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Global Witness for The Times - British business simply can not afford a delay to the Bribery Act

3rd February 2011

Read this article on The Times website.

We are desperately trying to rebuild British business after the financial crisis. Against that backdrop, you would think that an update to archaic anti-bribery laws that brings us into line with international standards and protects our business interests would pass off smoothly.

Passed last April with cross-party consensus, the Bribery Act underwent extensive consultation with business and NGOs before going through with support from the commercial sector.

So one wonders why it has since been the subject of so much grumbling over its supposed complexity or stringency, and has now been twice delayed by the coalition Government, this last time with no clear timeframe.

The Act is critically important to Britain’s overseas interests and reputation, bringing us into line with our international counterparts and creating a level playing field for our investments.

It is acutely embarrassing that since 1998 the US has seen fit to levy fines totalling $477.5 million, on UK companies that we have failed to properly regulate. Quite apart from what this does for our ethical standing, revenues on this scale would be very welcome to the Treasury.

The latest delay now seems likely to damage our commercial interests, too.

This week’s postponement drew threats of an export “blacklisting” for UK companies by members of the Organisation for Economic Co-operation and Development. Its patience is “running out fast”, according to Professor Mark Pieth, of the OECD’s anti-corruption group, whose stinging criticism a few years ago helped to prompt the new law.

Stopping bribery is not just a matter of principle – corruption destroys lives.

Bribery of foreign public officials means revenues that could be used for development are wasted on unnecessary, inflated and poor quality procurement projects.

This poses a risk to education, health and life where essential services are denied funding.

Bribery also encourages an environment in which embezzlement and other forms of corruption can flourish. And in these straitened economic times, it’s hard to tell the UK public to spend millions on overseas aid – one of the few areas of spending protected against cuts - when we are undermining development and subverting democracy in poor countries by permitting companies to bribe.

As with any law, this one will be subject to judicial discretion and common sense when implemented.

Contrary to some of the more breathless claims in recent coverage, companies will be allowed to continue to provide proportional hospitality to potential clients without fear of prosecution. Likewise, they deserve reasonable guidance from the Government in adjusting to the new law’s requirements – but this cannot be used an excuse for failure to react or to see the Act watered down.

Having known about this law’s arrival for several years and undergone consultation before its passage, companies have had plenty of time to prepare.

Indeed, as Richard Alderman, of the Serious Fraud Office, pointed out yesterday this latest delay actively disadvantages those companies that have made efforts to bring themselves into line with the new standards – hardly the best advert for the Government’s supposed new era of transparency.

Let us remember, also, that bribery by companies is only one aspect of corruption, which can also be fuelled by failure to disclose payments made to governments for natural resources.

The coalition Government has created a strong national transparency agenda. Transparency is at the heart of the other necessary step to tackle corruption: a law requiring disclosure of payments made to foreign governments by extractive companies, to mirror the recent US legislation and create a better business environment in many of the world’s most fragile countries.

But in the meantime, successful implementation of this much-needed bribery legislation is the first real test of the coalition’s ability to walk its talk on corruption, and so far things are not going well.