Legal
Wealth Management And The UK Bribery Act
The Bribery Act – where do business professionals stand?
The Bribery Act will be the first major piece of new legislation to tackle corruption in UK business life in 100 years. With less than three months until the current consultation period comes to an end and the Act is passed into law, it would be reasonable to expect business to understand its obligations. Yet, confusion reigns and with penalties for transgression being severe, it is anxiety, not understanding that dominates. Oliver Gardner, managing partner at Howards Solicitors, a practice that provides representation in Very High Cost Criminal cases, explains where business executives stand today.
A brief history
We tend to think of the UK as having Scandinavian levels of propriety in business matters.
However, we have not, as a country, led the way on stamping out the £1 trillion (around $1.63 trillion) spent each year on bribery worldwide, as estimated by the World Bank. Indeed the UK dropped from 17th to 20th in the Corruption Perception Index in the last year.
The UK government first promised action in implementing new anti-corruption legislation as far back as 1997. The rationale as stated by Justice Secretary Kenneth Clarke was simple: “Stamping out bribery is good for business because it creates conditions for free markets to flourish.”
But progress has been frustratingly slow for anti-corruption advocates such as the Serious Fraud Office and leading politicians from industrialised nations. In response, the 2010 guidelines were hard on corruption and carried draconian penalties.
“The most severe anti-corruption legislation in the world,” Clarke boasted of the UK act.
The guidelines, admittedly under pressure from business, were subsequently revised and presented at the end of March this year. The legislation was criticised by certain anti-corruption parties for being watered down. The penalties – up to 10 years jail for an individual who breaks the law and unlimited fines for companies – remain.
So where does the business professional stand?
The Bribery Act should firmly stamp out certain corrupt practices, but it neglects others. Facilitation payments for instance - paying officials to carry out their expected government duties - will not be tolerated. However, a bribe by a foreign-based joint venture partner, is unlikely to lead to the UK partner being prosecuted.
But it is other aspects of the Act, where guidance is perceived as blurred, especially in view of the penalties that can come down on offenders, which worries business professionals. Hospitality is arguably brought up most in this respect.
As Clarke stated: "Cases will be brought where they are in the public interest, which will require the personal agreement of the Director of Public Prosecutions or the Director of the Serious Fraud Office." He added: "I do not expect a large number of prosecutions and certainly not for trivial cases."
The issue is the line between what is acceptable and what is open to prosecution – it is not altogether clear. The courts have been left to decide the remit and scope of the new law, which is a potentially serious flaw. Without clear guidelines, it could potentially lead to unequal treatment depending on the particular court a defendant finds himself or herself in.
The situation could get more complicated still if there are major revisions of the guidelines in this consultation period. The business lobby has been accused of asserting its influence. Now pressure from anti-corruption bodies might be brought to bear, it certainly has been vociferous in condemnation of the current guidelines although major changes now seem remote.
Conclusion
No party would argue that the government clearly had, and continues to have, a difficult task in drawing up and implementing The Bribery Act. However, tardiness, revisions, poor communications (the messages to business are not getting through), harsh penalties and flaws in the extent to which it can be interpreted have not helped matters for gaining business understanding and buy-in. Saying that, I suspect at this stage that the fears of business might have been overplayed. There is unlikely to be a rash of prosecutions.
There needs to be good judgement, common sense and if there is a possibility that a company could be open to charges of corruption, company processes and procedures need to be thought through and implemented to ensure professionals act in a way that limits any possibility of prosecution.
To contact the author and the firm, click on the following link:
www.howardssolicitors.co.uk/services/criminal-and-fraud-law/
