The new bribery act: are UK companies ready?

This post has been written by Chandrashekhar Krishnan, Executive Director, Transparency International UK.

On 9th April, a new Bribery Act was passed into law. This will help to restore the UK’s reputation for taking corruption seriously by ensuring the UK is compliant with the OECD Anti-Bribery Convention. It also sends out a strong message to British companies and the rest of world that the UK will not tolerate bribery.

The Act provides UK law enforcement with a sound legal framework to prosecute offenders. The message is clear: ethical practices must be firmly embedded in all echelons of business. The new legislation will level the playing field for those companies that are already conducting business ethically.  It should also help businesses to reduce costs, given that companies themselves estimate that bribery adds at least 10 per cent to the cost of business transactions overseas.

What does it mean?

The Bribery Act sets out four offences: offering a bribe; accepting a bribe; bribing a foreign public official; and failure of a commercial organisation to prevent bribery. A key feature is that UK companies and their directors would be liable if they failed to prevent bribery. However, it is a defence for a company to prove that it had in place adequate procedures designed to prevent persons associated with it from undertaking such conduct. This means that UK companies who do not already have robust anti-bribery systems need to put them in place without any delay. And those who already have such systems need to ensure that they will be fully compliant with the new law, which is tougher in some respects than the US Foreign Corrupt Practices Act, eg. by criminalising facilitation payments and outlawing private-to-private bribery.

Research undertaken by TI-UK for the City of London Corporation has indicated that many UK companies may be inadequately prepared for the new law. Only one in four respondents in a survey considered themselves well informed about the  Bribery Act, while a recent survey by law firm Eversheds found that one in five businesses had no policy in place to address corrupt practices. It is possible that many UK companies – and small and medium size enterprises in particular – are not aware that:

  • They can face unlimited fines, while directors can be imprisoned for up to ten years for failing to have ‘adequate procedures’ to prevent bribery
  • Hospitality, publicity, insider information, and donations to charity could all be considered as bribes in certain circumstances
  • Individuals can be liable for accepting an advantage even if they did not know that the other party intended to induce improper conduct
  • Companies can be liable for bribes paid by subsidiaries, agents or partners in joint ventures.

Next steps

TI-UK recommends that companies take six basic steps:

  • Assess corruption risks thoroughly
  • Plan for proper systems and policies to address the risks
  • Act swiftly to implement the policy with leadership from the top corporate echelons
  • Monitor implementation
  • Report to stakeholders
  • Seek external assurance that anti-bribery systems are effective.

The UK government will issue guidance to companies on “adequate procedures” for preventing bribery before the key bribery offences in the Act come into effect. TI-UK believes that the bribery offences in the Act should come into effect no later than October 2010. Any delay beyond that date would attract criticism from the OECD Working Group on Bribery. TI-UK also urges the new Government to ensure that adequate resources are made available to enforce effectively the new Bribery Act. Although public financial constraints are acute, it would be a pity if UK prosecutors and investigators were not given the resources they need to make full use of the new legal framework they now have to combat bribery.

This post is an extract from an article that will appear in the July edition of the International Construction Magazine.

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Chandrashekhar Krishnan

About Chandrashekhar Krishnan

Chandu Krishnan joined TI-UK in September 2004. He has an extensive knowledge of international economic and sustainable development issues, including the challenges of good governance, combatting corruption and poverty reduction. Chandu gained over twenty years of experience at the Commonwealth Secretariat and the United Nations.

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7 Responses to The new bribery act: are UK companies ready?

  1. Chishty 10 June 2010 at 11:26 am #

    The new bribery act must enforce all UN countries especialy the under developed ountries Africa and South East Asia and Middle East. Before giving the aid or donation to any country please investigated the assets in overseas be their elite class of political,govt servents, business man what every they are. Is American president or British Prime Minister has overseas investment?? Rulers are rolling in billions but common man is striving gutter. They hardly get their basic necessities. Please freez their assets in all overseas countries and audit their source of income. These corrupted peoples are increasing their real estate and other business by illegal money.They are involved in lot of corruption cases but not award punishment. NO one is getting lession to stop it. They are not paying tax on monkey business. Please take the immediate action sold all those assets and return the money to repay the loan of IMF World Bank and other borrowing instution. Spent that illegal money on the public development project through international organisation to supervise. Other wise rich will become more richer and poor become more poorer. There are men and men. WE will die with hunger.
    Please come forward and take immediate ation to stop it. GOD BLESS YOU.

  2. TI EU 7 August 2010 at 6:52 pm #

    The UK ambassador to Ukraine has blogged about this new law during the week:

  3. Barry Grossman 18 August 2010 at 4:37 am #

    Anyone who spends 100 or so hours wading through the mountains of nonsense available over the internet about Foreign Corrupt Practices and Bribery of Foreign Officials will eventually realize that the millions of printed words on this subject come almost exclusively from:

    1. Legal and Accounting Professionals selling compliance programs;
    2, Well meaning academics debating legal niceties or doing generalised historical studies; and
    3. Bureaucrats who would have us believe that the OECD and UN schemes for ostensibly criminalizing corrupt foreign practices are little more than a PR exercise by first world nations.

    The reality is that there is no meaningful enforcement of foreign bribery legislation in signatory countries. I challenge anyone to contradict this assertion. In fact, in 10 years there has been fewer than 200 convictions world wide under the OECD scheme and almost all convictions occurred in only 5 countries, with most of the 38 signatory countries having had no prosecutions at all. In fact there is not even an international agency or mechanism through which individulas can report cases of bribery, let alone instances in which law enforcement agencies in signatory countries have refused to investigate clear cases of froeign bribery.

    Some estimates claim that bribe payments account for up tp 3% of global economic activity. We know that corruption and bribery is rampant in developing countries throughout South America, Africa and Asia. Yet in 10 years there has been less than 200 convictions under the OECD scheme world wide. That is an outrage. Are the OECD and UN schemes that traget foreign corrupt practices just a hoax?

    The only message going out loud and clear is that if businesses elect to advance their interests by bribing foreign officials, they face almost no tangible risk of criminal prosecution in their own jurisdiction. Indeed, while I am no statistician, I imagine the odds of ever being prosecuted for bribing a foreign public official are smaller than the odds that radiation from our sun will cause the earth to collapse on itself in 2012.

    It is not my intention to insult anyone, but maybe those people who are making a global industry out of talking about FCP legislation should spare us yet more rhetoric and drivel that seems to be more about carrer advancement than anything else, or alternatively start saying something a bit more meaningful.

  4. ict voor beperkten 12 October 2011 at 10:02 am #

    Goed dat je dit geplaatst hebt!. Heb het gelijk doorgestuurd naar een neef, hij was hiernaar opzoek! Mooie site trouwens!

  5. convert flv to avi 13 December 2011 at 3:22 pm #

    just smth to add about bribery; there’s saying: justice it’s when the law breakers ‘pay’ to the law, not its enforcement officer, and the officer is payed by the law, not its breaker.

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