Recent media reports have suggested the UK government may relax its anti-corruption law, the Bribery Act, for SMEs. But some legal sources believe that's unlikely.
“Given there has not yet been a corporate prosecution under the Bribery Act it appears premature to consider a review,” Pinsent Masons partner Barry Vitou said in a client alert.
But back in March the UK's Select Committee on Small and Medium Sized Enterprises recommended that the Bribery Act come under parliamentary scrutiny, arguing the law “has been met with confusion and uncertainty.” The Financial Times reported the Bribery Act could be reviewed as early as next month, citing summary report papers from a government committee.
The issue centers on the UK’s treatment of facilitation payments, which are often small sums paid to a foreign official, typically to influence the timing of a deal or transaction. Under current UK legislation these are considered illegal payments, and have been since before the Bribery Act, but in certain jurisdictions, such as the US, they are considered legal.
The argument for review focuses on the red-tape and allegedly unclear guidance businesses must grapple with when dealing with requests for facilitation payments.
“The difficulty is that these [facilitation payment] requests can be endemic in certain markets and jurisdictions,” says Kirkland & Ellis partner Satnam Tumani, a former prosecutor with the UK's Bribery Act enforcer, the Serious Fraud Office (SFO). He added that businesses argue that the solutions available to them in situations where facilitation payments are expected leave them with difficult commercial decisions.
“For example, there is guidance from UK Trade & Investment and the Department for Business, Innovation & Skills, but this usually takes time and is not immediately responsive to the problem of extortion and demands for repeated low level payments.”
However, not all legal sources agree that dealing with facilitation payments is a problem. “Claims of the bureaucracy and lack of guidance around the Bribery Act ring hollow. Simple steps can be taken to comply at little or no cost with details available free online and elsewhere,” said Vitou.
But both lawyers agree the approach internationally is that countries are continuing to debate and move towards the outlawing of facilitating payments so the US' Foreign Corrupt Practice Act (FCPA) position facilitation payments may over time be the exception rather than the rule. The Organisation for Economic Co-operation and Development (OECD) has signaled a desire for countries to combat facilitating payments, concluded Tumani.
The UK introduced the law just a few years ago and has since signaled its intent to clamp down on corrupt practices. Other countries have also been toughening their anti-corruption legislation; for example, Canada bolstered its anti-corruption laws earlier this year.