’re startled by what they’ve passed and they’re hoping to take the edge off it.

"This guidance aligns some elements of the new law more closely with widely-accepted U.S. compliance standards rather than extending them: facilitation payments are a bad idea, but probably won’t be prosecuted; hospitality generally won’t get you into trouble if it’s reasonable and provided without corrupt intent; failing to prevent bribery really just means failing to ensure reasonable steps have been taken to implement a robust anti-bribery compliance programme. There is nothing new in this for companies accustomed to operating under the FCPA.

"In fact, with respect to jurisdiction, the originally sweeping scope of the UK law has been reined in by this guidance and, if companies trading on the London Stock Exchange are really carved out, the UK law will be narrower in its application than its U.S. counterpart."

Sam Eastwood, head of Business Ethics and Anti-Corruption Group, Norton Rose LLP

"Whether or not a company's activities come within the scope of the UK act, strict bribery laws are becoming more commonplace around the world. For instance, China has recently introduced measures to combat the bribery of foreign public officials. A further incentive for all companies to address their bribery risks is that, for their own protection and reputation, their business partners may wish to see evidence that they have adequate procedures to prevent bribery.

"The guidance may have limited weight in the English courts: the guidance does not have the force of law and can be revised by the Secretary of State at any time. The ultimate effect of the act will depend on how it is interpreted by prosecutors and, ultimately, the courts and there remains a risk that they will take a stricter line on some issues like 'associated persons' or the territorial scope of the act. The act will come into force on 1 July 2011. With just over three months to go, businesses should now be focused on conducting a risk assessment, implementing proportionate policies and procedures, training their staff and getting reporting structures ready and implemented."  

John Smart, partner, Fraud Investigation & Dispute Services, Ernst & Young

"The revised guidance that was published today on adequate procedures under the Bribery Act now sets the right tone and provides clarifications and examples which will be welcomed by the business community. The guidance has been extensively reworked and more detail provided on many of the areas of sensitivity and ambiguity that gave rise to so much critical comment.

"It is the nature of guidance however, that it fails to address everyone's issues and larger businesses in particular may find the guidance less helpful than they may have hoped.  There is still wide scope for interpretation of what procedures may be adequate for them."

Liz David-Barrett, research fellow, Oxford University Centre for Corporate Reputation 

"Ken Clarke’s assertion in his message on implementation of the Bribery Act that bribery is one of those things “we know when we see” fails to appreciate cultural differences. When you do business internationally, your idea of ‘common sense’ might radically differ from that of your local representative. It would be wrong to draw the conclusion that honest companies do not now need to worry about falling foul of the law. And a bribery scandal can be hugely damaging to a company’s reputation, whether or not there are legal consequences.

"The message is that companies need not worry about aggressive enforcement of the Bribery Act and, according to Clarke; 'I do not expect a large number of prosecutions.' That is good news for the majority of decent companies that do not pay bribes. But arguably it is also good news for that minority of companies that do pay bribes. And it’s rather unfair on the companies that have taken the lead in promoting high ethical standards."

Howard Sklar, senior corporate counsel at Recommind, and advisor to the InfoRiskAwareness Project

"For all the time it took for the Ministry of Justice to issue this Guidance, in my opinion, it’s a real disappointment. The most glaring omission is any concrete guidance to companies on how to comply with the Bribery Act when it comes into play later this year. 

"As a general proposition, the EU regulatory scheme is principles-based, and the guidance follows this example. Telling us that hospitality must be reasonable doesn’t move the bar on advice to companies that want to be compliant. The business world is measured down to the pound – sales targets aren’t stated as ‘you have to sell a reasonable amount.’ That kind of guidance just doesn’t resonate with the sales, marketing, and operations folks that compliance officers will need to influence. 

"UK companies will have to decide – on a case by case basis – how much hospitality is too much.  As a result, compliance will now pervade all aspects of the relationship sales has with customers, and marketing has with sales.

"Unfortunately, compliance officers are in the same position as they were yesterday: trying to translate the Serious Fraud Office’s murky statements about the coverage of the law into language that the business understands, and trying to formulate policies that don’t unreasonably restrict operations but still don’t run afoul of the act. In light of this, the guidance just doesn’t guide."

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