FCPA Compliance and Ethics Blog

January 26, 2011

Doing Business in Russia under the FCPA or Bribery Act

As reported by Andres Kramer in Tuesday’s New York Times, in an article entitled, “Russia, Facing Big Budget Gap, Warms to Foreign Investors”, the Russian government is actively seeking foreign capital and foreign investors. The article mentioned that several state-owned enterprises are up for investment. It is reported that the state owned bank VTB; the state-owned oil company Rosneft and the state-owned national hydro-electric RusHydro, among others are seeking foreign investment.

While these offerings may produce significant business opportunities, Kramer notes that doing business in Russia still presents significant risks. He reports that the British political risk consulting firm Maplecroft “ranked Russia 186th out of 196 countries for political risk to business”. The Transparency International Corruption Perceptions Index for 2010, released in November 2010, gives Russia a score of 2.1 or number 154 out of 178 countries rated.

The Consultative Guidance on an adequate procedures program on the Bribery Act lists geographic risk as one of the key risks to be assessed for compliance purposes. This means that any US company contemplating such an investment, or UK company which will soon be subject to the Bribery Act, will need to carefully tread in any investment. Yesterday at the ACI FCPA Boot Camp in Houston, Michael Volkov, noted FCPA attorney from the firm of Mayer Brown, spoke on a panel with Ryan Morgan, of World Compliance, on the topic of due diligence on third parties. Many of Volkov’s remarks are applicable for US or UK companies which may wish to invest in Russian companies. Volkov believes the key all compliance based issues is to document the evidence. If you ask questions and get answers, document the process. If you ask questions and do not receive answers, document that process too. But the key is to Document, Document, and Document.

Volkov believes that the entire process of screening and evaluation of a new third party relationship should be done at the highest level possible within a corporation. This means in the General Counsel’s office; the Chief Compliance Officer or other equally high office trained to not only perform due diligence but also evaluate the risk. This centralized review should also include a centralized review of contracts to ensure consistent standards. He emphasized that the in-country business unit should not be allowed to handle this task. He noted that after the relationship is established you can set up a different standard for monitoring the relationship going forward. The key in this post-contract execution area is that if you detect a problem, then how does your company deal with the problem? Once again he emphasized Document, Document, and Document.

Volkov gave his thoughts on some of the basic pieces of information to cover when a company might begin the due diligence process. This would include:

  1. Existence of relationships with foreign governmental officials.
  2. Prior history of bribery or other crimes.
  3. What is the nature of services provided?
  4. What is the compensation and what will be the payment method?
  5. Have a written contract in place with appropriate terms and condition’s including:
    1. Reps and Warranties on compliance;
    2. Right to inspect and audit books and records; and
    3. Right to terminate if you believe that a violation has occurred.

As noted by the Kramer in his Times piece, there may be great opportunity for investment. However the risks for such investment, both political and those in the areas of anti-corruption and anti-bribery, as prohibited by the Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act may also be great. Some companies may find that their risk appetite is not large enough for such an opportunity. We can only end with the words of Ronald Reagan, in a different type of transaction he conducted with the then Soviet Union, “Trust, but verify.”

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2011

 

 

 

April 26, 2010

The Bribery Act-A Change in the Name Affects the Game

Filed under: FCPA,UK Bribery Bill — tfoxlaw @ 6:11 am
Tags: , , ,

The UK Bribery Bill is just over one week old and there has been a plethora of commentary on it. Indeed this commentator has received, and read, several helpful comments from his UK counterparts over the past week. This blog has had several posting on the legislation, both pre and post law. See here, here and here. This posting will list some of the highlights and insights into what has been posted over the past couple of weeks.

What’s in a Name?

TFoxlaw does not yet have a full appreciation of some of the subtleties of the British legislative process so the first thing that must be reported is that as the Bribery Bill was passed by Parliament and received the Royal Assent it is now law therefore it must be referred to as the Bribery Act. In other words, to continue to refer to it as the Bribery Bill is no longer correct. So, for those of you keeping score at home, please edit your score cards.

