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Caught in the Act

The U.K.’s new Bribery Act can ensnare you on things as simple as entertainment expenses. Beware.

By  Coletta Kemper

The United Kingdom’s new Bribery Act goes into effect July 1, replacing a variety of complex anti-bribery laws. With it comes a lot of uncertainty about what is and isn’t considered bribery and who will be covered by the new law. Brokers around the globe might be exposed to liability under the act for actions taken by their employees, agents or subsidiaries in or outside of the U.K.

The Bribery Act has a long reach and applies to the conduct of anyone remotely associated with a U.K. business. It also creates a corporate standard of strict liability for failing to prevent bribery. The act makes bribery of a public official or private individual a crime—in contrast to the U.S. Foreign Corrupt Practices Act, or FCPA, which is directed only at public officials.

The new law raises many questions about corporate client entertainment. For example, if you treat a prospective client to a lavish dinner hoping to land an account—is that considered marketing? Or bribery?

Another area of controversy is the so-called facilitation payment. These are generally low-level payments to local officials to get a project going, such as funding for a new road leading to the project. The FCPA provides an exemption for these payments; the Bribery Act does not.

The U.K.’s zero-tolerance policy on bribery establishes tough penalties, including up to 10 years in prison. Companies would also face stiff fines and could be banned from bidding on future public contracts.

The Ministry of Justice released long-awaited guidelines to assist businesses in complying with the new law, but there are a number of unanswered questions. Brokers can find Justice Ministry help at www.justice.gov.uk.

Here is some general guidance from the Ministry, the London International Insurance Brokers Association (LIIBA) and other sources. It is by no means comprehensive. Be sure to seek legal counsel when applying the law to you and your organization.

There are four offenses:

1. Offering, promising or giving a bribe to another person

2. Requesting, agreeing to receive, or accepting a bribe from another person

3. Bribing a foreign public official

4. Failing to prevent bribery by an association person, in the case of a commercial organization or partnership (the so-called “corporate offense”).

Who falls under the Bribery Act? All U.K. businesses are subject to the law. It applies to non-U.K. companies if they or their employees or agents are involved in an act of bribery that involves a U.K. connection. Any firm that does business in the U.K. is also exposed if it violates the law anywhere in the world (with or without its knowledge).

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