The Bribery Act delayed: a victory that will soon pass
The Ministry of Justice may have pushed back the implementation of the Bribery Act after an intense period of industry lobbying, but companies shouldn't sit back and look forward to their next corporate jolly just yet. The message from advisers is clear: the delay in publishing the guidelines is just that - a delay. Despite the protests, the best companies should expect from the Government is clarification and further guidance - not the substantive overhaul in the law some businesses may have been longing for. "It's inconceivable that it will come into law in any fundamentally different way," says Pinsent Masons partner and co-author of thebriberyact.com, Barry Vitou. "The UK has been subjected to widespread, justified international criticism that our existing patchwork of anti-bribery laws aren't fit for purpose. The US already thinks nothing of prosecuting overseas businesses and if our laws don't change, they'll just do it for us."
February 08, 2011 at 02:28 AM
4 minute read
Despite industry lobbying, the UK's Bribery Act, with a few tweaks, will soon be here
The Ministry of Justice may have pushed back the implementation of the Bribery Act after an intense period of industry lobbying, but companies shouldn't sit back and look forward to their next corporate jolly just yet.
The message from advisers is clear: the delay in publishing the guidelines is just that – a delay. Despite the protests, the best companies should expect from the Government is clarification and further guidance – not the substantive overhaul in the law some businesses may have been longing for.
"It's inconceivable that it will come into law in any fundamentally different way," says Pinsent Masons partner and co-author of thebriberyact.com, Barry Vitou (pictured). "The UK has been subjected to widespread, justified international criticism that our existing patchwork of anti-bribery laws aren't fit for purpose. The US already thinks nothing of prosecuting overseas businesses and if our laws don't change, they'll just do it for us."
The international dimension is important to consider. A number of international bodies, including the Organisation for Economic Co-operation and Development, have already raised the prospect that the UK could be blacklisted if it drags its feet much more on implementation.
The Act, which creates two general offences of bribery, a specific offence of bribing a foreign official and the offence of failing to prevent a bribe being paid, is not going away. Partners expect the revised guidelines to be issued within the next month or so, with the implementation, in roughly its existing stance, likely to come in three months later. This means companies have only got around five months to comply with laws thought by many to be tougher than the US Foreign Corrupt Practices Act (FCPA), which has itself seen a dramatic increase in enforcement activity in recent years.
The far-reaching new provisions extend as far as failing to prevent bribes made on behalf of a company by a third party, while the Bribery Act, unlike the FCPA, does not include an exemption for facilitation payments – a decision some argue could prevent UK corporates from operating in those jurisdictions where such payments are, it is argued, necessary to conduct business. This could either mean excluding companies from some developing markets where both they and the UK Government are keen to improve trade or companies risking prosecution if they continue.
But while businesses may have been hoping for fundamental changes, partners suggest that clarifications to the guidance should make the laws workable. Herbert Smith litigation partner Susannah Cogman says: "It would have been preferable to have had a better law in the first place but there can still be some help for businesses. The three main issues as a practical matter are: who is included when it comes to those performing services on your behalf; the lack of clarity over gifts and hospitality; and facilitation payments. The guidance can assist with some of these issues but it's still going to be a law that's unclear in scope and on the draconian side."
So the real issue for businesses now is guaranteeing that they use the time until it comes into force to ensure that they comply with the Act as it currently stands. Vitou warns: "The efforts to try to stop [the Act] suggests there may be some wishful thinking that it will never come into force – but that is unlikely. Corporates should think of this as extra time to comply rather than time to lobby against it. Taking steps and putting in place procedures to prevent bribery to benefit from the defence under the Act can be time-consuming."
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