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Anti-Corruption Net Is Spreading

April 5, 2010

News that the UK is poised to pass new anti-bribery laws brings welcome strengthening of the steady push to eliminate bribery from business dealings.

For some time, the UK has appeared to lack vigor in its pursuit of British (or UK-domiciled) companies accused of using bribes. This week it is expected that the first substantial new legislation for more than 100 years will be passed, bringing the UK closely in line with the position of the US authorities.

In general, large corporations have welcomed this move; for most, their presence in the US market has obliged compliance for some time. Others may not be so happy – at least according to an article in today’s Financial Times. One concern is about the impact on competitiveness, fuelled by recent studies that suggest some industries are badly hit when they refuse to yield to the demands of public sector offficials in emerging economies. These bribes are often small – perhaps just hundreds of dollars – and yet are fundamental to obtaining licenses or gaining timely clearance of goods.  Yet such behavior undermines social development and justice and it is surely right that countries which preach high standards of integrity should not compromise. It is also misleading to suggest that all – or even most- emerging economies are not similarly addressing this issue; we whould do all we can to support them.

The second concern is one that was often voiced in the US – the lack of precision over what will constitute an acceptable internal process to safeguard against corrupt practices. While this nervousness is understandable, the truth is that companies operating in the United States have generally managed to operate within the law. There is also a growing body of precedent on which companies and their advisors can draw. Certainly it will be important to ensure robust internal training and clear messages from executive management. It will also be advisable to undertake spot checks, especially in overseas locations. This is just one area where contracts experts can play a substantial role.

It is anticipated that there will be a number of high profile cases in the next few months, to ensure business understands that Government means business on this issue. Contracts and commercial staff should ensure they understand the legislation, study the approaches of leaders in the US, and advise management of the steps to take, to ensure they are not filling the newspaper headlines!

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