Is it a Game Changer?

This is not only a significant question for UK companies but also US companies with UK subsidiaries or a UK presence. So for both UK and US companies the answer is yes, the Bribery Act is a significant game changer. White and Case, in a client memorandum in April, 2010, notes that the Act changes the law for UK companies in the following areas:

• The extra territorial scope of the Act;
• The liability of senior officers;
• The corporate liability offence;
• The illegality of facilitation payments;
• The illegitimacy of payments to both foreign public officials and non-public officials; and
• The potential of debarment from public procurement contracts.

However, these changes can be just as dramatic for US companies with a UK presence so almost every US company with international operations has either a UK presence or a UK subsidiary therefore the answer is most probably yes, the Bribery Act is a game changer for US companies as well.

A new PM could ring in change?

For those of you who are not following the international section in your newspaper, there is an upcoming election in the UK. All Parliament seats are up for grabs and the party garnering the most seats will come to power, subsequently selecting the next Prime Minister. How does this impact the Bribery Act? It will affect the Bribery Act through the only affirmative defense set forth in the Act, which is the ‘adequate procedures’ defense. The Explanatory Notes to the Bribery Act indicate that this narrow defense would allow a corporation to put forward credible evidence that it had adequate procedures in place to prevent persons associated from committing bribery offences.

The legislation requires the Minister of State for Justice to publish guidance on procedures which relevant commercial organizations can implement to prevent bribery by persons associated with their entity. It was not originally anticipated that the Minster of Justice’s guidance on the Bribery Act, or the affirmative defense of ‘adequate procedures’, would not be published until the fall, most likely October as reported to this commentator.

Initially this means that it is likely that there will be a lengthy period where prosecutions are unlikely. Additionally, with the upcoming elections, there may be a change in government from Labour to the Tories or even to the Lib Dems. If the pro-business Tory party returns to power this could have implications for the guidance, as could a hung parliament. However, a coalition government of Labour/Lib Dems (or even a Lib Dem lead coalition) could well result in more restrictive language around the ‘adequate procedures’ defense.

So there may be more questions than answers at this point and the best guidance we can offer is “Watch this Space”.

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2010

April 16, 2010

Changes Coming: US Sentencing Guidelines, UK Bribery Billand the OECD on Facilitation Payment-Part II

At its April 7, 2010 meeting the United States Sentencing Commission approved amendments to its Sentencing Guidelines. The next day on April 8, 2010, the UK Bribery Bill received Royal Assent. These two events follow the December 9, 2009 release by the Organization for Economic Co-Operation and Development’s (OECD) Recommendation for Further Combating Bribery of Foreign Public Officials, when the OECD marked the tenth anniversary of the entry into force of the OECD Anti-Bribery Convention.

These three releases, which comprise of two changes in the legal schemes by two of the world’s largest economic players and the proposal of one of the largest Non-Governmental Organizations (NGO) dedicated to ending corruption across the globe portend significant changes in how companies will be structured and transact business going forward in the new decade. This is the second of three postings in which will discuss the changes that companies, with any US or UK presence, will be required to implement. The initial post will was on the changes to the US Sentencing Guidelines; in this post, we will consider the changes required by the UK Bribery Bill; and in the third and final post we will consider the recommendations as found in the OECD’s Recommendation for Further Combating Bribery of Foreign Public Officials regarding ending of facilitation payments.

 

There are several differences between the Foreign Corrupt Practices Act (FPCA) and the UK Bribery Bill which all companies should understand. These include:

  • The Bribery Bill
    • has no exception for facilitation payments.
    • creates strict liability of corporate offense for the failure of a corporate official to prevent bribery.
    • specifically prohibits the bribery or attempted bribery of private citizens, not just governmental officials.
    • not only bans the actual or attempted bribery of private citizens and public officials but all the receipt of such bribes.
    • has criminal penalties of up to 10 years per offense not 5 years as under the FCPA.

