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If you ask me - UK Bribery Act

Some of the official guide to the UK Bribery Act, which comes into force in July, reads more like advice on how to evade it, says Chandrashekhar Krishnan

Explaining the importance of the UK Bribery Act when official Government Guidance to the new legislation was published recently, Business Secretary Vince Cable said: 'Bribery has no place in British business, at home or abroad. This new robust law reflects the UK's leading role in the fight against bribery, updates regulation dating back to 1906 and paves the way for competitive but fair practice.'

Transparency International UK, the UK Chapter of anti-corruption organisation Transparency International, agrees that the UK has one of the best robust anti-bribery laws in the world which will enable the country to meet its international obligations on tackling bribery.

From a short-sighted business perspective it's tempting to brand laws aimed at shaping principled business behaviour and meeting international standards as nothing more than unwelcome and costly red tape. But stopping bribery is both a matter of principle and good business sense - corruption destroys lives. It also creates an uncompetitive, uncertain and costly climate in which to do business.

Government Guidance on preventing bribery is useful in providing greater clarity on how business promotion and hospitality will not be affected by the Act. But Transparency International is concerned that parts of the Guidance undermine the Act, to the extent that there is now a significant risk that bribery will go unpunished and dishonest foreign companies could put honest UK companies at a disadvantage.

The year-long journey between the passing of the Bribery Act in April 2010 and the publication of the Government Guidance, has, in our view, been the undoing of the Act's integrity. The Act was passed by the last Parliament after a thorough parliamentary scrutiny process and with all-party support. All that remained before the new law could be fully implemented was for the Justice Secretary to issue guidance on 'adequate procedures' (section 9 of the Act), which provide a defence for companies accused of failing to prevent bribery. Transparency International and others expected the guidance to be published in July 2010.

But the arrival of the new coalition government spawned a lobbying campaign by some business groups. They seemed keen to influence the Government Guidance to ensure they could carry on 'business as usual' in those parts of the world where corruption is rife. Spool forward through an autumn consultation on the government's delayed draft Guidance and into January this year when the business lobby renewed its campaign.

As we feared, the Guidance undermines key features of the legislation and will achieve the opposite of what Justice Secretary Kenneth Clarke claimed for it. On its publication he wrote in the Financial Times that the Guidance 'will create greater clarity and establish a level playing field, helping to align trading nations around decent standards'.

Yet parts of the Guidance read more like a guide on how to evade the Act, than how to develop company procedures that will uphold it. Some parts strongly indicate that government has surrendered to last-minute lobbying, opening up loopholes that allow dishonest companies to continue paying bribes.

Of particular concern is the unclear status on non-UK companies listed on the London Stock Exchange, and of multi-national companies with subsidiaries in the UK and overseas.

A corrupt foreign company listed in London could raise capital in the UK, use those funds to pay bribes to win business unfairly at the expense of a UK company and escape prosecution, unless the courts ignore what the Guidance says.

Transparency International hopes that such weaknesses can be rectified. Companies should have robust anti-bribery programmes based on good practice rather than an approach that solely uses compliance with laws and exploits weaknesses in the Government Guidance.

Chandrashekhar Krishnan is executive director of Transparency International UK www.transparency.org.uk

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