U.K. Issues Guidance for Bribery Act
Navarro, Lisa, National Defense
* On July 1, the United Kingdom's Bribery Act 2010 finally comes into force. National Defense's December 2010 Ethics Corner highlighted the act's worldwide reach. U.S. firms with U.K.-based activities appear to be covered by the act, as are firms that have significant sales in or from the United Kingdom.
To guide compliance, the nation's Ministry of Justice in March published steps companies should take to prevent corruption. The Serious Fraud Office also released its statement on how it interprets the various Bribery Act provisions.
These two roadmaps, originally expected in January, were delayed after intense lobbying on the part of industry to address concerns. This postponed the effective date of the Bribery Act from April to July. Courts obviously will have the final say on interpretation, and much will depend on the fraud office's prosecutorial discretion. In the advent of judicial rulings, can the documents help companies to achieve compliance?
One highly controversial aspect of the Bribery Act is its jurisdictional reach, relative to the activities of foreign companies. The "s7 Corporate Offence," purporting to cover all entities that "carr[y] on a business" in the United Kingdom, can penalize companies for failing to prevent bribery in the first place. This obviously carries serious implications for any U.S. defense contractor who engages in the British defense sector.
The situation is arguably murkier, however, for companies selling goods into Great Britain on an infrequent basis. Perhaps heeding concerns about harm to U.K. commerce, the ministry guidance suggests that entities lacking a "demonstrable" U.K. presence may fall outside the scope of the Bribery Act. Wisdom dictates a conservative approach by firms that have any meaningful U.K.-related business, rather than relying solely on a prosecutorial discretion.
Accordingly, companies with any business nexus to the country should assume their individual activities may be subject to the act.
The act's reach in the context of corporate hospitality has also been criticized, with some questioning whether that business entertainment trips to the Wimbledon tennis tournament would raise compliance issues. …