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By | OUT-LAW.COM 9th April 2010 14:50

Bribery Act passed by Parliament

Slip us a fiver and we'll tell you all about it

A new bribery law has been passed by the Houses of Commons and Lords but is not yet in force. The Bribery Act can penalise companies whose employees engage in bribery if the company did not have adequate policies in place to prevent it.

The law gives a more certain definition of what bribery is and updates a law that was seen as antiquated and difficult to use to obtain prosecutions. A commencement order will be required to bring it into force.

The Act also places a new onus on companies that businesses have expressed concern about. The employer of someone engaged in bribery can be held to account for the first time for those acts, even if the company did not condone or even know about it.

The company can be liable unless it had adequate policies, systems and processes in place to tackle bribery and make sure it does not happen.

Businesses have said that they are left in doubt about exactly when that liability applies and what is meant by 'adequate'. The Government introduced an amendment to reflect this concern, forcing ministers to publish and update guidance on adequate measures.

The Conservative Opposition had proposed creating an agency to advise businesses on their practices. In the rush to pass the Act the party agreed to drop the idea but said that it would introduce it if it entered government after next month's general election.

"Although we have decided not to move further amendments, providing for a business advisory service, this is certainly an area that we will wish to explore further in government, even if on a non-statutory basis," said Conservative business spokesman Jonathan Djanogly when debating the passage of the law.

The Act was passed without any major modifications by both Houses of Parliament and has now received Royal Assent.

"This Bill will bring about a much-needed overhaul of our criminal law as it applies to bribery," said junior Justice minister Claire Ward in the House of Commons. "The Bill will be good for business; often commercial organisations bear the burden of the added costs of doing business in countries where bribery is prevalent. The Bill will also be good for developing countries by helping to ensure that aid and trade benefits those whom it is intended to benefit, and not corrupt officials."

"Bribery is a crime that undercuts competitiveness, derails honest companies and distorts the marketplace," said Djanogly in Parliament. "Those who bribe and those who are bribed, whether in commercial organisations or governmental institutions, are thereby diminished by their actions, such that their legitimacy is called into question and the confidence of consumers and the public is weakened. Bribery also undermines the societies in which bribes are made."

"With this Bill, Parliament is no longer accepting the excuse of local practice; rather, it is tying our flag to the highest levels of intentional probity," said Djanogly. "The UK has fallen behind the standards of combating bribery that we have seen in other western countries, and our reputation has not been improved as a result. Conservatives therefore fully back the Bill and, in particular, are pleased that its implementation will finally make the UK compliant with the 1997 OECD anti-bribery convention."

The Government conceded that extra guidance on what measures would count as adequate were needed when the law was debated in the House of Lords.

Bribery law expert Claire Shaw of Pinsent Masons, the law firm behind OUT-LAW.COM, had previously said that such guidance would otherwise be hard to come by.

""You're never going to get prescriptive advice from a prosecution agency such as the SFO [Serious Fraud Office] on what will be adequate and what won't," she said. "They don't want to fetter their discretion and set up too-firm guidelines or rules because each case is judged on its merits."

Changes to the law were proposed in a report by the Law Commission in 2008. It said that the law was out-dated and in places not fit for purpose.

Shaw recently told technology law podcast that the new law ought to make it easier for prosecutors to run successful cases.

"There have historically been very few corruption prosecutions," she said. "It is a difficult concept for a jury to get its head around to be honest because there is all sorts of rather aged legal concepts like principal and agent, and if the principal actually agrees to the corruption then can the agent be held liable. So there were lots of legal hurdles to getting a successful prosecution off the ground."

"What the new law does is to make it much clearer what bribery is and in what situations employees and companies will have committed an offence," said Shaw.

Copyright © 2010, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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