The UK’s leading anti-corruption watchdog, Transparency International UK, is strongly critical of the official Guidance to the Bribery Act published by the Government today even though it finally paves the way for the Act to come into force in July.

30 March 2011 - Transparency International UK has been campaigning for early publication of official Guidance that would not dilute the Act and ensure the UK would, for the first time, meet its international obligations on tackling bribery.

But in a statement issued today, it questions whether the final Guidance is worth the long wait, and suggests that it undermines key features of the Act as passed into law with all-party support almost a year ago.

In Transparency International UK’s view, parts of the Guidance strongly indicate that the Government has surrendered to last-minute lobbying by some resources-resources-business groups, opening up loopholes that could allow dishonest companies to continue paying bribes. 

Chandrashekhar Krishnan Executive Director of Transparency International UK explains:

"The Bribery Act, as passed by the last Parliament, is one of the best anti-bribery laws in the world. But the Guidance will achieve exactly the opposite of what is claimed for it. Parts of it read more like a guide on how to evade the Act, than how to develop company procedures  that will uphold it.

It is deplorable that changes made to the draft Guidance since late last year, and now enshrined in the published version, depart from international good practice in several areas. The Ministry of Justice has exceeded its brief with this final Guidance which undermines the Act and will limit its effectiveness.  There is now a significant risk that bribery will go unpunished.

"For instance foreign companies could be listed on the London Stock Exchange, pay bribes and get away with it. This will disadvantage all honest companies and perversely - turn on its head the Government’s stated aim of creating a level playing field through the Act’s extra-territorial reach." 

Notes 

1. Examples of loopholes created by the Guidance that weaken the 2010 Bribery Act:

• A non-UK company listed on the London Stock Exchange (LSE) is not automatically caught by the Bribery Act. This means that a) it could use capital raised in the UK to pay bribes overseas, and b) a UK-based company that loses a contract to a non-UK company listed on the LSE which paid a bribe to win the contract, may have no recourse in the UK courts. [Guidance para 36] 
• A non-UK parent company A with a large UK subsidiary B could pay bribes through subsidiary C based in a third country. If UK subsidiary B did not directly benefit from the bribes the non-UK parent company A would not be caught by the Bribery Act – even if its other subsidiary C was competing unfairly with honest UK companies. [Guidance paras 36 & 42]
• A UK company would be able to outsource bribery by building a chain of subcontractors sufficiently long to distance itself from bribe paying [Guidance para 39]

2. The Bribery Act 2010 was passed on 9 April 2010 with all-party support. It introduces an offence of corporate failure to prevent bribery unless a company can prove that it had ‘adequate procedures’ in place to prevent bribery.  The Secretary of State for Justice is required by section 9 of the Bribery Act, to provide official Guidance on ‘adequate procedures’.  The corporate offence of failing to prevent bribery can only come into force after the Guidance has been issued.

3. Transparency International UK has been campaigning for early publication of the official Guidance that would not dilute the Act.  Publication of the Guidance was delayed by further consultations in late 2010 and a last-minute burst of lobbying in early 2011 by some resources-resources-business groups.