Keep a file of rejected gifts, say advisers

Elizabeth Fournier
UK companies should prepare for the Bribery Act now by establishing a “no-list” of hospitality gifts that have been turned down, say City advisers.

Much has been made of what can be accepted as corporate hospitality under the Act’s new rules, but companies should pay more attention to what its employees reject based on internal standards – those that raise suspicion regardless of size.

“If you’re flying someone to Sydney for the Ashes and not going as well it’s always going to look strange – the new Act doesn’t change that,” said Daniel Barton, a senior director at professional services firm Alvarez & Marsal. “Instead companies should focus on establishing a list of gifts that have been declined, to prove that adequate procedures are in place internally to catch bribery.”

It’s also crucial that there is a clear chain of command in place for internal communications, with a central ethics and compliance officer that staff can go to for advice.

This is particularly important as there is no minimum price for a bribe – anything with improper intent is included regardless of value.

Though extra guidance on the Act is expected from the Ministry of Justice before the end of January, companies should not expect this to be dogmatic.

“Companies waiting for guidance rather than acting now are wasting their time,” said Barton. “It’s likely to be pointers rather than a template.”

This is particularly important in relation to facilitation payments. Already illegal within the UK, the new Act will have an extraterritorial scope that will apply to subsidiaries based in foreign jurisdictions.

Though the Ministry of Justice could prove lenient during the first weeks of the Act, it’s best to start now to ensure continued supply.

“Companies should look at fading out facilitation payments now so they have a chance to explain to suppliers before the Act comes in,” said Barton.

● The new UK Bribery Act was initally planned for implementation at the beginning of the year, but was delayed to allow for further consultation. It will now be introduced from 1 April 2011, with further guidance expected from the Ministry of Justice before the end of January.

● The Act contains a new liability clause for directors that will mean subsidiaries and service providers will have to be closely monitored – regardless of how far down the chain bribery occurs, the buck will stop at the top. But Scotland has indicated it would scrap rules that ban companies convicted of bribery from winning public contracts if the new liability charges go ahead

● Minority stakeholders in joint ventures could be hit by the new rules – a 49 per cent control defence will no longer be acceptable, with investigations focusing on the practical and commercial running of a business rather than the percentage held.

● The Serious Fraud Office is likely to encourage companies to be proactive in self-reporting and remediating – US companies used to working under the Foreign Corrupt Practices Act are likely to be a step ahead of their UK couterparts in coming forward.