Relief and frustration as business concerns force Bribery Act delay
7 February 2011 | By Gavriel Hollander
11 February 2011
4 July 2012
30 March 2011
7 February 2011
29 March 2004
Last week the Ministry of Justice announced a delay to the implementation of the Bribery Act, originally due to come on to the statute book in April.
The delay has been met with a mixture of relief and frustration in the City, particularly among firms that have been advising their corporate clients on the implications of the legislation.
The Lawyer spoke to four partners who have been following the twists and turns of the act since it was passed by the old Labour government last April:
Jeremy Summers, partner, business crime and regulation, Russell Jones & Walker
Undoubtedly, there’s been some heavy lobbying, not least from Formula 1. Whether that has been persuasive we may never know, but the timing is hard to ignore.
Their concern was that the act was drafted so widely that it could prevent normal business conduct and, in particular, corporate hospitality.
My view is that the act itself will not be changed but more thought will have to go into the guidance. A number of the GC100 have made the point that they have no problem with the purpose of the act, but they’re not comfortable with how it will be applied. The draft guidance wasn’t at all helpful.
I don’t think there’s ultimately going to be any big impact from the delay - it will still come in and bring about a sea-change in anti-corruption compliance.
Companies will now have an extended period of time to plan for the way that the act will affect their business, but it would be foolish for any company or its adviser to think it won’t come in.
It will be surprising if there is a period of much less than three months before the new guidance is published, and then there has to be another three months before implementation.
The delay is probably sensible given the concern of business leaders. The act was brought in in some haste just before the end of the last administration and this government could fairly say, it’s an important piece of legislation so let’s get it right.
Michael O’Kane, head of business crime, Peters & Peters
They will look at what aspects will make UK interests uncompetitive and water those down.
The reason it’s been delayed is that UK business and the CBI that represents it is concerned that the UK will be less competitive in foreign jurisdictions. It’s a question of looking at the legislation to make sure it’s compliant with overseas law, but doesn’t make it harder for UK businesses.
There should be clear guidelines with regard to hospitality. Guidelines need to be clear and robust about what is expected of companies, but there will remain a concern about the outlawing of facilitation payments.
I anticipate the delay won’t be too long. The UK has to reform its legislative framework to comply with international obligations but there may be a greater focus to ensure the guidance is drafted to make sure that UK business can remain competitive.
Sam Eastwood, head of business ethics and anti-corruption group, Norton Rose
The guidance was always going to be controversial. It was introduced as a concept late on in the parliamentary process and the new government introduced a previously unheralded consultation process to seek to head off corporate concerns.
People have to be realistic about how prescriptive the guidance can be. There’s a lot of guidance for companies other than that which is to be published by the Secretary of State for Justice - there’s a range of material out there that establishes broad parameters for an effective anti-corruption programme.
Compliance procedures have to be tailored to the individual company. The difficulty is that the act is quite broad, and some would say that’s necessarily so.
There appears to be an understanding among the political establishment that, for business, the act is going to be difficult to come to terms with.
In response to lobbying, the Government wants to make sure the guidance is as helpful as it can be, but it will be difficult to satisfy those corporates that want certainty. There’s scope to improve the draft guidance but anyone who wants absolute clarity is going to be disappointed.
The significance of the delay has been overstated in some quarters, but the Government will certainly be disappointed that it’s had to further delay implementation.
Paul Lomas,partner, litigation, Freshfields Bruckhaus Deringer
There were lots of rumours that it was going to be postponed so it’s no surprise in a way.
So why is it delayed? I think there are probably two reasons. First, the Government indicated that the act wouldn’t come into force until three months after the guidance had been published and that’s difficult to get right. Second, it’s worried the act may go too far in some areas.
The first version of the guidance attracted trenchant criticism and some of it was well-directed. I have some sympathy because the guidance has to deal with the law; much of the problem is inherent in the way the act is structured. The real problem is that the meaning of the critical term “associated person” is unclear. It could be a subsidiary, it could not be; it could be an employee, it could not be; it could be anyone who fulfils the poorly defined test of providing a service to a company.
This means that parties beyond the control of the company could expose it to criminal liability, and that really worries businesses.
The poor devil writing the guidance has to find a way of describing processes that are relevant to companies of all sizes and operate in a variety of ways, trying to cope with quite generally written but fact-specific tests.
The core of the problem is that a UK business can be exposed to criminal liability by a bunch of people it cannot control and top management may not even know exist. It’s difficult to be confident that your procedures are adequate to deal with that.
But the act is likely to come into force. The Organisation for Economic Cooperation and Development will be beating up hard on the Government and I find it hard to see how the Coalition could risk the criticism that it’s going soft on corruption.