Press Release / March 30, 2011

Government bows to pressure from business to allow bribery through the back door

Last minute revisions to the guidance for the UK’s new Bribery Act risk fundamentally undermining its ability to stop corruption, warned anti-corruption campaigners today. These revisions follow delays in implementation of the act as a result of a lobbying campaign by business groups to weaken it.

The new UK Bribery Act was passed last April as a much-needed update to legislation dating back to 1906. It introduces two new crimes: one of bribing a foreign public official, and another of a company failing to prevent bribery where it has occurred on its behalf.

The Government delayed implementation of the Act in order to finish drawing up “guidance” intended to assist industry in complying with the new law. However, the guidance published today goes way beyond that remit by interpreting the Act in a way which potentially undermines its purpose.

The guidance opens a huge loophole that would allow companies to use subsidiaries to pay bribes to foreign public officials. Whilst the Act is clear that companies are liable when their subsidiaries pay bribes, the guidance seems to contradict this. This is of concern as companies have, in the past, used subsidiaries to pay bribes.

“These revisions dramatically diminish the scope of a perfectly good Act which was passed with cross-party consensus and support from the business sector after much consultation,” said George Boden, a campaigner at Global Witness. “It’s pretty reprehensible that the government has caved in to an aggressive business and media lobby, and, at the last minute, effectively licensed UK companies to continue bribing through the back door by use of offshore subsidiaries.”

The guidance also exempts foreign companies listed on the London Stock Exchange from the Act, as long as they do not carry on other business in the UK.This means that foreign companies which benefit from a London listing will not necessarily be prosecuted for paying bribes. Foreign companies will also be able to avoid prosecution by simply operating a subsidiary in the UK.

“The guidance that has now been released is clearly a concession to business,” said Nick Hilyard of Cornerhouse. “It contradicts the spirit of the Bribery Act. It simply provides a tick-list for companies to hide behind, and does not place responsibility on companies to proactively prevent bribery on their behalf.”

The original version of the MoJ Guidance, published last November 2010, was welcomed by anti-corruption campaigners and went through a series of consultations. By the end of January 2011, the business lobby started a sustained campaign. The CBI said the Act “was not fit for the purpose”. Government then delayed the release of the final version of the guidance on January 31. Since then substantive changes have been made. Indeed, the guidance risks undermining the will of Parliament which passed the act after careful consultation.

“An act is only as good as its implementation” said George Boden. “Anti-corruption campaigners will be watching closely to make sure that the government takes implementation of this act seriously. The early signs are not good.”

Contacts: George Boden on +44 (0)7808 767 134, or Oliver Courtney on +44 (0)7815 731 889 [email protected]g