Foreign partners liable
By R. Nadeswaran, The Sun
“When the Bribery Act comes into force, I shall have jurisdiction in respect of foreign companies – such as Russian companies – that carry on business in the UK and are involved in bribery in any other country in the world, even if the bribery has no connection with their UK business.”
– Richard Alderman, director of Serious Fraud Office.
THESE visionary words articulated in a BBC interview in November last year on the implications of UK’s new Bribery Act. It was supposed to be implemented on April 1, but as it stands, it may turn out to be an April Fool’s joke. Following outcry and protests from the private sector, it has been deferred until guidelines are published and thereafter, a three-month notice period before the laws is enforced.
The new legislation means that any UK company that fails to take adequate precautions to prevent corruption could be charged with a criminal offence, even if they had no knowledge of their overseas’ subsidiaries or companies or their agents’ actions. They have strict liability provisions which make the companies responsible for their companies and partners overseas for their actions.
This means directors of UK companies have to ensure that their staff do not engage in any unacceptable conduct not only in their own companies but in those of their overseas principals, agents, suppliers and producers. In short, they can only deal with those whose operations are deemed to be squeaky clean.
The British business fraternity is arguing that British companies will become less competitive and the new law will deter them from doing business in developing companies where “facilitation payments” are compulsory and in countries where it would be difficult for them to exert control over their local staff.
Queen’s Counsel Mark Rainsford told the Evening Standard: “The problem is that in emerging economies and the developing world, where it might be difficult and expensive to do that, some big employers will think the risk is too great and decide to pull out. That will be bad for Britain.”
That’s not exactly a cogent argument or a solution for the British firms. Taking a leaf out of the maxim, where there’s no giver, there will be no taker, shouldn’t UK directors ensure nothing is given or taken? So, is it all right to pay a commission or offer a “finder’s fee” to a middleman with political or governmental connections in exchange for a contract in some Third World country but not in your own?
The West has been given the impression that things won’t move in many countries if there is no greasing of the palms. Why do they have such perceptions and whether such perceptions are right or wrong will endure yet another debate. The numerous reports of corruption in high places and the government’s lack of interest in preventing it may be one factor. Then there’s the policy of only “registered agents” being eligible to bid for supply of goods or services. Overseas suppliers are compelled to use such agents and pay commissions, which are perceived as bribes in accordance with the Act.
The government, in its answers to questions in Parliament on the submarine deal said it did not pay any commissions but conceded that payments were made by the French suppliers to a middleman. If the same UK laws are applied in France, the manufacturer would have been put on the mat.
In Malaysia, there have been many cases, reported and unreported on activities which would be deemed an offence by a UK company with interests in Malaysian ones. When asked why he had to pay for the air tickets of a VIP’s personal trainer to accompany her on a trip to the United States, the director of a Malaysian media company whose shareholders include UK companies retorted: “That’s how you do business in Malaysia. If you want to get to the VIP, you will have to get close to the people around her.”
This would certainly be unacceptable to the UK authorities and neither would it be a defence for the UK principals. The distressing fact is such payments are now lying in public domain in the form of court documents. These documents have reached the Serious Fraud Office, and yet again, our country will make the headlines for the wrong reasons.
