Confusing rules on bribery may prove a gift to prosecutors

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LATER this month, the UK government is expected to announce a review of the Bribery Act 2010 in the wake of continued criticism of the legislation and its enforcement.

Despite its laudable objectives, critics argue that enforcement is ineffective and resource intensive; and that the Act creates an onerous compliance burden for UK business at a time when red tape is supposedly being reduced to foster economic growth.

Initially the CBI and other business groups argued the Bribery Act 2010 could impact on legitimate corporate hospitality and the giving of gifts, particularly overseas where such practices may be a cultural norm.

The Ministry of Justice deserves credit for addressing some of the concerns, publishing guidance on the approach that UK companies should take to compliance. The MoJ has also sought to reassure UK businesses that normal business hospitality and gifts are not prohibited.

However, a number of concerns remain. For instance, businesses operating in Scotland have yet to receive any assurance that Deferred Prosecutions Agreements (US-style plea bargain type arrangements) set to be introduced from 2014 with authorities south of the Border will be honoured by the Scottish authorities.

This is problematic because crimes committed by UK companies are often subject to concurrent jurisdiction, meaning that prosecutors in England and Wales and the Crown Office in Scotland are entitled to prosecute. Evidence that the MoJ is working with the Scottish Government to provide a meaningful solution would be useful.

The Westminster government has said it is keen that businesses “only put in proportionate measures to comply” with the Act and that the regime does “not impose unnecessary costs or burdensome procedures on legitimate business”. However, such sentiments lack the clarity of black letter law.

What I anticipate is further guidance from the MoJ.

While clarification will doubtless be welcomed it is ironic that any further guidance could require changes to existing procedures. The government’s objective of helping businesses by reducing the compliance obligations could actually serve to create more work.

What will be harder to achieve in the short term is the level of enforcement that will assuage doubts over the pragmatism of the legislation.

Since the introduction of the Act in 2010, three individuals have been convicted of Bribery Act offences, but no corporate prosecutions have yet been brought. Some say that without a big-name “scalp”, the rules will go largely ignored.

The full picture is more nuanced. Although there have been no companies in the dock, in 2012, there were five completed cases (mainly civil settlements) of bribery and corruption against UK companies under Proceeds of Crime legislation.

There are also numerous cases involving UK companies under investigation. One reason there has not been a company prosecuted is that many of the cases involve bribery overseas. Obtaining evidence from overseas is time consuming and challenging unless companies fully co-operate with the authorities. Quick results cannot reasonably be expected.

Here in Scotland, there is evidence to suggest that new procedures are working. The Crown Office has implemented a self-reporting policy designed to encourage companies to self-report bribery and to co-operate with an investigation.

Last year, Crown Office settled a case with Abbot Group Limited which paid £5.6 million to settle a historic overseas bribery issue. Abbot Group has received credit for the courage it showed in being the first Scottish company to self-report a bribery issue and the Crown Office received widespread praise for its effective and pragmatic approach to enforcement. Progress, as ever, will happen incrementally.

In any review of the Bribery Act it will be important not to lose sight of the initial policy objective which was to promote an ethical business culture in which bribery has no place. While the jury is out on the legislation and its application, there is no doubt that the aim is worthwhile.

• Tom Stocker is a Partner at international law firm Pinsent Masons and advised Abbot Group on the matter referred to above.

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