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ANTI-BRIBERY RULES TO GET EVEN TOUGHER

TOM EPPS<br />PARTNER, RUSSELL JONES &amp; WALKER<br /><br />BEFORElast week, some might have suspected the wave of criminal investigations into corporate corruption over the last 12 months was a blip. The inclusion of the Bribery Bill in the Queen&rsquo;s Speech, however, should convince everybody that such investigations are here to stay. <br /><br />The bill, which is understood to have cross party support, contains a new corporate offence of negligently failing to prevent bribery, meaning that those companies which turn a blind eye to their staff bribing foreign public officials may soon be at risk of criminal charges.<br /><br />The potential reach of the proposed legislation is considerable. Any company carrying on part of their business in the UK would be at risk of prosecution for failing to prevent bribery in relation to business conducted anywhere in the world. The bill will also repeal all existing laws on corruption dating back to 1889 and will seek to simplify and modernise legislation so that there are two primary offences, one for paying bribes and one for receiving them for both public and private sectors. If the bill is enacted, then a business will be able to avoid conviction if it can show that it has adequate procedures in place to prevent bribery.<br /><br />Those involved in business investigations will know that the clear message being delivered by law enforcement agencies in recent times has been that companies need to ensure that strong controls are in place and are followed, to minimise the risk of corruption. The existing penalties for failing to do so can be severe. For example, the FSA fined Aon Ltd &pound;5.25m for failing to properly assess the risks involved in its dealing with overseas firms, and recently the bridge building firm Mabey and Johnson Ltd received financial penalties totalling &pound;6.6m following the successful prosecution of the company by the Serious Fraud Office for corruption and breach of UN sanctions.<br /><br />In addition to regulatory action, companies which have weak anti-corruption controls may be exposed to the risk of investigation by the DOJ and SEC in accordance with the Foreign Corrupt Practices Act (FCPA). The FCPA requires companies whose stocks trade on US exchanges to have internal controls. The US has jurisdiction over foreign concerns if any act in violation of the FCPA in the US. This does not require a physical presence in the US, and even an electronic action such as a payment through a US bank can count. . <br /><br />The Bribery Bill underlines the message that those involved in investigations have received for some time: namely, ensure anti-bribery safeguards are in place or risk investigation. Given that the Serious Fraud Office is increasing its anti-corruption team and the US is showing no signs of losing its appetite for becoming the leading global enforcement agency, it would make sense for compliance programmes to include clear internal guidance as to how an investigation should be managed. To delay doing so could prove a costly mistake.<br /><br />Tom Epps is a partner in the Business Crime and Regulation team at Russell Jones &amp; Walker