Adequate Procedures - Written by on Wednesday, September 29, 2010 23:52 - 0 Comments

UK bribery law: practical lessons from the journey to compliance

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As the entry into force of the Bribery Act gets closer (it comes into force next April and does *not* have retrospective effect) we are seeing increasing interest from companies and the media in the what the Act will mean for businesses.  Stories circulate about the difficulty of compliance and the challenges created by, for example, the lack of a safe harbour in the legislation for facilitation payments and corporate hospitality.

Is it workable?

Judging by the level of comment it would appear that many companies are concerned that the new law is unworkable or will simply make it impossible to compete on a global stage.

Listen carefully to the SFO, it will make you feel better

Our suggestion.  Listen VERY carefully to what the SFO have to say about their objectives and their plans for enforcement.  We think a great deal of comfort can be obtained.

[Shameless plug] Our webinar with Vivian Robinson Q.C this afternoon will be a great opportunity to learn more on this and perhaps put some of the fears (and urban myths) about the new law to bed.

What lessons can be learned from businesses who have taken the journey of Bribery Act compliance?

The flip side of the coin to the concern about difficulties in compliance with the new law are the numerous companies who are getting to grips with it.  For some companies this represents a sea change in culture.  For others, for example those already subject to the Foreign & Corrupt Practices Act, the new law represents a change which builds on top of strong foundations of existing anti-corruption compliance programs.

We are firmly focused on providing tips and insight on how to comply.  To that end thought we’d pass on three lessons which we’ve heard from companies who have taken the journey to compliance.

Commitment like a stick of rock (or candy!)

Anyone we speak to about their journey tell us that it is a huge commitment for the company.  One of the most important pieces of the puzzle is changing the culture.  For many this manifests in the adoption of a zero tolerance policy to bribery and corruption [Ed: this is the best way as any other message risks diluting the compliance strategy with potentially dire consequences].

The commitment includes the familiar “tone from the top”.  However, our preferred metaphor is a stick of rock.  The culture must be reflected at all levels throughout the organisation.  It must be embedded in the DNA of the business or as we say run through it like a stick of rock.

Have good business partners

Under the new law organisations are responsible for the conduct of associated persons who perform services for them.  This is a high risk area for business.  Make sure that you have good business partners.  They will understand and empathise.  Many will probably be dealing with exactly the same compliance issues your business faces in compliance. You can exchange war stories.

Don’t expect  it to be easy

We’ve heard stories of customs delays.  In another example we’ve heard about tyres being let down following the refusal to look after the police in one particular country.

Companies all report a pain barrier as they invoke their anti corruption policy.  But the common theme has been a message that when the anti-corruption message gets through and there is understanding that no payments will be made, the requests for payments stop.

Goods may take longer to clear customs but they do clear customs as officials get bored with looking at the same boxes every day and want to create space.

You may say that this approach is fine for a large corporate which can afford to wait; or that it is OK in a sector where a few days delay is only an inconvenience.  What about the situation for SME’s who lack the leverage of a global corporation or in a Fast Moving Consumer Goods (or FMCG – e.g. food, rather than motorbikes) business where a customs delay could make life impossible.

The answer.  It’s difficult and we are talking to the SFO about these issues.  You too have your chance in the ongoing guidance consultation.

One solution may be for SME’s is to take collective action and agree as a group, perhaps sector by sector, not to make facilitation payments.  Obviously this needs to be done in a way which does not incur the wrath of competition regulators. But given the objective this will be an obstacle which can be overcome. We expect to see this approach take hold over coming months.

The FMCG conundrum is potentially more difficult. The SFO have said that they do not expect miracles overnight and have dropped strong hints that they will be content if companies can demonstrate that they are doing their very best to comply.  The most difficult aspect here is that much like training a dog a mixed message of a zero tolerance policy while continuing to pay facilitation payments to move goods quickly through customs quickly is unlikely to change behaviour.  Nobody ever said it would be easy.

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