Businesses warned of heavy price for bribes
WITH strict new measures set to be introduced in the UK cracking down on the use of bribes, kickbacks, gifts and other forms of financial advantage, Birmingham advisers have warned companies to be prepared or risk tough penalties including unlimited fines and a maximum 10-year custodial sentence.
The new Bribery Bill, which is likely to come into effect before the General Election, includes a new corporate offence of Failure, by a commercial organisation, to prevent a bribe being promised or paid, for or on its behalf.
Under the Bill, the corporate offence applies to the worldwide conduct of corporate bodies in England, Wales and Northern Ireland and applies to the conduct of others providing services on their behalf, such as agents.
The UK and parts of Europe have been accused of lagging behind the United States in the fight against corruption.
However, according to experts at Deloitte and Pinsent Masons, the imminent Bribery law will see the beginning of a new regulatory landscape at a time when the Serious Fraud Office (SFO) is becoming more aggressive, by bringing new US-style approaches to civil recovery in a bid to bring the UK in line with other countries.
Cited as an example of the new approach is the recent case involving BAE Systems, which agreed to settle a charge of conspiring to make false statements to the US government by paying the not inconsiderable fine of $400m (£250m).
It simultaneously reached agreement with the SFO to plead guilty to one charge of breaching its duty to keep accurate accounting records in respect of payments made in Tanzania, a move which resulted in a penalty of £30m.
Adam Smith, the partner leading Deloitte’s Forensic and Dispute Services practice in the Midlands, said: “Prosecutors and regulators across the globe are increasingly fining and penalising companies in respect of their illegal business conduct.
“Significant fines are no longer limited to the US and can be for millions, if not billions. The BAE Systems case highlights the doggedness and pragmatism of prosecutors and illustrates the significant financial penalties they can levy.”
The highest anti-bribery fine to date is $1.6bn, paid by Siemens AG to US and German authorities under US FCPA enforcement.
Claire Shaw, Pinsent Masons’ senior associate in the Birmingham-based Dispute Resolution and Litigation group, said: “Companies need to undertake an annual risk assessment and introduce compliance programmes, to prevent bribes being paid on their behalf, no matter by whom or where.
“Liability will only be avoided if they can show that adequate procedures were in place and that they were enforced.”
Mark Surguy, legal director in the Dispute Resolution and Litigation group at Pinsent Masons in Birmingham, added: “The law enforcement environment has changed irreversibly. New management could find themselves in the firing line if they don’t get to grips with historical issues within the business.”
