In what is an increasingly competitive global market businesses are often faced with differing anti-competitive practices on both a local and non-local basis.
After criticism from the Organisation of Economic Co-operation and Development (OECD), triggered mainly by the judicial handling of the investigation into the recent bribery allegations against BAE Systems plc, the anticipated Bribery Act 2010, which has now received royal assent and is expected to be brought into force later this year, represents a significant overhaul by codifying and, in some instances, dramatically extending preexisting anti-corruption rules. However, does the Act provide businesses with adequate protection, allowing genuine competitive practices in a clear and free manner? The answer is probably not.
The Act contains two general offences, that of being bribed and that of bribing another where an 'advantage' is offered to induce 'improper performance', as well as notably introducing the corporate offence which carries strict criminal liability for a business whose 'associated persons' i.e. employees, subsidiaries, agents or consultants, pay bribes in relation to its business in either the public or private sector anywhere in the world.
Whilst similar in content to existing law, the actual definition of bribery appears somewhat hazy; the Act's provisions, including the new corporate offence, are not limited to pure financial payments and will prevent those better known 'facilitation payments' which may include certain types of corporate hospitality if intended to subvert duties of good faith or impartiality that the recipient owes to his or her employer.
Such provisions, which notably apply to both UK and non-UK businesses operating in the UK (no matter where the act takes place) are much broader than previous rules and are far wider in scope than comparable US provisions which do not prohibit facilitation payments or restrict dealings between private individuals.
Under the new legislation, failure to comply can result in an unlimited fine for a breaching party, as well as up to 10 years imprisonment for consenting individuals.
There is a single statutory defence for businesses able to show they have, on the balance of probabilities, 'adequate anticorruption systems and controls' in place which will require evidence of extensive policy documents, training and compliance material. Whilst likely to suit larger multibillion pound companies, a more light touch approach is expected for smaller or medium sized ventures although the extent of such action necessary to avoid prosecution is still unclear.
In a similar vein, the Act introduces a further new discrete offence of offering an 'advantage' to a public official to induce 'improper performance' in circumstances where such action is not permitted or required by written local law.
The requirement for express support under written law in the Section 5 defence is crucial and, whilst clearly intended to prevent argument over varying local customs, may well provide substantial difficulties.
For example, where in many countries, such as South Africa, businesses simply cannot compete without paying what the other international authorities might call 'bribes', a lack of written law permitting such payments may well force businesses to either withdraw from these markets or face prosecution. Further guidance is anticipated, but it is expected that prosecutors will take account of local advice when sought and followed.
In the face of such provisions businesses may well decide to take heed from the US and be tempted to turn themselves in and 'do a deal' with the prosecuting authorities. However, in the wake of recent judicial activism, seen in the court's decision to dramatically increase the penalty paid by US chemicals manufacturer, Innospec Inc, such action should be viewed with extreme care.
What is clear is that the Act requires strict deference to laws and social customs in the UK and overseas; unfortunately the only real certainty appears to be that in ensuring this, the Act unfortunately requires businesses to spend increased sums on legal costs in getting such advice both at home and abroad.
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