1st July 2011
As The Financial Times (paywall) reports the biggest overhaul of Britain’s bribery laws in more than a century will be of particular concern to financial companies. This is because, the FT explains the Serious Fraud Office and the Financial Services Authority will now be taking a closer look at how well financial services companies guard against "bungs".
The consequences for those found to pay or recieve bribes will be fairly hefty: individuals risk a maximum sentence of 10 years, while companies – even those with no headquarters in the UK – can receive fines for failing to prevent bribery.
That's not all though, the FSA has said that if companies risk action if they do not have tight enough procedures, all it has to do is prove bribery could have taken place because of weak controls.
There were fears that corporate hospitality could be considered bribery under the terms of the Act but earlier this year the Justice Secretary Kenneth Clarke assured companies that events such as Wimbledon and the Grand Prix were acceptable hospitality, so long as the amount spent was "reasonable and proportionate".
But many UK businesses could be still caught out as according to a survey published last year a third of UK companies have not yet conducted an anti-bribery and corruption risk assessment.
On the Sky News website Jeremy Cole, a partner at law firm Hogan Lovells International LLP, said speculation that dinner at an expensive resturant – paid for by a potential client – was an exaggeration.
He said: "Following the initial hype on corporate hospitality it is unlikely to provide the ammunition for the first prosecution, particularly following the recent guidance"
Law firm Shoosmiths has some advice on corporate hospitality.
It says the laws are "amongst the toughest anti-bribery and corruption legislation in the world" but fears over coporate hospitality amounting to bribery have been overstated.
"At first glance, the legislation is so broadly drafted, it appears that providing or accepting corporate hospitality might fall foul of the Act and therefore be illegal.
"Such concerns are overstated. As the Government has made clear, it is not the intention that genuine hospitality or reasonable and proportionate business expenditure should infringe the legislation. You can continue to provide bona fide hospitality, promotion and other business expenditure. The intention of the legislation is to catch hospitality which is really a cover for bribing someone."
Shoosmith gives the following advice:
"In a commercial context (that is not involving foreign public officials) for there to be an offence, the prosecution must show that the hospitality:
(a) provided an advantage to another person