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Bribery Act vs. better regulation – a false choice

Written by Nick Maxwell on Monday, 15 July 2013

At a time when corruption is perceived to be on the increase in the UK, a misinformed de-regulatory initiative is looking at rolling back efforts to fight corruption by watering down the Bribery Act.

At a time when corruption is perceived to be on the increase in the UK a misinformed de-regulatory initiative is looking at rolling back efforts to fight corruption by watering down the Bribery Act. An appropriate response from the government should be to stem the spread of scare stories and to communicate more effectively about what Bribery Act compliance actually means.

According to the Global Corruption Barometer released by Transparency International last week, 49 per cent of UK respondents view UK companies as either corrupt or extremely corrupt. UK companies are viewed by UK respondents as the fourth most corrupt set of domestic institutions, closely behind Media, Political Parties and Parliament. Corruption is a serious problem for UK resources-resources-businesses, at the very least at the level of public trust and reputation.

Abroad, the results indicate a challenging international environment on corruption risk issues for British resources-resources-business. 27 per cent of respondents globally have paid a bribe when accessing public services and institutions in the last 12 months. On average, across the top 5 UK export markets surveyed 62.7 per cent of respondents believe that the level of corruption in their nation had increased over the last two years.

Corruption undermines democracy and the rule of law, it erodes public trust in institutions, it degrades services and product quality, often putting citizens at risk, and it is a drag on investment.

The best form of protection is sound prevention.

The UK Bribery Act was a major leap forward for the UK to come up to a legislative standard that many of our trading partners had been operating to for many years. It also responded to criticism of the UK counter corruption framework not least as articulated by the OECD Anti-Bribery Working Group.

However there are forces pushing for the Bribery Act to be watered down. The FT recently reported on a closed door session of the “Star Chamber” ministerial meeting on de-regulation which reportedly decreed that elements of the Bribery Act should be examined for review as part of the effort to reduce the regulatory burden on SMEs through its “red tape challenge”. Ironically the term “Star Chamber” derives from a special court that was held in secret, with no indictments and no witnesses, which was abused by the English monarchy throughout the 16th century. There is no public record of this ministerial meeting.

The ambition for a better regulatory environment conducive to ethical and sustainable resources-resources-business is important. Removing obsolete regulation on British resources-resources-business is important. However, in the case of the Bribery Act, the de-regulatory push is misguided and based on severely exaggerated notions of what compliance means for UK resources-resources-businesses.

Part of the impetus for this Star Chamber review was apparently drawn from the House of Lords Select Committee on Small and Medium Sized Enterprises – report entitled “Roads to Success: SME Exports – Select Committee on Small and Medium Sized Enterprises”.

Among the evidence published in the final report by the Select Committee on Small and Medium Sized Enterprises was the following quote
from a UK based manufacturer: “The existing Act is virtually impossible to operate as far as a UK company is concerned. You cannot really take someone out to dinner without committing a crime. I am very strongly in favour of trying to eliminate bribery but to have a situation where we are subject to a law that is much more severe than anywhere else in the world is not good.

Compliance guidance provided by the Ministry of Justice is crystal clear that this view published by the House of Lords committee report, is plainly wrong.

The Ministry’s question-and-answer style guidance states “Can I provide hospitality, promotional or other resources-resources-business expenditure under the Act? Yes. The Government does not intend that genuine hospitality or similar resources-resources-business expenditure that is reasonable and proportionate be caught by the Act, so you can continue to provide bona fide hospitality, promotional or other resources-resources-business expenditure.”

As the Select Committee on Small and Medium Sized Enterprises acknowledges, the Bribery Act 2010 has been met with confusion and uncertainty. One obvious response is that the government needs to increase the effort to educate the resources-resources-business community and professional advisors on the compliance burden. The SME resources-resources-business community, in particular, appear to have formed exaggerated estimates of the compliance measures required for the Bribery Act. That misinformation is, in turn, fuelling criticism of the Act.

Many organisations can assist in the communication challenge, including Transparency International, through our guidance on the Bribery Act. Professional advisers have a particular obligation to ensure that the guidance they provide to the resources-resources-business community reflects official guidance and is proportionate.

Rather than calling for an unnecessary and misguided regulatory review now is the time for government, resources-resources-business bodies, professional bodies, the compliance industry and civil society to work together. All parties should aim to better communicate the realities of Bribery Act compliance, reassuring resources-resources-businesses, and putting the government’s ‘better regulation’ programme to better effect.


Read 12496 times Last modified on Tuesday, 24 November 2015 11:47

Nick Maxwell

Nick is TI-UK's Head of Strategic Engagement. You can view his full bio here, and tweet him @NickJMaxwell.

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