 

There is one affirmative defense listed in the Bribery Bill and it is listed as the “adequate procedures” defense. The Explanatory Notes to the Bribery Bill indicate that this narrow defense would allow a corporation to put forward credible evidence that it had adequate procedures in place to prevent persons associated from committing bribery offences. The legislation requires the Secretary of State for Justice to publish guidance on procedures that relevant commercial organizations can put in place to prevent bribery by persons associated with their entity.

Other than this commentary, the Bill provides no further information on what might constitute “adequate procedures” as a defense but the Government has signaled that it will work with the UK business community to provide appropriate guidance to this critical component of the Bribery Bill. The UK law firm KattenMuchin has indicated that they expect the Government will apply a test regarding the “adequate procedures” defense “with regard to the size of the company, its business sector and the degree to which it operates in high risk markets”. The law firm of Covington and Burling, in a client advisory dated March 31, 2010, has opined that the Bribery Bill will not come into force until late 2010 because it will take the UK government until then to issue guidance on what may constitute ”adequate procedures”.

The Bribery Bill is a significant departure for the UK in the area of foreign anti-corruption. It cannot be emphasized too strongly that the Bribery Bill is significantly stronger than the US FCPA. The Bribery Bill provides for two general types of offence: bribing and being bribed, and for two further specific offences of bribing a foreign public official and corporate failure to prevent bribery. All the offences apply to behavior taking place either inside the UK, or outside it provided the person has a “close connection” with the UK. A person has a “close connection” if they were at the relevant time, among other things, a British citizen, an individual ordinarily resident in the UK, or a body incorporated under the law of any part of the UK. Many internationally focused US companies have offices in the UK or employ UK citizens in their world-wide operations. This legislation could open them to prosecution in the UK under a law similar to, but stronger than, the relevant US legislation.

These changes include the outright banning of facilitation payments and the outright banning of all bribery and corrupt payments by US companies to not only foreign governmental officials but all private citizens. The Bribery Bill certainly does away with any legal question of “who is a foreign governmental official” under the FCPA and the use of other legislation, such as the Travel Act, which bans bribery generally, to back corrupt actions made to a foreign person who is not a governmental official, into an FCPA violation. All US companies with UK subsidiaries or UK citizens as employees, should ban such acts as part of their overall compliance and ethics policies sooner rather than later.

 

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The author can be reached at tfox@tfoxlaw.com.

 

© Thomas R. Fox, 2010

April 14, 2010

Changes Coming: US Sentencing Guidelines, UK Bribery Bill & OECD on Facilitation Payments-Part I

At its April 7, 2010 meeting the United States Sentencing Commission approved amendments to its Sentencing Guidelines. The next day on April 8, 2010, the UK Bribery Bill received Royal Assent. These two events follow the December 9, 2009 release by the Organization for Economic Co-Operation and Development’s (OECD) Recommendation for Further Combating Bribery of Foreign Public Officials, when the OECD marked the tenth anniversary of the entry into force of the OECD Anti-Bribery Convention.

These three releases, which comprise of two changes in the legal schemes by two of the world’s largest economic players and the proposal of one of the largest Non-Governmental Organizations dedicated to ending corruption across the globe portend significant changes in how companies will be structured and transact business going forward in the new decade. This will be the first of three postings in which will discuss the changes that companies, with any US or UK presence, will be required to implement. The initial post will be on the changes to the US Sentencing Guidelines; in our second post, we will then consider the changes required by the UK Bribery Bill; and in our third and final post, we will end with the recommendation as found in the OECD’s Recommendation for Further Combating Bribery of Foreign Public Officials regarding the ending of facilitation payments.

The US Sentencing Guidelines are used in the sentencing of organizations and serve as the de facto blueprint for corporate ethics and compliance programs. The changes, which were approved at an April meeting, must be formally submitted to Congress by May 1, and will take effect November 1, 2010, unless Congress passes legislation to reject or modify them. These proposed changes follow public hearings and public comment period which ended in March. The most significant changes in the Sentencing Guidelines are as follows.

