Stephen Fox (Senior Partner)
The Bribery Act is due to come into force in April 2011 with a short consultation period which will begin and conclude some time before that date. The Act introduces four new offences:
1. Active bribery including giving or offering a bribe in the private or public sector
2. Passive bribery including agreeing to receive or accept a bribe, which also applies in the public or private sector.
3. An offence of bribing a foreign public official
4. A corporate offence which applies when a commercial organisation fails to prevent bribery
This is new and will be an offence of strict liability for which organisations will need to show that they have adequate measures in place to prevent. This will be particularly important for UK companies acting abroad as behaviour which may not be an offence in another country will fall foul of UK legislation if the commercial entity concerned is formed or incorporated in the UK or carries on business in the UK.
The fact that another country may regard corrupt practices as normal and therefore a UK company cannot compete on a level playing field is no defence. It is also clear that merely having systems in place to prevent bribery and corruption will not be enough and we take the view that commercial entities must be able show that they are actively enforcing their systems and also that their staff and officers are regularly updated.
It is likely that a commercial entity will find that there will be a very wide definition as to for whom it is regarded as being responsible. Manoeuvres such as making people independent consultants or purporting to work through apparently independent foreign third parties are likely to come under close scrutiny and true independence will be required. We at Ralli foresee considerable arguments as to who is providing services? When or where an act takes place? What amounts to a service and when is it actually provided?
Rallis view is that we expect some of HMCE criteria in taxation cases to be replicated e.g. examining for how many other entities an apparently unconnected company actually works, and who controls its decision making. Anyone, accused of MTEC fraud, who has sought to reclaim VAT after running a legitimate mobile phone import or export enterprise, may well be familiar with the difficulties which might be faced in arguing your corner!
Ralli’s Regulatory team are used to these principles especially in relation to Money Laundering and Proceeds Of Crime Act issues, but this may be unfamiliar territory to many. The legislation in our view is likely in practice to follow the expectations imposed by the financial regulations embodied in the other recent enactments affecting the financial and commercial sectors.