Psst! Bribery Laws Are about to Get a Lot Tougher; Government Is Cracking Down on Cash Bungs and Other Corporate 'Gifts' LEGAL ANALYSIS

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Byline: Lucy Tobin

WHEN BAE's cash-for-contracts scandal put the UK's bribery laws under a bright spotlight, officials bayed for reform. They claimed the UK was lagging behind countries like the US, where the Department of Justice's Foreign Corrupt Practices Act (FCPA) specifically looks at cross-border deals, and European courts, which have tough anti-bribery legislation.

They flagged up the fact that when the British company settled with fraud authorities over the [pounds sterling]43 billion al-Yamamah arms deal with Saudi Arabia, it paid the US Justice Department [pounds sterling]250 million, whilst over here, the Serious Fraud Office pocketed only [pounds sterling]30 million.

Lord Falconer, the former Lord Chancellor, said the discrepancy in penalties in that case showed "the toothless nature of our law".

Now, as bribery allegations continue to crop up, including one at engineering firm Charter International last month, the Government has taken action.

Its tough new Bribery Act is currently waiting a second reading in the House of Commons, but lawyers say its crossparty support means they expect it will scrape through Parliament before the general election.

The legislation will give the SFO the authority to take action on bribery by UK companies, wherever in the world it takes place. It aims to eradicate the use of cash wads in envelopes, fancy cars and other gifts to secure contracts, and places the burden of proof onto companies to show they have adequate procedures in place to prevent corruption.

Lawyers say the firms most likely to be affected are those in the energy sector, defence, construction, pharmaceuticals and financial services, which do a lot of business in emerging markets.

There, firms often use distributors or agents to introduce them to the local officials that award contracts, and some of those agents pay money "to grease the wheels", says Raj Parker, a partner at City law firm Freshfields' global investigations practice.

"It can be quite crass, like suitcases full of cash, but sometimes it's more subtle, with payments to offshore companies," he says. "The new Act will catch both kinds of conduct. …