Enforcing foreign bribery: notes on some of the key issues (part 2)

Gillian Dell, Programme Manager for Transparency International’s programme on international anti-corruption conventions joined the International Bar Association  conference on foreign bribery enforcemen in Prague from 20-22 September. Here’s the second part of what she learnt:

Considerable attention was given to the new UK Bribery Act. That’s the UK law that introduces strict liability for companies that fail to prevent foreign bribery and is due to enter into force in April 2011 – later than originally expected. If the new law is enforced the way it currently reads, it will have more influence on business policies and practices than the 1977 US Foreign Corrupt Practices Act.

The plenary discussions showed that the law has the business sector worried- including non-UK companies that do business in the UK. Some industry-friendly lawyers think the law should be amended to weaken it. At the same time, British lawyers and compliance experts are delighted at the unfolding bonanza of business from companies.

But how will the new UK legislation be interpreted and enforced? Many practitioners at the IBA meeting expect that we won’t see strong enforcement. Resources for the Serious Fraud Office, the leading agency for foreign bribery enforcement, have been cut by a fifth for 2009-2010.. Moreover, there are plans by the UK government to subsume the SFO into a new Economic Crimes Agency, which would result in time-consuming re-deployment processes. (One thinks of a similar development in South Africa).

There was also discussion about the SFO’s evolving leniency in its approach to business and its encouragement of industry self-reporting. Some participants considered this approach important as self-reporting provides an opportunity for bringing to light cases that would otherwise be discovered only by chance.

Finally, what about the key parts of the new law that are open to interpretation? And how much protection does a company compliance programme provide? This will be critical. The UK Government has recently published draft guidance on adequate corporate procedures for preventing bribery (in relation to Clause 7), and has opened a public consultation which ends early November. The guidance will be finalised early in the New Year. Our UK chapter also has provided a publication that looks at adequate procedures. This publication is available here.

Apart from the UK Bribery Act, other developments in the UK took up much of the discussion.  Centre stage was Lord Justice Thomas’ decision in the Innospec case. It was generally agreed that the decision of Lord Justice Thomas in the Innospec case was like challenging the executive branch in a constitutional battle of powers. Innospec prolonged the use of harmful lead-based fuel in Indonesia by giving corrupt payments totalling more than 8.5 million US dollars (£5.6 million) to local officials and pled guilty. The development created uncertainty about the future of settlement agreements in the UK.

Concerns following the Innospec case have led to multiple postponements of a court hearing on the SFO’s proposed settlement with BAE Systems, announced back in February, which has thus still not been confirmed.

On a final note, I would like to share with you the investigation of a Finnish journalist. Magnus Berglund presented his work on the Patria case that involves alleged bribery by a Finnish defence company of Slovenian public officials, including allegedly the former Slovenian Prime Minister. The journalist showed a segment of his TV report (English language transcript) on the case originally broadcast on the YLE Current Affairs programme of the Finnish Broadcasting Company and re-broadcast in Slovenia three weeks before national elections, which the Prime Minister lost. The allegations caused a big controversy in the country and diplomatic interventions .

In international bribery cases, problems with mutual legal assistance can arise. In this case, as mentioned during the session, issues between the Slovenian law enforcement authorities and the Finnish criminal investigation were raised and resolved at the OECD Working Group on Bribery.