The UK Ministry of Justice has begun a consultation exercise to prepare businesses for the introduction of the UK Bribery Act 2010. The act, which will come into effect in April 2011, will enable courts and prosecutors to respond more effectively to bribery in the UK and overseas.
The legislation holds businesses liable if they fail to prevent bribery by individuals performing services on behalf of their organization. The act applies to all commercial organizations (both companies and unincorporated bodies) that conduct business in the UK, regardless of where they were formed.
The act creates “the most onerous anti-corruption regime in the world,” Alexandra Underwood, a senior associate at Field Fisher Waterhouse, told India Business Law Journal. “Businesses in the UK face liability for bribes paid by their employees and business partners, wherever in the world that activity takes place. It does not matter that the entity knew nothing about the bribe or had little practical control over the person paying the bribe. The test is simply whether the bribe was paid with the intention of gaining a business advantage for the business in the UK.”
[ihc-hide-content ihc_mb_type=”show” ihc_mb_who=”3″ ihc_mb_template=”2″ ]
According to Neill Blundell, a partner at Eversheds, the Bribery Act is much broader than the US Foreign Corrupt Practices Act, 1977, because it covers commercial-to-commercial transactions, transactions with foreign public officials or entities, and prohibits facilitation payments. “An international company could therefore be prosecuted in the UK for corrupt acts it commits in Asia, simply because it does part of its business in the UK,” writes Blundell in India Business Law Journal’s sister publication, China Business Law Journal.
Businesses falling foul of the act could face unlimited financial penalties unless they can prove they had adequate anti-bribery procedures in place. Companies have expressed concerns about provisions of the new law that suggest that socializing with and entertaining clients could be perceived as an attempt to win business opportunities and therefore be considered an act of bribery. Lawyers suggest there are still many grey areas which require clarification.
[/ihc-hide-content]
