Anxiety, intrigue, confusion: these are just three of the sensations that filtered through the corporate and legal landscapes in February when the Ministry of Justice (MoJ) announced that the implementation of the Bribery Act would be postponed.
The delay raised questions over whether the government had ulterior motives in parking the legislation, and whether full implementation would ever come to pass. As NewLegal Review reported last year, the text of the Act certainly sets new targets for discernment among law-enforcement officials, and legal experts have pondered whether they would know how to put the text into practice.
However, on 30 March, clarification arrived when Justice secretary Kenneth Clarke published a set of guidelines on how the Act should be managed. In Clarke’s view, the guidelines offer ‘common-sense’ approaches to a crime that ‘we know when we see’. He advised:
• Reasonable and proportionate corporate hospitality is permitted in cases where it aims to seal relationships or showcase products or services. So taking a client to a sporting event, or paying for a foreign official to travel abroad for a site visit with food and entertainment, would not – if reasonable and proportionate – breach the Act.
• One of the Act’s most contentious concepts is that of the ‘associated person’: someone with connections to a business who could leave that business vulnerable by paying or taking a bribe. Although the concept is to be interpreted broadly, liability does not necessarily accrue through simple corporate ownership or investment – such as when that person is working in a joint venture or subsidiary.
• A foreign company that simply has a stock listing or subsidiary in the UK is not necessarily ‘carrying on part of its business’ there – so may not be subject to the Act’s jurisdiction.
• There is no exemption for facilitation payments. In common with the vast majority of international legal systems, these will be viewed as bribes.
In tandem, the Serious Fraud Office (SFO) and Director of Public Prosecutions released their own advice. Essentially, this asks prosecutors to decide, in cases where there is sufficient evidence to prosecute, whether it is in the public interest to do so. It also asks them to judge whether a company under investigation has taken genuine steps to volunteer information and modify its internal procedures.
The Act will now be implemented on 1 July. Here is what some high-profile organisations and individuals have said about the guidance:
THE BUSINESS VIEW: Confederation of British Industry (CBI)
‘We strongly support the principles behind the Bribery Act and welcome this much-improved final guidance,’ said chief policy director Katja Hall. ‘The Government has listened to concerns that honest companies could have been unwittingly caught out by poorly drafted legislation and has clarified a number of important areas. These include the extent of liability through the supply chain, joint ventures, due diligence and hospitality.
‘Businesses now need to use the next three months to revise their anti-bribery policies and ready them for the Act’s implementation. Meanwhile, the SFO must take a common-sense approach to enforcement, ensuring it is reasonable and risk-based. This will help avoid creating a culture of fear that could undermine UK competitiveness.’
THE ACADEMIC VIEW: Oxford University Centre for Corporate Reputation
‘Ken Clarke’s assertion that bribery is something that “we know when we see” fails to account for cultural differences,’ said research fellow Liz David-Barrett. ‘When you do business internationally, your idea of “common sense” may radically differ from that of your local representative. It would be wrong to draw the conclusion that honest companies do not now need to worry about falling foul of the law. And a bribery scandal can be hugely damaging to a company’s reputation – whether or not there are legal consequences.
‘Clarke says, “I do not expect a large number of prosecutions.” That is good news for the majority of decent companies that do not pay bribes. But arguably it is also good news for the minority of companies that do. And it’s rather unfair on companies that have taken the lead in promoting high ethical standards.’
THE AUDITOR’S VIEW: Deloitte
In the view of partner Nic Carrington, the guidance has come at the right time: ‘According to Deloitte’s 2011 Global General Counsel Survey – which polled 887 in-house lawyers in 10 countries – 61% of UK respondents said that their organisations were more concerned about bribery and corruption now than they were five years ago.
‘The top-three reasons cited for this were i) an increased regulatory focus in the UK, ii) an increase of work in emerging, or ‘risky’, markets, and iii) an increased regulatory focus elsewhere. Questions still remain for many businesses about how the new legislation will be enforced, and how prosecutorial discretion will be exercised.’ Anti-Bribery and Corruption Partner Kirsty Searles added: ‘It is now more important than ever that companies ensure that they have a robust risk-assessment process in place, and that any policy or procedural enhancements have been properly identified and implemented.’
THE LAW-FIRM VIEW: DLA Piper
According to consultant, and former SFO chief, Robert Wardle, ‘Paying bribes is, in the long run, bad for business. Those who ask whether business can afford this legislation – especially at a time of economic recovery – are misguided. This law is necessary to achieve greater transparency in world trade and efficiency for businesses.’
He stressed: ‘The Act is tough, and it is important that prosecutors exercise their discretion in enforcing it as the guidance recognises. Pursuing trivial allegations will not be in the public interest, especially where companies have been proactive in anti-bribery measures and have cooperated to remedy problems.’
THE RISK-MANAGEMENT VIEW: Protiviti
‘Provided that prosecutors take a sensible, measured approach to dealing with allegations of bribery, there should not be anything in the Act to cause undue concern,’ said UK litigation and investigations head John Cassey. ‘Now that final guidance has been published, there is much greater clarity on areas such as corporate hospitality, facilitation payments and use of third parties.
‘Legitimate businesses that genuinely run their affairs ethically, with clearly defined policies and effective controls to minimise the risk of bribery, should have nothing to worry about. Although the Act is designed to create a level playing field, this can happen only if a consistent approach is taken by prosecutors in the UK and overseas.’