Lunch with the FCPA Compliance and Ethics Blog – UK Edition with Barry Vitou

A couple of weeks ago I had the opportunity to enjoy a day of fabulously sunny weather in London and, more importantly, have lunch with Barry Vitou, one of the two founding partners of the Blogsite, thebriberyact.com. So I am able to present the next installment of Lunch with the FCPA Compliance and Ethics Blog. Just as sometimes my inspiration, Lunch with the FT, travels to the US to interview a noteworthy person, this edition comes from the UK. Over a lovely entrée of some grilled white fish whose name in French I could neither understand nor repeat, we chatted about all things Bribery Act, Foreign Corrupt Practices Act (FCPA) and generally anti-corruption and anti-bribery.

For those of you who do not know him, Barry, together with Richard Kovalevsky QC, founded thebriberyact.com site after, in 2009, they began to follow the legislative meanderings for the UK Bribery Act and decided to start a website to highlight the legislation and bring commentary and analysis to the new law. As I have previously stated, “If you only have one resource for all things UK Bribery Act related, you could not find a better site. Barry Vitou and Richard Kovalevsky have put together that rarest of all blog sites, one that covers an entire subject in-depth, with both practical insight and analysis. Their interviews of the relevant players allow all compliance practitioners to develop insight into what the top UK regulatory officials are thinking about on the Bribery Act.”

Barry has practiced law for nearly 20 years and is a partner at the firm of Pinsent Masons LLP. At Pinsent Masons, he heads the firm’s corporate crime team specializing in corporate risk and cross border corporate crime issues. As Barry puts it, he helps companies with ‘tape at the top’, prevention  advice as well as offering ‘the ambulance at the bottom’ when accidents happen.  Barry’s busy.

While the topics we discussed at lunch were wide-ranging, one of the issues I was most interested in was Barry’s take on the GlaxoSmithKline PLC (GSK) corruption investigation in China. As my readers will recall, I believe that the GSK matter will be a true game-changer in compliance because of the entry of China onto the international stage for the prosecution of western companies for corruption and bribery in China. With typical British reserve Barry explained to me that he did not view the situation was as unexpected or draconian as I have opined. While neither of us could discern the true motives behind the Chinese government’s aggressive pursuit of GSK, Barry believed that the issue of corruption in China has been present and indeed well known for some period of time. So he was not surprised an issue did arise.

However, from his perspective what was perhaps different was the very public way that investigation has played out. Particularly, when GSK publicly tried to distance itself from its Chinese operations (read: rogue employees); the Chinese government simply upped the ante by announcing its investigation had found evidence that the alleged bribery involved was coordinated by the GSK management and was not simply the work of rogue employees.  In this war of words it’s too early to know what went on.  But, one thing is for sure. Unlike the US anti-corruption regulators the Department of Justice (DOJ) or Securities and Exchange Commission (SEC) or UK Serious Fraud Office (SFO), none of which will comment about ongoing investigations, the Chinese government has no such compunction. Indeed there is certainly no jury panel to prejudice in China. But the point is that there is no way to win in any such battle. True or not.  Damage is done.

We also talked about the ongoing JP Morgan hiring program which is under FCPA scrutiny now. Once again we turned to the more general point that this matter may have mushroomed outside the original area of concern regarding the hiring of Chinese government officials sons and daughters in China to a wider review across Asia. Here I have to credit Barry with one of the great lines of British compliance understatement. He said that when any program comes under such intense scrutiny, you may well find other “imperfections” in your compliance process. But his take was not simply on this understated way of looking at things but to the larger point that the key question is what actions did you take when you found such imperfections? Barry went on to explain that when he lectures, trains or meets with companies one of the things that he tries to get across is that regulators on both sides of the Atlantic will measure you in large part on your response so it is far better to begin remediation as soon as you can do so rather than to wait.

We also talked about the SFO and where it might be in any Bribery Act investigation and prosecutions. He believes a key is that the SFO is reverting to type and will focus on prosecution of Serious Fraud. Barry opined that the SFO has several open, high profile investigation ongoing. Further, although the SFO Director, David Green, would certainly like to bring a high profile prosecution, he would not rush to do so out of expedience. Barry also said that it was his opinion that non-English companies which come to London to be listed on the London Exchange will certainly have to follow UK law if they wish to avail themselves of the benefits of UK registration.

