March 30, 2011 10:33 AM
U.K. Bribery Act to Finally Take Effect in July
Posted by Chris Johnson
The long-delayed U.K. Bribery Act will finally take effect in July, according to new guidance issued Monday by the Ministry of Justice.
The act, which looks set to generate significant work for U.S. white-collar practices, was delayed for the second time in February to allow companies more time to put in place what the ministry labeled "adequate procedures" for preventing bribery. Companies now have three months to prepare for the introduction of a law that is broader in both remit and scope than the U.S. Foreign Corrupt Practices Act.
Any company that has a U.K. office, employs U.K. citizens, or provides any services to a U.K. organization will be subject to the act, meaning that U.S. lawyers already advising public companies on FCPA violations are likely to face an increased workload and new reporting obligations to U.K. regulators.
As The Am Law Daily reported in October, the act is primarily designed to tighten the U.K.'s regulatory framework and is the first change to the country's bribery laws in more than a century. Still, its broad jurisdictional reach means that the majority of U.S. public companies are likely to be affected by what experts have described as the world's most draconian anticorruption legislation.
"It's wider ranging even than the [Foreign Corrupt Practices Act]," Lord Goldsmith QC, the former U.K. attorney general, now head of Debevoise & Plimpton's European litigation practice said at the time. "It's going to affect all companies with business in the U.K., even if they're not incorporated here. The enforcement agencies have greater powers and the penalties are much tougher than under previous U.K. law. Boardrooms throughout America and beyond should have this on their agenda."
Any company that has a U.K. office, employs U.K. citizens, or provides any services to a U.K. organization will be subject to the bill, which carries unlimited fines and an increased maximum jail term of ten years. That means that U.S. lawyers already advising clients on FCPA violations are likely to face an increased workload and new reporting obligations to the U.K.'s Serious Fraud Office (SFO).
And while the two laws will regularly act in tandem, there are a number of key differences. Most fundamentally, where the FCPA deals only with governmental bribery, the U.K. act also covers corruption between commercial entities.
And where the U.S. law requires prosecutors to prove intent and awareness of the bribe at a senior level, the Bribery Act imposes strict liability on any company that fails to prevent bribery from taking place. This not only covers bribes made by its own employees, but also by any individual "associated" with the company--a fact likely to be of major concern to smaller enterprises, which generally lack their own international networks and are therefore regularly forced to deal with third-party agents abroad.
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