1. Direct Report. The amendment would change the reporting structure in corporations where the Chief Compliance Officer (CCO) reports to the General Counsel (GC) rather than a committee on the Board of Directors. The proposed change reads “the individual…with operational responsibility for the compliance and ethics program…have direct reporting obligations to the governing authority or any appropriate subgroup… (e.g. an audit committee or the board of directors)”. If a company has the CCO reporting to the GC, who then reports to the Board, such structure may not qualify as an effective compliance and ethics program under the Sentencing Guidelines. The better practice would now appear to be that the CCO should be a direct report to the Board or appropriate subcommittee of the Board such as compliance or audit.

2. Discovery of Problem Inside the Organization Rather Than Outside. This amendment encourages a company to have a hotline and other mechanisms to detect any compliance and ethics violations internally. While most companies have a Code of Conduct, with attendant implementation policies and procedures in place, training thereon and a hotline; many companies have yet to implement any type of self-audit program to measure Foreign Corrupt Practices Act (FCPA) compliance program performance. This encourages companies to not only monitor its internal self reporting to actively test the information available to it through a system such as continuous controls monitoring. For post on CCM, see here.

3. Promptly Report. This amendment inserts specific language regarding the “prompt” reporting of any violation of a compliance and ethics program. While no definition of the word “prompt” is provided, the revisions to the Commentary note that an organization will be “allowed a reasonable time to conduct and internal investigation” and that no reporting is required if “… the organization reasonably concluded…that no offense has been committed”. Nevertheless this language reiterates what many former Department of Justice employees tell industry representative at conferences and events regarding the FCPA. It is always preferable to report a violation to the US government rather than the US government finding out and coming to you.

4. No Person With Operational Responsibility Condoned or Was Willfully Ignorant. This proposed amendment is aimed at those personnel within a company’s compliance and ethics organization. While operational responsibility could be defined to mean only those who might report to the Board, this commentator would suggest the better approach is to include all company personnel with direct reporting responsibility in the compliance and ethics group. The definition of “willfully ignorant” has not changed from the current version of the Sentencing Guidelines, which is provided in Application Note 3 of Commentary to §8A1.2 (Application Instructions-Organizations). The definition reads in full “An individual was “willfully ignorant of the offense” if the individual did not investigate the possible occurrence of unlawful conduct despite knowledge of circumstances that would lead a reasonable person to investigate whether unlawful conduct had occurred”.

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2010

April 7, 2010

UK Bribery Bill Update

Filed under: FCPA,UK Bribery Bill — tfoxlaw @ 2:06 pm
Tags: , ,

It appears that the UK Bribery Bill, introduced in March 2009, made it out of Parliament before the upcoming general election. The Bribery Bill is a significant departure for the UK in the area of foreign anti-corruption. It is significantly stronger than the FCPA. Many internationally focused US companies have offices in the UK or employ UK citizens in their world-wide operations. This legislation could open them to prosecution in the UK under a law similar to, but stronger than, the relevant US legislation.

Some proposed amendments were recently introduced by the Tory Party which would have allowed allow facilitation payments that were ‘reasonable in amount’, ‘customary in the situation’ or the ‘only reasonable alternative in the situation’. Writing in the blog doingggoodbiz.wordpress.com, Alan Holroyd reported that Clair Ward, the Parliamentary Under-Secretary of State for Justice, stated that such exceptions would have ‘driven a coach and horses through the policy objectives of the bill’.

This debated brings up one of several differences between the FPCA and the Bribery Bill. These include:

• The Bribery Bill has no exception for facilitation payments.
• The Bribery Bill creates strict liability of corporate offense for the failure of a corporate official to prevent bribery.
• The Bribery Bill specifically prohibits bribery of private citizens, not just governmental officials.
• The Bribery Bill has criminal penalties of up to 10 years per offense not 5 years as under the FCPA.