Unfortunately our lunch had to end as Barry had to return to his office. But the meal, company, conversation and weather were all first rate. Until my next installment of Lunch with the FCPA Compliance and Ethics Blog, bon appetite.

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, 2013

Justin Rose and Barry Vitou-Two Winning Brits

Ed. Note-Yesterday, Justin Rose won the US Open, making him the first Englishman to win the Open since Tony Jacklin in 1970. So a big tip of the golf cap to Mr. Rose. In the field of anti-bribery and anti-corruption, the English are somewhat ahead of their golfing wins at the US Open. Barry Vitou, who together with Richard Kovalevsky QC, helps to shine a light on the UK Bribery Act, posted a piece on his recent remarks at the St. Petersburg International Law Forum. I asked Barry if I could repost his remarks on my site, which he graciously allowed me to do so.

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Last week Barry attended and presented on a (large) at the St. Petersburg International Law Forum about corruption.

The St. Petersburg International Legal Forum is now an established premier fixture on the legal map in Russia.

There were various slots on corruption.  Ever topical on Wednesday the Russian media (this link is worth clicking through to see the raid) was full of the story about the arrest of the Russian CEO of Societe General Russia on suspicion of bribery (USD$1.5 million to allegedly favourably  alter the terms of a loan in Moscow).

At the Forum Barry presented on International developments (a quick run down on the continuing trend for anti-bribery law creation and enforcement), the UK Bribery Act (coming soon…eventually) and the practical aspects of compliance in a Russian context.

What do I mean by in a Russian context?

Russia’s capitalist economy is barely twenty years old.  You can’t make an omelette without scrambling some eggs and it’s fair to say a large number of eggs have been scrambled in Russia.

But you can’t fail to be inspired, as your walk around the streets of Moscow and St. Petersburg, by the progress which has been made in those twenty years.

It’s not perfect.  There’s still a long way to go.  But whichever way you look at it strides have been taken.

Back to the ‘Russian context’:

For Russian business on the one hand UK Bribery Act and FCPA seem distant.

Yes, there is long arm jurisdiction under both.  But in reality, non-Russian law enforcement will (in most cases) find it hard to enforce.  Getting evidence will be tough (probably even tougher than usual) and Russia’s constitution forbids the extradition of a Russian national to another country.

There is little or no chance of Russians being extradited in orange jumpsuits to face the music in the US.

And yet.

On the other hand, there are three compelling reasons why, in practice, Russians care a lot about anti-bribery and why, whenever we present there we do so to packed houses.

First, Russians don’t like corruption.  Contrary to popular belief Russians do not like having to bribe traffic cops, kindergarden teachers to get their kids in, the planning department to get the permits to refurbish their apartment or anything else for that matter.

No-one would be happier than Joe Blogski or John Doeski if corruption in Russia was a thing of the past.  It isn’t yet (but then corruption is alive and well in the West too).

Second, many Russian businesses want to operate on an international stage. This ranges from setting up shop in London or New York to Russian businesses doing IPO’s on the NYSE, NASDAQ or London Stock Exchange and everything in between.

But perhaps the most compelling of each of the three reasons at the moment is not a general desire to stamp out corruption, the threat of law enforcement or the lofty aspiration of setting up outside Russia.

Instead it is the more prosaic reality that many Russian businesses count western companies as their customers.  Increasingly those Western customers are seeking to impose their own (developing and in some cases ill thought out) anti-corruption compliance on Russian businesses (mindful of the problems third parties in risky places – and Russia is a risky place – can cause).

So Russian businesses, the Russian government and Russian citizens are very interested in anti-corruption.

After explaining that in Russia it was broadly impossible to fire someone suspected of bribery (they would need to be convicted by a criminal court) and that the only two reasons to sack someone were, basically, 1. if they were drunk at work or 2. seriously late, Anton Smirnov of Lovells said a journey of 1000 steps starts with just one step.

The chairman of the panel, the very smart Alevtina Kamelkova Russian & CIS General Counsel of Alcatel Lucent said it would be really helpful if CEO’s of Russian groups demonstrated tone from the top and participated in anti-corruption panels like those running at the Forum.

That would be good too.

