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Diluting graft law would savage Britain’s reputation, ex-minister says

Thu, 13 Jan 2011 19:35 GMT

Source: trustlaw // Tosin Sulaiman

Nelson's Column, which commemorates Britain's most famous naval hero Lord Nelson, is seen behind a Union flag in Trafalgar Square in London in this February 2005 file photo. REUTERS/Russell Boyce

OXFORD, England (TrustLaw) - Any attempt to water down a long-awaited anti-bribery law would be “disastrous” for Britain’s reputation abroad and raise questions about its commitment to fighting corruption, a former justice minister said on Thursday.

Charles Falconer, justice spokesman for the opposition Labour party, said Britain should not retreat from its commitment to bring the Bribery Act into force in April and resist lobbying for amendments by various companies worried that it will harm their competitiveness.

“There’s a last-ditch attempt by, I assume, various corporations to try to prevent it coming into effect in its full splendour,” Lord Falconer told an anti-corruption conference in the English city of Oxford.

“It would send a message to every country in the world that our commitment was lukewarm and it would be disastrous.”

Falconer served as Lord Chancellor -- responsible for the functioning and independence of the courts -- and later as justice secretary under the Labour government which lost power in May.

In July, the justice ministry under new Conservative Justice Secretary Kenneth Clarke said the act would be implemented in April after time for consultation on one section of it - the procedures companies can put in place to prevent bribery. The government said it would publish final guidance on the Bribery Act early this year.

Addressing concerns that the act could put British companies at a competitive disadvantage, Falconer said that while some companies that refused to pay bribes may lose out in the short term, greater transparency would ultimately lead to more business. He added that it was no longer possible to justify bribery and corruption abroad by arguing “that’s the only way you can do business in a particular country”.

“If you want properly to get rid of the corrosive cancer of corruption, then the short-term price has got to be paid in the interest of transparency and honesty in relation to commercial business,” he said. “Most countries want to do business with people they regard as both honest and committed to good values.”

The Bribery Act was passed by the Labour government in April in an attempt to modernise the UK’s anti-bribery laws, which date back to the late 19th and early 20th centuries.  

It creates four offences, including two general offences of bribing and receiving a bribe, an offence of bribing a foreign public official and another of failure by a commercial organisation to prevent bribery. A company can defend itself against the final offence if it can demonstrate that it had adequate procedures in place to try to prevent bribery. Companies could face unlimited fines under the act, while individuals could face up to 10 years in prison.

Falconer said the act was among the toughest anti-bribery laws in the world, especially in creating a new offence of failure to prevent bribery and in outlawing “facilitation payments”.

Such payments, which are made in certain countries to obtain a service that the state would otherwise be required to provide, are allowed under the United States’ Foreign Corrupt Practices Act.

“Those four offences go as far and beyond most other countries’ bribery acts,” he said. “We’ve done incredibly well in relation to the act we have passed in comparison to other countries. We stand tall in the world in relation to that.”

The law applies to UK companies operating abroad as well as overseas companies operating in the UK. Its extra-territorial effect means countries can work together to fight corruption around the world, Falconer said.

“Imagine a large American multinational company with a place of business here,” he said. “Assume it’s involved in bribery in South America that in no way touches the UK. The British courts and prosecuting authorities have jurisdiction over that event. It means that corporations can’t try to cox and box with different jurisdictions. It means that regulators and prosecuting authorities throughout the world can cooperate to look at worldwide bribery.”

Falconer said there should be no delay in implementing the act and that the Labour government “took much too long” to introduce it.

“Now is the time to proselytise around the world about what we stand for in relation to bribery and corruption,” he told the conference.

Chandrashekhar Krishnan, the executive director of corruption watchdog Transparency International UK, said the business community had already had a chance to air its views on the act and that his organisation would strongly oppose any further attempt to delay it.

“We do have an effective Bribery Act that’s fit for purpose,” he told TrustLaw. “What we now need to do is simply get on with enforcing it. The protests we are hearing come from a minority. That’s not representative of the UK business community.”

The conference was organised by the Centre for the Study of Governance and Transparency at Kellogg College in the University of Oxford in conjunction with Transparency International UK.