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Smoke, mirrors and grease – government signals review of controversial Bribery Act

It was the most controversial piece of legislation aimed at corporates to emerge in the last decade and, in a slow news week at least, the Bribery Act is still generating headlines amid signals that the government is flirting with watering down the anti-corruption law.

A report in the Financial Times indicates that a review of the act is likely to be announced in July following recommendations from the so-called ‘Star Chamber’ – a government working party hunting the Snark that is cutting red tape.

A Ministry of Justice (MoJ) spokesperson confirms the direction of travel, telling Legal Business: ‘The government is clear that the Bribery Act and its associated guidance should not impose unnecessary costs or burdensome procedures on legitimate business. [The MoJ] and [Department for Business, Innovation & Skills] are working together to ensure that small firms understand the requirements and only put in proportionate measures to comply.’

Particular focus is on easing the compliance burden on small and medium-sized businesses and the 2010 act’s ban on facilitation payments. The latter are often termed ‘grease payments’ – used to induce officials to award contracts to a certain bidder – a tactic many UK businesses argue are necessary when conducting business in much of the world.

This is par for the course. The Bribery Act has frequently been the subject of hyperventilated attacks in the City press and from the business lobby for hobbling British companies, despite the UK’s antiquated anti-corruption laws and poor record on enforcement being criticised for years.

The incoming coalition government was quick to latch on to a populist topic at the expense of a law enacted in the dying days of the Labour administration, with then Justice Secretary Kenneth Clarke making repeated statements questioning the act’s value. This culminated in MoJ guidance issued in March 2011 that some saw as skating dangerously close to retroactively re-writing the act in outlining a softer enforcement stance.

The more heated attacks also skipped over the fact that lawyers and policy professionals specialising in the area generally received the act as a sensibly-conceived and well-drafted law. This reception extended beyond the private practice lawyers obviously in line to profit from advising on the act, with general counsel in the main supporting the thrust of the reforms.

Since the act has been implemented, there have been only a handful of low-level prosecutions against individuals and – despite the noted commitment from the Serious Fraud Office – no prosecutions against companies.

While critics of the act often lambast the statute as tougher than the Foreign Corrupt Practices Act – in part for its clear ban on grease payments – the US legislation is in practice more potent given the more robust and better-funded enforcement backing it.

Several corporate crime advisers contacted by Legal Business took a jaded view of the case for reviewing the act.

Pinsent Masons’ head of corporate crime, Barry Vitou, comments: ‘Given that nothing’s really happened under the Bribery Act so far – there’s been no corporate prosecution – it seems somewhat premature to consider a review of it. Some advisers have engaged in scare-mongering to generate work and therefore have overblown this. On the other hand, claims from UK companies about a lack of guidance ring hollow and suggestions that you can’t take people for lunch are obviously just plain silly. For your average SME, compliance shouldn’t be too onerous and for those that complain that lawyers cost a fortune, there’s loads of free guidance around all over the place.

‘So my concern is that there is a more general complacency around anti-corruption compliance generally. If UK PLC relegates the importance of anti-corruption compliance, we risk relegating UK PLC to the third division.’

Clifford Chance disputes partner Roger Best is likewise unconvinced of the case for reviewing the law, noting that senior ministry officials have recently given assurances that anti-bribery guidance would not be reopened.

Best argues that there is more need for guidance, not around what payments are illegal, but in how companies can build ‘adequate procedures’ to prevent bribery, the primary means by which companies avoid liability for the corrupt actions of staff or agents.

He comments: ‘It’s rather strange for the government to say that we’re going to set the very highest standards and impose them internationally then two years later start reviewing them before bringing a single enforcement case.’

Still, with a cash-strapped government looking for cheap ways to win over the business lobby there will be a strong temptation to unpick what is regarded by most lawyers as one of the better statutory reforms of the Labour government.;

For more on the act and white collar crime, see the online resource the