But in our view Russia should not beat itself up and likewise the West should not beat Russia up, over its present stage of development.

In world terms the Russian economy is a baby.

Non-Russian labor laws are hardly perfect – but we’ve come across plenty of others with similar flaws from the UK to Asia and beyond when dealing with international internal investigations.

We would like to see some CEO’s of Western businesses taking the time to demonstrate real tone from the top and talk about anti-corruption on similar panels.  Imagine the message that would be sent if the CEO of a Fortune 500 (not under FCPA investigation) took the time…

We agree that every journey starts with just one step. Russia has begun its journey.

Any Special Effects Left for ENRC?

Ray Harryhausen died yesterday. For my money, he was the greatest special effects artist of the 20^th century. I absolutely loved his stop motion animation. He began his career working under Willis O’Brien on the original King Kong. However he went on to surpass O’Brien by developing what the New York Times said was the process Harryhausen called “Dynamation. It involved photographing a miniature — of a dinosaur, say — against a rear-projection screen through a partly masked pane of glass. The masked portion would then be re-exposed to insert foreground elements from the live footage. The effect was to make the creature appear to move in the midst of live action. It could now be seen walking behind a live tree, or be viewed in the middle distance over the shoulder of a live actor — effects difficult to achieve before.” If you want to see real special effects, check out the Jason and his crew sword fighting against the raised-from-the-dead skeletons in Jason and the Argonauts.

We saw some very different ‘special effects’ for the UK listed company Eurasian Natural Resources Corp (ENRC) in the month of April. As reported in the UK Telegraph, the title of the April 30 piece says it all – “ENRC’s annual report is full of laughs – for all the wrong reasons”, reporter Alistair Osborne says that the worldwide mining conglomerate’s value “has been disappearing down the mineshaft.” While all of the company’s economic metrics were headed downward, the company’s chairman, Mehmet Dalman declared “The primary focus for 2013 will be to maximise shareholder value through the implementation of our strategic priorities.” Unfortunately, Chairman Dalman wrote this statement before he resigned as company chairman.

What was it that led to this resignation? It may be something related to an announcement by the UK Serious Fraud Office (SFO) that it “has launched a criminal investigation into Eurasian Natural Resources Corporation (ENRC) amid allegations of fraud, bribery and corruption”. In an article, entitled “SFO launches criminal investigation into ENRC”, it states the “SFO has confirmed that it has taken over an internal investigation by the mining giant into allegations made by a whistleblower relating to its operations in Africa and Kazakhstan.”

According to an article in the Financial Times (FT), entitled “ENRC looks to dig itself out of a hole”, some of these allegations in Africa related to claims that the company became involved in deals in the Congo and with transactions involving its President, Joseph Kabila. One of these transactions involved the purchase of mining rights in a project “outside the town of Kolwezi, which had been confiscated by the Congo government from the Toronto-listed miner First Quantum.” After legal action by the Canadian company, ENRC “settled with its rival for $1.25 bn.” The allegations of bribery and corruption in Kazakhstan relate to allegations of fraudulent payments at ENRC’s Kazakhstan unit Sokolovsko-Sarbai, known as SSGPO.

Unfortunately, ENRC seems to be stumbling over itself as it has investigated these whistleblower allegations. The first stumble was when ENRC dismissed its lead internal investigator, Alex Gaft. This individual dismissal came after ENRC dismissed the US law firm Dechert, which had headed up the external investigations of these allegations. This dismissal came after Dechert presented a preliminary report to the SFO, which the FT said “raised concerns over payments totalling at least $100m over four years.”

According to the FT,  Dechert received a Section 2a notice, immediately after being terminated, “and just weeks before a second report into ENRC’s business practices in Africa was due to be handed to the SFO, say people familiar with the investigation. The SFO uses Section 2a notices specifically to demand information at a pre-investigation stage when it suspects overseas bribery and corruption, its website says. Sending out such a notice to the law firm signalled that the SFO felt it could no longer depend on the information provided by the company alone. The SFO now has the job of investigating the African operations of ENRC, which recently hired ex-attorney general Lord Goldsmith as a legal adviser.”

