Internationally transparent
When is a bribe not a bribe? Well, that can depend on where you're asking the question. But one thing is clear – following the implementation of the UK Bribery Act 2010 next April, companies operating in the UK will have to approach the question with as much rigour as anyone else in the world.
International approaches to the thorny problem of bribery and corruption were for many years informed by the US Foreign Corrupt Practices Act of 1977. This set benchmarks for the rest of the developed world to follow – benchmarks which were strengthened some 20 years later by the OECD's 1998 Convention on Combating Bribery of Foreign Public Officials.
For some time, the UK argued that its own laws followed the Convention anyway, and that there was no need for further legislation. But finally, after many years of criticism by the OECD and the BAE affair, it was decided to make a clean sweep of the various old laws that touched on the issue, and wrap them into a new, clear Act – and so the Bribery Act was born.
'It's certainly easier to understand,' says BDO's Forensic Services Director Andrew Maclay, 'and it's also dramatically more than just a copy of existing standards. In some notable ways the Act goes further than the FCPA and the OECD Convention, and it's important that companies are ready for its introduction next year.'
One key difference between the Act and the FCPA is that – as its name suggests – the latter only applies to foreign officials. 'The UK Act applies to anybody,' Maclay observes, 'and it also covers activities that happen wholly outside the UK.’
The Act places considerable emphasis on preventative measures. 'Section 7 creates a new corporate offence of failing to prevent bribery,' says Maclay, 'so if somebody in a company is paid a bribe, the whole company can be guilty unless it has adequate procedures in place to prevent bribery.
'Obviously this begs the question of what is meant by "adequate". The MoJ lists six principles that should inform these procedures – risk assessment, top level commitment, due diligence, clear practical policies, effective implementation, and monitoring and review; but unlike anti-money laundering legislation, there is no legal requirement to have these procedures in place. Technically speaking, the absence of these procedures would only become a problem for a company once an employee has committed an offence, although at this point the SFO would take a very dim view of their absence.'
Another notable difference is the treatment of so-called facilitation payments. Maclay explains: 'Payments of this kind, intended to speed up processes that should take place anyway – getting a visa, say, or sorting out the paperwork to import a lorry – aren't covered under the FCPA. Technically they'll be illegal under the Bribery Act, although UK prosecutors have said they're unlikely to go after small payments. The main thing though is that they must be scrupulously recorded – any attempts to cover them up in paperwork will be treated very seriously.'
Uncertainty appears to be easier to deal with in the US, where if a company has doubts about any aspect of an acquisition they're involved in, they can call a Department of Justice hotline which can give them clearance under the FCPA. The UK SFO is also offering guidance, but in more informal terms, and it looks unlikely that its guidance will prove to be so reliably definitive.
'The major objection to the Bribery Act at this stage looks to be knowing where you draw the line in so many instances,' Maclay comments. 'How are companies meant to be certain in the real world that they are complying adequately with its requirements? No doubt it will become clearer over time as cases come before the courts and decisions are made, but for the moment we would strongly advise firms to think hard about their policies and procedures, and make sure proper risk assessments are carried out.
'Transparency International has produced comprehensive guidance on adequate procedures under the UK Bribery Act 2010, and we'd recommend that anyone in doubt takes these as a starting point for their own corporate policy.'
• BDO has produced a Diagnostic tool, based on this guidance, to assist companies to review their anti-bribery procedures. Please contact andrew.maclay@bdo.co.uk to request a copy.
