The UK now has some of the toughest anti-corruption legislation in the world. The Bribery Act 2010 is unforgiving – along with the Proceeds of Crime Act 2003 and its sharp anti-money laundering provisions, we impose strict duties on companies that do business through London. Behaviour that used to be no more than questionable has now become patently criminal.
The consequences for business are both obvious and under-appreciated. In particular, the risk to law firms, banks, accountants and commerce flowing from inadequate internal compliance regimes is that these failings can amount to criminal offences under UK law, for which the corporates themselves can be prosecuted. Many foreign entities in London still have no idea of the draconian nature of UK legislation, still less of the obligations it imposes upon them and of the consequences of non-compliance.
The problem is particularly acute for companies with UK offices doing business in parts of the world where corruption is endemic. Everyone knows, for example, that in Africa and the Far East, cargo ships won’t be assigned berths until so-called facilitation payments have been made to harbour staff. Indeed, the practice is so widespread that US legislation offers a carve out and these cash handovers are tolerated as a part of doing business internationally.
Behaviour that used to be no more than questionable has now become patently criminal
But the UK Bribery Act shows no such understanding. Under our law, a facilitation payment is a bribe and a criminal act. Indeed, it is possible that profits earned under a contract oiled by portside payments of this sort may be considered criminal property under the Proceeds of Crime Act, so that a company dealing with these assets commits the serious offence of money laundering.
So what is an honest business to do? First, it needs to understand the law and to take all reasonable steps to see that its employees abide by it. This means having policies and practices consistent with legislation, since a failure to do so can amount to an offence in its own right. Companies need to be able to show that their response to the Bribery Act is to enforce future compliance through policed business practices.
And this is a recurring theme, so that a UK company purchasing an overseas operation that may have been involved in past corruption must be able to demonstrate a corporate determination to mend its new subsidiary’s ways. For the clear risk is that any profits flowing into London from past corrupt practice could raise the spectre of money laundering offences too.
These quandaries are the price we pay for world-leading legislation. Yet it is important to understand that it has never been our law that wherever a crime is evidenced, a prosecution must follow. Whatever the state of the evidence, charges will only be brought where a prosecutor finds that they are in the public interest. This is where the answer usually lies – in the case of a respectable company striving to clean up a newly acquired subsidiary, the Crown Prosecution Service may be unlikely to reach such a conclusion.