To top off all of the above dismissals of investigators and investigating law firms, the ENRC representative who was overseeing the internal investigation was none other than Chairman Dalman, the same person who resigned his position last week. Now the SFO has taken over the investigation, which according to the FT means that it can “use its full criminal powers such as arrests, dawn raids and demands for documents.”

Thebriberyact.com guys have been telling us that the SFO is still out there and SFO enforcement cases are moving forward. When you have a lead internal investigator dismissed, external counsel let go and your own chairman heading an investigation all leave a public company within 30 days, it is bound to get the attention of regulators. I wonder if the Department of Justice may have noticed?

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, 2013

They are back, although they never really left, thebriberyact.com guys

Unlike that fabulous song-writing team of Lennon and McCartney, these two guys promised that they would be back and from what we have seen over the past few weeks, they have kept to their collective word. Yes, those two light-shiners on all things UK Bribery Act, thebriberyact.com guys have re-entered the blogging fray. While I will it to you to figure out which briberyact.com guy most closely corresponds to which song-writer, all I can say is it is hard to say where one’s contribution ends and the others begins. To celebrate their roaring return, I want to highlight some of the great posts that they collectively put up last month.

March 2 – Opinion: Don’t buy snake oil. Why a lack of Bribery Act prosecutions should not signal complacency. The guys begin their comeback last month with this post, which was their take on the status of some investigations and why there has yet to be a substantive prosecution. It is a good explanation of where things have been and where they might be headed. The guys end by noting, “In the meantime the chances of violations of the Bribery Act emerging are increasing with the passage of time. This is borne out in fact. We are aware that the SFO has a number of pre-investigation (or projects as the new Director of the SFO has dubbed them) in connection with the Bribery Act already. Whether these develop into Bribery Act enforcement cases remains to be seen. One thing is for sure. Bribery Act enforcement for corporate violations is inevitable. Those who would suggest otherwise are selling snake oil. Don’t buy it.”

March 3 – The Bribery Act, its material impact since 2011 & the Aston Martin analogy… In this post the guys take on Howard Sklar and everyone else who says it is time to bring an enforcement action under the Bribery Act. They put it as such, “For those seeking instant gratification then the Bribery Act, it turns out, is not Coca Cola. But we’ll stick with the Aston Martin analogy. Aston Martin took off with the arrival of a certain David Brown. The SFO now has David…Green… But on a serious note, the impact of the Bribery Act should not just be measured in enforcement (though that will happen). It’s ultimate purpose was to foster behaviourial change. The genie is out of the bottle, the Aston is out of the garage and 18 months in change is already happening.”

March 5 – Don’t mention the ‘war’? Scotching the myth that saying the ‘b’ word will freak out employees in high risk markets. This post speaks to that most classic of English traits, to apologize for everything English. The guys point out that it is actually OK to tell employees not be pay bribes or otherwise engage in corrupt behavior, you will not insult them by doing so. They properly note, “The sight of people from Head Office taking the trouble to visit the local office with strangers in tow asking lots of questions underscores the importance the business attaches to anti-bribery.  It sends a very clear message to those in the organisation who might seek to apply unfair pressure on others to engage in questionable practices. A clear directive that bribes will not be paid is likewise well received. Employees like to know that they will not be sacked for losing a sale as a result of not bending to improper requests and demands,” they then conclude with this universal truism, “And for the very tiny minority (in our experience) who don’t like it – you don’t want to employ them anyway.” As we might say here in the  south, the American south that is, “Amen, brother.”

March 14 – Parliament report calls for Bribery Act review: Our opinion – Junk in. Junk Out. With typical British tact, the guys skewer a claim presented in the House of Lords committee that the Bribery Act has met with “confusion and uncertainty.” The guys end by offering to help these forlorn Lords with a bit of education by saying, “There is plenty of free guidance out there on the application of the Bribery Act. We cannot think of a piece of legislation which has sparked much more commentary, advisory, much of it on line and completely free, including our own eponymous website. Complaints about a lack of information and desire for more guidance ring hollow – especially when a centerpiece propping up the claim is the concern that taking someone to dinner is a criminal offence. The calls for a review need to be seen in context. Junk in. Junk out. And, Tony from Alderly PLC, if you’re reading feel free to give us a call. We can help you.”

