AFTER A SERIES OF DELAYS AND MUCH AMBIGUITY, official guidelines on the interpretation and use of the UK Bribery Act were published on 31 March, while the act itself looks set to pass into law at the end of July.
Put in place to prevent bungs and backhanders, particularly abroad, the arrival of the Bribery Act will require vigilance from all businesses, including private equity houses. Ignorance will be no excuse. Whether it is gauging excess in corporate hospitality or ensuring overseas agents are on the straight and narrow, it is vital that firms adopt best-practice protocols to protect them from any damaging accusations.
There have been anti-corruption laws in place in the UK for over a century, of course, but things changed in April 2008, when Richard Alderman became director of the Serious Fraud Office (SFO). “Alderman’s arrival heralded a significant change in direction. He remodelled the office along the lines of the US Department of Justice, raising its profile and firing it up,” says Jeremy Cole, partner at Hogan Lovells.
Indeed, until 2008 there had been no prosecutions in the UK. But in the last three years, prosecutions against corporates and individuals, including the arrest of Robert and Vincent Tchenguiz for their connection to the collapse of Icelandic bank Kaupthing, have been numerous.
“Under the act, a bribe is determined as the intention to induce or reward improper conduct. Under the ‘basic’ offence, if you give someone an advantage with the intention of trying to persuade them to do something they shouldn’t otherwise be doing then you could be committing an offence. There is no need to show a corrupt mind or dishonesty,” says Cole.
One key element is that the guidelines are applied both inbound and outbound. Both giver and receiver can be liable.
Recent guidance published by the Ministry of Justice has provided clearer advice on aspects of the act that have caused much speculation. Below are the key elements of that clarification and an explanation of what the act could mean in practice:
Genuine hospitality that is reasonable and proportionate to the size of the business will not be troubled by the act. Three specific examples have been given – taking clients or customers to Wimbledon, a Grand Prix or Twickenham are classified as “bona fide hospitality, promotional or other business expenditure”.
The SFO will only target cases where hospitality is thought to be a cover for bribing someone. Authorities will assess this by reviewing the level of hospitality offered, the way in which it is provided and the level of influence the person receiving it has on the business decision in question.
The guidance goes so far as to recommend that you continue to provide tickets to sporting events, take clients to dinner, offer gifts as a reflection of good relations, or pay for reasonable travel expenses if proportionate to your business.