International - Written by on Friday, September 24, 2010 14:27 - 0 Comments

The penny begins to drop

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Its been a busy week for the Bribery Act in the UK this week.

The draft guidance has been published and stories in the UK press have focussed on the tricky issues of compliance under the Bribery Act as the new law, which is to come into force in April, starts to become a reality.

More questions than answers

There is real concern over the way the UK SFO will treat facilitation (or so-called “grease”) payments and representatives of the FTSE 100 sought clarification of the way these should be treated.

It is clear that these payments are illegal (and always have been under UK law).

Typically payments made to expedite a process which is a right rather than the exercise of a discretion.  For example, payments made for the expedition of visas or getting goods through customs are often considered by those paying them to be facilitation payments.

The SFO made the somewhat delphic comment that whether or not the SFO will prosecute in relation to such bribes will depend on their “seriousness”.

It is unclear if other UK prosecution agencies (for example the Crown Prosecution Service which has far lower thresholds for prosecution) will adopt a similar stance or threshold before prosecuting. Without further clarification on the meaning of what is “serious” and on the position other enforcement authorities (for example the UK’s Crown Prosecution Service) will take in relation to such payments there remains uncertainty in relation to the way the prosecution authorities will exercise their discretion in deciding whether or not to prosecute if a facilitation payment is made.  We hope the prosecution authorities clear up these uncertainties.

The cost of compliance

We have also seen concern rising about the likely cost of compliance for SME’s.  A sector largely overlooked in the context of the Bribery Act where until recently the focus was on larger corporates and some of the eye watering fines which have been meted out to them.

However, Small to Medium Sized Enterprise’s are likely to be equally hard hit by the new failure to prevent bribery offence.  They typically do not have the resource to have their own employees on the ground in new markets and overseas territories and instead use representatives, agents and intermediaries.  Under the Bribery Act they will be responsible for these associates activities whether they know about it or  not.  There is a defence.  Companies will need to show that they have  “Adequate Procedures” to prevent bribery and in a story published by the FT the burden of the putting into place “Adequate Procedures” was placed under the spotlight. Our own Barry Vitou is quoted in this piece.

Our view

Businesses have the opportunity with the current consultation over guidance to seek clarity in relation to some of the uncertainties. However, the law will come into force next year and companies should use the opportunity now to take steps to prepare to comply with it.

Steps taken to comply can be proportionate.

No-one is suggesting that the systems that a global conglomerate needs to put in place are the same as those of an SME.

Golden Opportunity

If your business has questions about the Bribery Act please join us on our free webinar on September 30, when we shall be interviewing Vivian Robinson Q.C the general counsel of the SFO the principal UK prosecution agency in the enforcement of international fraud and corruption who will aim to deal with your unanswered questions.

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