March 22 – (Contrarian) Opinion: Corporate crime in the UK. A shift in public perception? In this piece, the guys noted that “Notwithstanding the barrage of criticism which has been meted out to the SFO in recent months it appears the perception of the public in general may be changing about it, and the UK’s approach to dealing with corporate crime.” They ended this post with the following witty observation, “And, while it may not be politik to say it, (but then we like to be visionary contrarians like others we can think of…), perhaps criticism of the SFO today for historic conduct is just a bit harsh and opportunistic? Perish the thought….”

March 24 – The Met, City of London Police & SOCA spearheading additional £8 million crackdown on overseas corruption. In their final March post  the guys report on some very clear indications that the UK government is putting its money where its collective mouth is regarding its seriousness to combat bribery and corruption. The guys noted that “The UK government has reportedly earmarked a further £8 million in the fight against corruption to go to specialist anti-corruption teams in the Metropolitan and City of London Police, the Serious Organised Crime Agency (SOCA) as well as additional support for the Crown Prosecution Service (CPS).”

So while it is true they never really left, because you know they do practice law for a living; it is good to see them back up on the site and providing their collective opinions and insights.

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, 2013

Head ‘Em Up and Move ‘Em Out-the Bribery Act Becomes Effective

Well it’s been a long ride but it’s here. The UK Bribery Act is effective as of today. It seems like it has been more like herding cats than herding cattle. Just where is Rowdy Yates when you needed him? The Bribery Act has been the subject of a veritable multitude of commentary and, as with all commentary, some is of value and some is, well, just commentary. For what it’s worth, on this day of effectiveness, I add my thruppence worth of commentary.

Who’s On First?

As written in the FCPA Blog, in a post entitled, “The Coming Chaos in Global Enforcement”, there will certainly be a world-wide focus on anti-bribery and anti-corruption. Even if the Bribery Act is not “the FCAP on steroids” it does portent a growing trend towards multiple jurisdictions prosecuting bribery and corruption. There will certainly be cooperation between jurisdictions. The FCPA Blog quoted Serious Fraud Office (SFO) Chief  Richard Alderman who said the following:

It is important that the enforcement authorities liaise closely together so that there can be an overall resolution subject to the decisions of the courts in each jurisdiction. These issues are best left to the authorities in each jurisdiction and the courts.

Don’t Get Picked Off First

While we may not know what the future may portend, I can say with some degree of certainty that you do not want to be the first company which the SFO brings bribery or corruption charges against. If this happens, your company will probably face a very difficult time as the SFO will want to make a name for itself with a highly public and highly publicized enforcement proceeding. And remember, if your company thinks it may have reached a settlement or even the British equivalent of a Deferred Prosecution Agreement (DPA) with the SFO, it still must be accepted by the UK Courts, which hold the sentencing prerogative near and dear to their hearts. You certainly do not want to the first to test the boundaries of what the British judiciary will accept.

Watch for High Heater-it might be aimed at your head

Writing in thebriberyact.com, in a post entitled “BREAKING: We forecast it in March – SFO confirms involved in US sovereign wealth fund probe” our colleagues Barry Vitou and Richard Kovalevsky QC, discussed the announcement that the SFO would be joining the US Securities and Exchange Commission (SEC) in investigating those companies which do or did business with Sovereign Wealth Funds (SWF) or are private equity companies. I would put my money on a “high hard one” towards private equity because what may look like reorganization of companies, by taking majority ownership and eliminating managerial inefficiencies to private equity, may look like cutting back or not taking compliance seriously to a regulator.

Adequate Procedures-Rollin’ Rollin’ Rolling; Keep Those Doggies Rollin’

As was pointed out in the US House Judiciary hearing last month, the Bribery Act has an affirmative defense called ‘Adequate Procedures’ which the Foreign Corrupt Practices Act (FCPA) does not. However, there are many unanswered questions about ‘Adequate Procedures’. Mike Volkov, in a post entitled, “T-Minus 32 hours and Counting — The UK Bribery Act Becomes Effective” detailed some of these unanswered questions

How will the defense to a corporate charge for failing to prevent a foreign bribery offense actually operate? What kinds of evidence will companies be allowed to offer? Will acts of compliance, actual law-abiding conduct, be allowed or an overall presentation of the anti-corruption program and the compliance successes?

