EASED scrutiny of subsidiaries under the new UK Bribery Act could hit M&A deals, with buyers forced to increase due diligence on acquisitions, or risk liability for corrupt practices.
Guidance issued today on the Act is expected to make it clear that the definition of associated persons – those who perform services on behalf on a company and who the parent has liability for – is intended to be broad.
It means businesses will need to make sure they have stringent risk assessments in place on all subsidiaries, joint ventures, and members of their supply chains.
“This could affect the traditional, devolved power model of UK business,” said one person with knowledge of the guidance’s contents.
More information on overseas facilitation payments – one of the key areas that businesses have lobbied on – is also likely to be unforthcoming.
Companies should instead look to advice on prosecutions, which will also be released today by the Serious Fraud Office. It should give companies a useful steer on what to expect from the enforcers.
But it also means businesses are likely to have to wait for future case law for clarification on some points.
Though specific questions on hospitality claims are unlikely to be addressed, a focus on the intent rather than the value of a gift, and on applying the Act proportionally according to a business’ size should allay fears.
Full implementation can take place three months after guidance, but deputy leader of the house Lord McNally told a CBI breakfast meeting yesterday that it would be in force in September – sparking speculation that entrance could be delayed to account for the summer break.