Q&A: UK Bribery Act
The UK Bribery Act has come into force as the coalition government attempts to clamp down on business corruption.
The government has said it wants the UK to take a leading role in the global fight against bribery.
Who does the Act apply to?
It applies to both individuals and companies. Both UK and foreign companies are covered, provided they have some operations in the UK, and could be prosecuted by the Serious Fraud Office (SFO).
It is a criminal offence for an individual to give or receive a bribe.
It is also a corporate offence if a business is found to have failed to prevent bribery.
What are the penalties?
Individuals can face up to 10 years in prison and an unlimited fine.
Companies can also face unlimited fines.
What counts as bribery?
In its guide to the Bribery Act, the Ministry of Justice says:
"Very generally, [bribery] is defined as giving someone a financial or other advantage to encourage that person to perform their functions or activities improperly or to reward that person for having already done so."
Facilitation payments, whereby officials are paid to speed up routine services they are obliged to carry out, are bribes. These type of payments were illegal even before the Bribery Act.
For instance, a facilitation payment may involve giving cash to customs officials abroad to get goods through.
In practice the SFO will make sure that a prosecution is in the public interest, and it is not expected that cases will be brought that concern small amounts of money. For larger sums though, experts say a tough line will be taken and companies will have to tolerate some delays.
Hospitality is not prohibited by the Act. This had previously been unclear and the legislation, which had been due to come into force in April, was delayed after the government issued additional guidance.
Are there any defences?
An organisation will not be liable if it can show it had adequate procedures in place to prevent bribery.
"Adequate procedures" may include providing anti-bribery training to staff, carrying out risk assessments for the markets you operate in, or carrying out due diligence on the people you deal with.
While firms do not have to employ external consultants or lawyers to help assess bribery risks, many are being advised to appoint an ethics officer.
However, this may prove to be a grey area, as what may count as adequate procedures for one company may not for another.
Are there any other grey areas?
Yes, according to Philip Urofsky, partner at the international law firm Shearman & Sterling and a former federal prosecutor for the US Department of Justice.
What if a company lists in the UK but doesn't have any physical operations here - is that carrying on business in the UK and so is it covered by the Act? he asks. The government seems to say no but it is a debatable point.
Then there is the issue of using contractors and subcontractors. The MoJ's guidance says you only have to perform due diligence on those who actually supply goods or services to you.
But if bribery is being carried out by a subcontractor below that first level and you know about it, then only doing one level of due diligence does not seem to qualify for the "adequate procedures" defence.
Another point for debate is the question of liability between a parent company and a subsidiary.
The guidance says that if a bribe has been paid by a subsidiary, and the benefit is solely to that subsidiary, then the parent company is not liable.
But Mr Urofsky argues that the parent clearly profits if a subsidiary does well. And he adds, if the parent company knew about the bribery, then surely the test should not be over profit anyway, but for culpability.
Are companies in the UK ready?
A recent survey by the consultants KPMG suggests that a third of UK companies have not yet conducted an anti-bribery and corruption risk assessment.
The survey also found that 71% of companies believed there are some places in the world where business cannot be done without engaging in bribery and corruption.
How does the UK compare with other countries over tackling bribery?
In covering bribery between businesses, the UK's legislation goes further that the Foreign Corrupt Practice Act in the US, which makes it illegal for companies to give foreign officials improper payments.
But the UK lags behind the rest of Europe in tackling corruption and has come under pressure from the OECD to catch up, says Michael Littlechild from the Good Corporation, which helps companies comply with the Act.