What I believe is that a company should following the Six Principles of an ‘Adequate Procedures’ program; or the OECD Good Practices; or the Department of Justice best practices as it has set out in every DPA since last summer. The point is to begin moving forward with a written compliance program and then implementation. I believe that the SFO wants to see concrete steps made in good faith to set up a “proportionate” compliance program tailored to your company’s risk profile based upon the risk assessment you have performed.

If you have not panicked as yet – don’t. But if you have not started to implement a compliance solution that will put your company in compliance with the Bribery Act – the effective date of July 1 would seem like a good time to begin.

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

UK Bribery Act Guidance-Facilitation Payments and Hospitality

For those of you who have not yet done so, you should check out the great resource available on the UK Bribery Act, through a website entitled thebriberyact.com. Hosts Barry Vitou, of the London office of Wiston and Strawn, and Richard Kovalevsky Q.C., from 2Bedford Row-the Chambers of William Clegg, Q.C., provide, in one site, one of the best collection of resources that can be found on the UK Bribery Act, all at no cost to the viewer. They also have a newsletter which is distributed through email subscription. Two of the sites more recent postings provide recent guidance and development from the UK Serious Fraud Office (SFO) on two of the most vexing topics for Bribery Act (or the Foreign Corrupt Practices Act (FCPA) for that matter) compliance practitioners, facilitation payments and hospitality under the UK Bribery Act.

Unlike the FCPA, the Bribery Act has no exemption for the payment of facilitation payments. Additionally, there is no affirmative defense or otherwise noted exemption or exception for hospitality, whether bona fide or not, under the Bribery Act. Therefore, under a strict interpretation of the Bribery Act, any facilitation payment or conceivable hospitality granted a customer or client could be a violation of the Bribery Act.

I. Facilitation Payments

In a recent speech before the International Corruption Hunters Alliance meeting, hosted by The World Bank in Washington, DC, SFO Director Richard Alderman noted that the SFO position is one of zero tolerance for facilitation payments. However, he noted that the focus of discussions in the UK has moved from persuading companies that it is wrong to give bribes to how it is possible to stop the demands for bribes in the first place. Director Alderman believes that both the UK regulators and the businesses subject to the Bribery Act should work together to end such bribes. He said that “What is needed here is international involvement between countries and including institutions such as the World Bank and others. It can also mean companies working together to share their experiences of working in other countries and bringing those experiences to us.”

To this end, Alderman suggested that unlike the Department of Justice (DOJ) or Securities and Exchange Commission (SEC), which jointly enforces the FCPA, the SFO is more than just a prosecutor. The SFO is pursuing a strategy to engage with corporations, NGOs, such as the World Bank, and other governments which support anti-corruption efforts, such as the United States for helping in solving these problems. The authors have previously noted that Director Alderman is on record as saying that he is “not only interested in concentrating on investigations and prosecutions but also, importantly, on prevention.” This prior statement clearly follows one of the points Director Alderman reiterated in his speech that corporations should look to the SFO “for help in solving these problems”.

II. Hospitality

thebriberyact.com has for some time reported that UK companies have voiced various fears which have been widely reported about the “uncertainties” around the application of the Bribery Act to corporate hospitality are overblown. The authors have noted that SFO position on hospitality is that if “hospitality is not lavish and people use their common sense then there should not be a problem” under the Bribery Act.

In today’s online edition of the UK Daily Telegraph newspaper, Director Alderman is reported to have said: “Sensible and proportionate expenditure on hospitality will remain perfectly lawful under the Bribery Act when it comes into force.” Further, “I understand that businesses want more detailed guidance before attending major sporting events. We will be happy to help by publishing our views.” This guidance is expected to be published in early 2011.

All US companies with UK operations should incorporate the Bribery Act requirements into their FCPA compliance programs. The Bribery Act has become the new gold standard for anti-corruption and anti-bribery compliance programs. As has been noted by the law firm of Fulbright and Jaworski, only 11% of respondent US companies believe that the Bribery Act will impact their compliance programs. From this report, it is clear that most US companies do not understand the differences in the Bribery Act and the FCPA. With the wide extra-territorial reach of the Bribery Act, US companies with UK subsidiaries, UK operations or UK citizens in their employ should assess their FCPA compliance programs to ensure Bribery Act compliance and the website thebriberyact.com is good starting point.
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