UK law and its enforcement looks set to become clearer, tougher and more like the US on bribery and corruption, according to a report issued on Thursday.
Anyone following the UK's abysmal performance on business-related bribery and corruption in the last couple of years will be heartened by the Law Commissions report, out today, entitled "Reforming Bribery".
Our current bribery laws have come in for sustained criticism in recent times.
For example, a recent October 2008 report by the OECD's Working Group on Bribery said that "current U.K. legislation makes it very difficult for prosecutors to bring an effective case against a company for alleged bribery offences."
Infamously, the UK's former Prime Minister, Tony Blair quashed a major investigation into supposed corruption at Europe's biggest defence firm, BAE Systems in late 2006.
While the UK is trying to avoid re-opening the case at all costs, the US Department of Justice is investigating the possibility that corrupt payments were laundered through the now defunct Riggs Bank in Washington D.C.
The BAE story is well covered in this recent article.
This new report by the UK Law Commission, asked in March 2007 to come up with reform ideas, says that the "patchwork of offences" around bribery be covered by two simpler ones.
These should, the Commission says, be related to both giving bribes, and recieving them.
The report also says there should be specific wording in law against bribing foreign public officials. Finally, the report concludes that companies should be censured for failing to prevent bribery by an employee or an agent.
This last part is potentially incredibly significant for corporate management of anti-corruption programmes.
Controlling agents who do not work as employees is a very complex and tricky business for large companies.
This is particularly true in emerging markets such as China, Russia or India where local "fixers" can be very useful for companies.
The Ethical Corporation Institute, the research arm of this publication, recently published a new research report on how companies are handling this issue, and others in anti-corruption, within Russia.
Karina Litvack, head of Governance and sustainable investment at F&C Asset Management, which manages £93.3 billion (EURO;118.4 billion) of assets from London, says it is essential for the UK to raise its standards in the area of anti-corruption enforcement, "as this is fundamental to the interests of investors".
According to a statement issued by F&C earlier this week to the press, the current lack of robust legislation and enforcement in the area of corruption may undermine the efficiency of capital markets by creating uncertainty for UK companies that have to compete in markets facing a high incidence of corruption.
In recent times, the UK’s relative standing in the area of corruption has slipped, when measured by Transparency International’s 2008 Corruption Perception Index.
F&C wants anti-corruption law to "enable the UK to comply with the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions”.
“No company relishes tough policing, but what companies do value is clarity and certainty, and a level playing field", concludes Litvack, who points out that:
"...at the moment, British companies face a mix of different enforcement regimes, including a very muscular US Department of Justice that is not shy about prosecuting non-US companies for actions taken outside the US. The French and Germans have also begun to toughen their stance, and yet the UK’s approach has been not only feeble, but compromised by political interference – as illustrated by the BAE Systems Al Yamamah case.”
The new Law Commission report could well form the basis of a draft bill that could come before the British Parliament before June 2009.
For more on ECI's recent Russia anti-corruption report, go here.
If you're interested in learning more about ways to tackle anti-corruption in your business, you might want to take a look at this conference we're holding in Washington DC on 14-15 May 2009. It's all about how you can manage anti corruption risk in your business, today. It's called The 2nd Annual Global Anti-corruption Summit USA.
Take a look at the conference by clicking on this link: www.ethicalcorp.com/globalethics
If you'd like some more information just call: +44 (0) 207 375 7575
Download your FREE Ethical Corporation magazine special report on anti-corruption, ethics and compliance here.