Facilitation payments - Written by on Friday, March 18, 2011 3:11 - 0 Comments

LATEST: Ministerial Statement Bribery Act, timing, facilitation payments & SME’s

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In response to questions about the timing of the entry into force of the new Act, its jurisdiction and other controversial subjects Lord Sasoon (pictured), a government minister – first Commercial Secretary to the Treasury, gave a statement to the House of Lords.  The statement covered various topics ranging from facilitation payments to issues faced by SME’s and the extractive industries.

Absolute commitment to new law

Reinforcing the government’s commitment to the new law he said:

“I make it absolutely clear that the Government are committed—lest anybody doubts it—to implementing the Bribery Act…Bribery should not be considered an acceptable way to win business….The Act will contribute towards a level playing field internationally.”

It is unthinkable that the new law will not enter into force.

Answering questions on the calendar for the implementation of the new law:

Timing

It is the intention of my right honourable friend [Kenneth Clarke Minister of Justice] and the Government to publish guidance shortly. Implementation of the Act will follow publication after three months, in order to give businesses time to prepare themselves.”

We are disappointed about the continued failure lack of a hard deadline.

Kenneth Clarke has said that he is working on this as fast as he can following a statement he made in the House of Commons a month ago.  However, we do believe that now is the time to impose a deadline.

The continued delay and lack of as hard deadline is creating a vacuum which is being filled with speculation and guesswork about what might be in the guidance and the timing of the new law.  This is unhelpful and serves no useful purpose.

This could easily be solved by the publication of the guidance enabling companies and their advisers to simply get on with it.

Facilitation payments

There has been some suggestion that the now fabled guidance will, when finally issued, offer some relaxation for these payments.

A very specific example was put by Lord Hodgson of Astley Abbotts who called for clarity and gave the example of a “transport tax” which he described as “not a tax in the conventional sense. It is a payment to customs officials and to transport union officials to ensure prompt and timely delivery of our goods.” In other words a euphemism for a bribe often referred to as a so-called facilitation payment.

Lord Sasoon’s reply does not suggest that the guidance will offer much comfort.  He replied: “I am not going to stand at the Dispatch Box—no Minister would—and suggest that anyone should break the law. I hope that that is a clear answer to the question.”

Against this backdrop it is hard to imagine that the guidance when issued will say anything which contradicts this approach.  However, as we have reported before Richard Alderman of the SFO has offered a dialogue with, and assistance from the SFO for, ethical corporates who have tried their best to stamp out these practices but find that they hit a brick wall.

We are encouraged by the SFO’s stated approach when it comes to their intended approach to the enforcement of the Bribery Act, it’s offers of help to ethical corporates who are trying their best to comply with the new law who find themselves facing knotty problems like these and their assurances that they are not interested in pursuing ethical corporates trying their best to comply with the new law.

They have described to us their view that the objective underpinning their approach and the legislation can be summed up in one word.  Transparency.

While it is anticipated that the SFO will be as good as their word when it comes to corporates who take this approach it remains our view that before engaging with the SFO corporates should speak to their legal advisers.

Specific help for SME’s

Lord Sasoon acknowledged the specific problems faced by SME’s and telegraphed that specific help would be available for them and that guidance and support would be available from the UK government at home and overseas.  He said:

“In all that the Government are doing in the regulatory space, we need to be sensitive to the particular needs of SMEs. It is the intention to publish a quick-start guide, as it will be called, that focuses particularly on the needs of small businesses. UK Trade & Investment and overseas posts will be geared up to provide guidance and support on managing risks of corruption in particular export markets”

Extractive industries

Lord Sasoon also answered questions about the Government’s assessment of the effectiveness of the Extractive Industries Transparency Initiative.   Lord Hannay of Chiswick asked: “Is it contributing to the fight against corruption? What progress is being made in getting more countries and more British companies signed up to it? Is something more needed if the discovery of rich natural resources in developing countries is not to be, as it has been so often in the past, a curse rather than a blessing? Are we looking seriously at making the EITI mandatory, perhaps within an EU context?”

Lord Sasoon replied: “It is a topic that my right honourable friend the Chancellor has recently addressed. He drew particular attention to it at the February G20 Finance Ministers’ meeting in Paris, where he raised the issue of new international rules; he believes that this was the first time that that has happened. My right honourable friend, along with my right honourable friend the Business Secretary, will be arguing for a European agreement that matches the new standards set in the US in this area. This is very much on our agenda.”

The government continues to forcefully assert that the law will enter into force.

We hope the guidance will be published shortly.  We are increasingly concerned that the ongoing delay.  The lack of any hard deadline is counter productive.  It encourages speculation about its content and creates uncertainty for clients.  It is hard to see any justification for continued delay.


Image © Crown Copyright 2011

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