The Act which came into force on July 1st this year was created with the intention of updating old and much-criticised laws on bribery. It was meant to come into force in April 2011, but this was delayed following negative responses from a number of key business figures and bodies such as The Law Society. One individual who publicly contested the Act was John Cridland, director-general of the CBI. He branded the legislation as “not fit for purpose” because it lacked clarity and had the potential to harm British companies. The draft guidance, published in September 2010, was also severely criticised as being vague and the Ministry of Justice confirmed that it would revisit the guidance to make it “practical and comprehensive”.
The new offences that the Act tries to address are:
• offering a bribe;
• accepting a bribe;
• bribing foreign officials; and
• failure of a commercial organisation to prevent a bribe.
The big issue seems to be the failure of a commercial organisation to prevent bribery. This offence is new and was considered controversial as it means that companies that are unable to demonstrate that they have implemented “adequate procedures” to prevent corrupt practices within their ranks or by third parties on their behalf, could be exposed to unlimited fines as well as seven to 10 years’ imprisonment for individuals. The draft guidance from the Ministry of Justice was seriously lacking in that it provided companies with little guidance as to how the defence of having adequate procedures to prevent bribery could be made out.
Having watched several commentators and pundits on TV as well as having read several newpaper articles I must say I am still thoroughly confused. Each seems to have their own definition and interpretation of the Act but there seem to be little agreement of when corporate hospitality becomes bribery. Everyone agrees that a brown envelope containing cash is wrong and that a day’s hospitality at the races is okay but no-one seems to know where the line will be drawn.
Justice Secretary Ken Clarke says, “Cases will be brought where they are in the public interest, which will require the personal agreement of the Director of Public Prosecutions or the Director of the Serious Fraud Office. I do not expect a large number of prosecutions and certainly not for trivial cases.”
So, when we can clearly define the definition of “trivial” and what is in the “public interest” we’ll all see with more clarity where the line lies.
One final point to ponder. We often hear tales that in some countries the distribution of cash in brown envelopes is regarded as normal business practice and without doing so you will never ever win the business. If a British company’s agent based “in country” were to carry out such a practice which won an order which subsequently created and secured British jobs, would it be in the public interest to prosecute or should we disqualify ourselves from trying to do business with such countries because it simply isn’t British? Your comments are most welcome.