Bribery Act & Proceeds of Crime - Written by Barry & Richard on Monday, April 2, 2012 12:10 - 0 Comments
Opinion: Order Order: Let’s get some perspective & be careful what you wish for
The lunch was largely constructive; we were proud of the UK corporates who spoke about what anti-corruption measures they were taking (which included Jo Morgan at IMI) as peers swapped compliance tips and challenges.
On the other hand there were comments (Chatham House rule prevents us from being more specific) that the new law that the Bribery Act is poorly drafted: ‘we made a bad job of it’.
A speaker said that government guidance published by the Ministry of Justice only partly addressed the Bribery Act’s flaws and compared it unfavourably with the US Foreign Corrupt Practices Act. The Bribery Act, it was explained to the assembled throng, did not contain a ‘de-minimis’ threshold like the FCPA.
On Friday, the next day, we learnt of interest in attempting to seek dilution of the Bribery Act. We were asked ‘are there any examples where the Bribery Act has been particularly adverse for British business over the past year?’
On the flip side last week the OECD published which criticized the government guidance as too lax and permissive.
Cutting through it all
We decided not to go into bat at the House of Lords (why spoil a good lunch?). We haven’t got a good example of the Bribery Act being adverse for business either.
In truth, the FCPA contains no de-minimis threshold and references to one were misleading (at best). At the House of Lords we guessed the speaker was, in fact, talking about the US facilitation payment exemption. An exemption which would be useful if there was consensus on what a facilitation payment is.
Panalpina and its clients still smart over the c.US$230 million penalties imposed by the US for amounts clients paid to the Swiss freight forwarder to get goods delivered. Those who knew what they were doing (Head Office was largely if not totally ignorant) no doubt thought payments to get goods through customs etc. fell into the US ‘de-minimis’ (or facilitation payment) exemption.
In the meantime in the US FCPA receives exactly the same ‘it’s anti-competitive’ criticism the Bribery Act receives.
Ironically, there is a strong push across the pond for the FCPA to have a compliance defence like the Bribery Act.
When we meet Boards of UK PLC we occasionally hear concerns over the anti-competitive effect of the Bribery Act. Most are simply getting on with doing business ethically – having no time for meaningless debate.
Everything and nothing changed with the entry into force of the Bribery Act.
A contract entered into through bribery before the Bribery Act always represented the Proceeds of Crime subject to being recovered and/or confiscated just the same way as one after. Broadly, anyone involved before or after commits a criminal offence with the threat of a longer sentence under pre-existing money laundering laws.
There are plenty of stories that when companies who engage in bribery enter new markets levels of corruption in those markets increases.
Put to one side the ethics of people in the poorest countries paying twice the price to buy the same goods we do. The humble facilitation payment makes life harder for the locals on a day to day basis. Think Arab Spring. It’s hard to justify the requirement to ‘grease the nurse’ in order to get to see your new baby or get your sheets changed in hospital.
The UK fetish of comparing our law/enforcement unfavourably to the US is bizarre. In the US the top ten fines are either near or well over US$100 million. In the US Siemens clings onto the top spot with nearly US$800 million in penalties with a further c. US$800 million from German authorities.
The largest UK penalty to date doesn’t even equate to 5% of the Siemens US number or 2.5% of the combined US and German penalty.
The key to all of this is reasonable and fair enforcement. To date, broadly, the UK enforcement of anti-corruption laws has been fair and reasonable.
Be careful what you wish for.