There is one affirmative defense listed in the Bribery Bill and it is listed as the ‘adequate procedures’ defense. The Explanatory Notes to the Bribery Bill indicate that this narrow defense would allow a corporation to put forward credible evidence that it had adequate procedures in place to prevent persons associated from committing bribery offences. The legislation requires Secretary of State for Justice to publish guidance on procedures that relevant commercial organizations can put in place to prevent bribery by persons associated with their entity.

Other than this commentary, the Bill provides no further information on what might constitute ‘adequate procedures’ as a defense but the Government has signaled that it will work with the UK business community to provide appropriate guidance to this critical component of the Bribery Bill. The UK law firm KattenMuchin has indicated that they expect the Government will apply a test regarding the ‘adequate procedures’ defense “with regard to the size of the company, its business sector and the degree to which it operates in high risk markets.” The law firm of Covington and Burling, in a client advisory dated March 31, 2010, has opined that the Bribery Bill will not come into force until late 2010 because it will take the UK government until then to issue guidance on what may constitute ‘adequate procedures’.

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2010

February 12, 2010

Proposed UK Bribery Bill: It’s Implications and Contrasts to the FCPA

In March 2009, the United Kingdom introduced into Parliament a Bribery Bill drafted to consolidate and bring into the 21st Century the various UK anti-corruption and bribery laws. As stated by Her Royal Highness Queen Elizabeth II, in her speech of November 18, 2009, the purpose of the Bribery Bill is to “Provide a modern and comprehensive scheme of bribery offences to equip prosecutors and courts to deal effectively with bribery at home and abroad.” As of February 9, 2010, the Bribery Bill had its third and final reading in the House of Lords, where no changes were proposed, and the bill has now been presented to the House of Commons for the first reading.

Background

General reform of the bribery laws was first proposed in a Law Commission report in 1998. This led to a draft Government Bill in 2003 that failed to win broad support in pre-legislative scrutiny. This defeat led to mounting pressure as the UK faced criticism from the Organization for Economic Co-Operation and Development (OECD) for the UK’s lack of clear substantive prohibitions on bribery and its failure to comprehensively implement and enforce its obligations under the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

The Secretary of State for Justice Jack Straw introduced the draft Bribery Bill, which was informed by a further review by the Law Commission and was published in March 2009. The bill was subject to pre-legislative scrutiny by a Joint Committee of both the House of Lords and Commons from May to July 2009. The Joint Committee report, published in July 2009, was broadly supportive of the Government’s proposals. The Government’s response to the Joint Committee report was published on November 20, 2009; the same day as the publication of the Bribery Bill.

With wide cross-party support it is anticipated that the Bribery Bill will pass the House of Commons and become law by May, 2010. The Bribery Bill amends and repeals existing anti-bribery offences under the Public Bodies Corrupt Practices Act 1889, the Prevention of Corruption Act 1906 and the Prevention of Corruption Act 1916 and abolishes the UK common law offenses of bribery and embracery (bribery of jurors). This proposed legislation represents a long awaited simplification of the law on corruption and makes the UK compliant with its international obligations under the OECD. It will have a major impact on the way businesses connected to the UK manage their international business.

Offenses under the Bill

A. Individuals

Individuals can be prosecuted for making an offer to, or a promise to, bribe where such promise or offer gives a financial or other advantage to another person to obtain a reward. The bribe need not be financial but can be of “other value”. This can occur for any function of “of a public nature” (i.e. ‘governmental official’) or “connected with a business” (i.e. ‘private entity’). The Bribery Bill makes it a crime to accept a bribe where a person agrees to receive or accepts something of value and it occurs whether or not the person actually receives it; if the action is linking to providing improper performance. As with offering a bribe, the legislation prohibits such actions by both public officials and those “connected with a business”. The test for whether an offer or promise is a bribe is “what a reasonable person in the UK would expect in relation to the performance of the type of function or activity concerned.”

