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Business 'Not Hit' By UK Bribery Act

by Robert Lee, Tax-News.com, London

14 December 2011


Six months into its operation, the UK's Bribery Act has not significantly affected companies' ability to do business, according to a new survey from Ernst and Young.

Passed into law in April, 2010, the Bribery Act entered into effect in July this year, and is designed to modernize bribery law. Very generally, the government defines bribery as "giving someone a financial or other advantage to encourage that person to perform their functions or activities improperly, or to reward that person for already having done so". The Act contains two general offences covering the offering, promising or giving of a bribe (active bribery) and the requesting, agreeing to receive or accepting of a bribe (passive bribery).

In its survey of 406 chief financial officers, controllers and finance managers at a range of FTSE 100, FTSE 250, mid-size and private firms, Ernst and Young found that just 6% of firms believe the anti-bribery law has affected their ability to do business. This claim comes in spite of concerns raised in July that the legislation would damage the UK’s competitiveness abroad.

According to John Smart, head of Ernst and Young's Fraud Investigation & Dispute Services team, the Act has caused organizations to examine how they carry out their business. In particular, businesses have been forced to reconsider their work with third parties - largely agents, intermediaries, and distributors.

However, those business that have still not paid heed to the Act are at risk, particularly in their dealings abroad, Smart warned. He stressed that the Serious Fraud Office "has a large number of ongoing bribery and corruption investigations and is looking to take its first corporate scalp. Being cognizant of the risk, having detailed knowledge of those acting in your name, and making good decisions about the way you operate abroad goes a long way to protecting your business.”

Jonathan Middup, head of the Anti-Bribery and Corruption team at Ernst and Young, added that the survey is good news for UK business, and growth, for it shows that nearly six months on, the Act has not proved to be the costly barrier that some feared it could become.

He commented: “The premise that UK businesses need to pay bribes to be competitive abroad is a false one. There is a cost of carrying out risk assessments, amending policies, and implementing training and due diligence procedures but for many well run businesses they have been able to bolt on the extra requirements to good compliance structures that already exist. That more than nine out of ten say their business hasn’t been affected reflects this."

“The next step will be for companies to keep their bribery and corruption programmes fresh. To be protected businesses will need to monitor and review their programmes and ensure that compliance fatigue doesn’t set in,” Middup concluded.

TAGS: compliance | business | training | law | United Kingdom | corporate governance | multinationals | legislation | corporate responsibility

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