Bribery Act controversy no nearer to resolution

Nine months after it passed through parliament, the act is still dividing opinion

The Bribery Act hasn’t even come into force yet, but already it faces radical reform amid a torrent of criticism and heated debate.

Passed by the moribund Labour government last April, the act makes it a criminal offence to give, offer, request or receive a bribe; introduces a corporate offence of failure to prevent bribery by persons working on behalf of a business; and increases the maximum penalty for bribery from seven to 10 years’ imprisonment, with an unlimited fine.   The coalition is currently reviewing the act before it comes into effect in three months’ time, with a view to making its terms softer. The review was called to widespread fear that the legislation’s severity could jeopardise the success of British firms overseas, while criminalising innocent businesspeople.

 

However, many influential commentators are now rallying around the act, saying its terms are clear and workable, and it’s about time someone got tough on the spirit of corruption which permeates today’s business community.

Harsh

Critics argue that the terms of the act go way too far; rather than focusing simply on massive illegal payments, or ridiculously extravagant favours to clients, they claim it will punish even those who buy gifts such as wine and stationery for their customers at Christmas.

According to the act’s detractors, gifts previously considered perfectly innocent, such as tickets to the football and even dinner with clients, could be classified as criminal under the new law – so firms which have no intention of unduly influencing their customers could be punished. Furthermore, the act’s complexity could punish entrepreneurs who are simply unclear on the new regulations, rather than those actively trying to bribe.

Although the Bribery Act is based on EU legislation, critics argue that many other European states pay no heed to the regulations, and gift-based persuasion is a fact of commercial life in many of the world’s leading economies. Indeed, America’s Foreign Corrupt Practices Act allows ‘facilitation payments’ to speed up business decisions – whereas the Bribery Act would completely outlaw such transactions.

Thus, the critics claim, the British Government is putting its businesses at a competitive disadvantage by stamping out bribery so rigorously. Furthermore, many firms looking to expand overseas, particularly into the developing world where business and contractual etiquette is less clear cut, may be put off by the draconian new laws.

Liz David-Barrett at Said Business School, told the Daily Telegraph: “Once the Bribery Act is in force, UK companies might calculate that it is better to withdraw from certain markets entirely than to face the reputational risk of a bribery scandal, or lose business to corrupt competitors.”

But fair?

On the other hand, many argue that, if the coalition softened the act at this late stage, it would be seen as a cop-out and severely damage Britain’s international reputation.

One of the most strident critics is Lord Charles Falconer, justice spokesman for the opposition Labour party, who claims that watering down the act could be “disastrous” for Britain’s international reputation, as “it would send a message to every country in the world that our commitment was lukewarm.”

Furthermore, supporters of the act believe bribery needs to be stamped out. One of those supporters, Nigel Cooper, executive director at events specialist P&MM and an expert in corporate entertainment, told Growing Business, told Growing Business that the law surrounding bribes “really is something that needs to be defined. Like all things, it’s better to have it defined and you know what the rules are, rather than have it questioned.”

Cooper also refutes the view that the act is unduly complex. He told us:

“As long as you declare what you are doing, there are no issues. Provided organisations have a register, in the same way that MPs have a register, and you always declare what you receive on that register, then you have complied with the law.

“Ultimately, it’s down to the individual business to understand and accept what its own personal standards are. If a firm is planning to host or benefit from corporate hospitality events, there should be specific programmes in place with set parameters, and organisational authority should be sought and approved.”

Many believe that, far from being too vague, the definition of what does and does not constitute bribery remains fairly clear.

Cooper concluded:

“Corporate hospitality is okay – it’s a well-established marketing practice. What’s not okay is if a senior manager or procurement manager is offered a free holiday. There’s a big difference between a personal favour on that scale, and attending a group event.

“The law, the courts and everyone involved are quite clear on this. If it’s a case of “I’ve bought you something, take it whenever you like,” that’s bribery. If it’s a case of “would you like to attend a certain event on a certain day,” you shouldn’t have a problem.”

Delays possible

In light of the present controversy, many influential bodies, including the Institute of Chartered Accountants of Scotland, believe the government should postpone implementation of the Bribery Act until July.

Even if the act is delayed, it seems that the debate over its content will run and run – the corruption may go away, but the confusion seems to be here to stay.

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