B. Companies

In addition to the ongoing corporate liability for its employees engaging in bribery, this Bill creates a strict liability crime when a company fails to prevent bribery. This means that if an employee offers or makes a bribe and the person, who has the responsibility of preventing bribery, fails to prevent the bribe such person can be liable under the Bribery Bill. If there is no ‘person responsible’ for preventing bribery within the company, responsibility for the action is deemed to be that of any senior officer, such as a director, secretary or manager of the company. The only defense to this situation is if the company can show it had “adequate procedures designed to prevent…such conduct.”

C. Extraterritorial application

This legislation has extraterritorial application so that any UK citizen or company transacting business anywhere in the world can be liable under this Bill. This means that the relevant criminal act can occur outside the UK and persons or companies in the UK can be liable. But more importantly for non-UK companies, they are covered as well if they have a UK office or operation or even probably if they employ a UK citizen. There is no requirement in the Bribery Bill that the illegal conduct be approved by or paid through the UK branch or subsidiary. The simple instance of having a UK presence will create jurisdiction. So if a Dutch company has a UK branch and engages in bribery in some country in Asia, that Dutch company can now have UK liability under the Bribery Bill and be prosecuted in the UK.

D. Penalties

The Bribery Bill provides penalties for individuals for up to 10 years in jail per offense and unlimited fines. Senior company officials who consent to or are a part of a bribery scheme are liable as individuals as well. Equally significantly prohibited actions by companies are punishable by fines that not limited.

Contrast with the Foreign Corrupt Practices Act

The Bribery Bill is significantly broader than the US Foreign Corrupt Practices Act (FCPA). There is more strict scrutiny in the Bribery Bill and enhanced criminal penalties available to UK prosecutors. The significant differences in the two pieces of legislation are as follows.

A. Public v. Private

The FCPA focuses on anti-corruption of foreign governmental officials. The Bribery Bill specifically covers non-governmental officials, i.e., private citizens. This makes any bribery illegal; not just trying to or bribing a foreign governmental official.

B. Facilitation Payments

The FCPA has a specific defense for facilitation payments. The Bribery Bill has no such defense and indeed, certain types of corporate hospitality are prohibited if they are “intended to subvert the duties of good faith or impartiality that the recipient owes his or her employer”.

C. Strict Liability for Failing to Prevent Bribery

The FCPA has no strict liability either written directly into the statute or interpreted by judicial review. The Bribery Bill creates a new strict liability of corporate offense for the failure of a corporate official to prevent bribery.

D. Penalties

The FCPA has criminal penalties of 5 years per offense. The Bribery Bill has penalties of up to 10 years per offense.

Defenses under the Bill

There are two affirmative defenses listed in the Bribery Bill. The first is listed as the ‘adequate procedures’ defense. The Explanatory Notes to the Bribery Bill indicate that this narrow defense would allow a corporation to put forward credible evidence that it had adequate procedures in place to prevent persons associated from committing bribery offences. Although not explicit on the face of the Bill, in accordance with established case law, the standard of proof the defendant would need to discharge is the balance of probabilities. The legislation requires Secretary of State to publish guidance on procedures that relevant commercial organizations can put in place to prevent bribery by persons associated with their entity.

Other than this commentary, the Bill provides no further information on what might constitute ‘adequate procedures’ as a defense but the Government has signaled that it will work with the UK business community to provide appropriate guidance to this critical component of the Bribery Bill. The UK law firm KattenMuchin has indicated that they expect the Government will apply a test regarding the ‘adequate procedures’ defense “with regard to the size of the company, its business sector and the degree to which it operates in high risk markets.”

Conclusion

The Bribery Bill is a significant departure for the UK in the area of foreign anti-corruption. It is the culmination of many years of debate within the British government on how to move forward with its responsibilities under the OECD Convention on the Combating of Bribery. The Bribery Bill is significantly stronger than the US FCPA. Many internationally focused US companies have offices in the UK or employ UK citizens in their world-wide operations. This legislation could open them to prosecution in the UK under a law similar to, but stronger than, the relevant US legislation. US companies should monitor the progress of this Bribery Bill and be ready to enact changes to their FCPA compliance programs to incorporate the required changes if they have UK subsidiaries or business operations.

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