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U.K. to Make Bribery Law Easier for Foreign Companies

Neil Baker | March 21, 2011

The U.K. government is about to significantly weaken the impact of its tough new Bribery Act, especially as it affects foreign companies, if press reports based on leaks of draft guidance are accurate.

The Act came into effect last year, but the start date of controversial provisions that would leave companies open to prosecution if they failed to prevent the payment of bribes has been delayed.

The law says companies cannot be prosecuted if they have “adequate procedures” in place to prevent bribes; the Act doesn't take full effect until government lawyers have produced guidance explaining what that means.

The Guardian newspaper, based on what it says is a leaked copy of the guidance, reported that foreign companies would not fall under the scope of the Act simply because they had shares listed on the London Stock Exchange; they would have to be doing business in the United Kingdom. The paper said the change could encourage companies to move their domicile overseas to escape the Act.

And the Telegraph newspaper reported that, according to the guidance, companies would not be prosecuted for acts of bribery committed by their subsidiaries unless an "intention to bribe" can be proved. George Boden, a campaigner at anti-corruption charity Global Witness said that interpretation of the law "makes a mockery of a perfectly good act.”

The Ministry of Justice is expected to publish the final version of the guidance imminently. The Act will take full effect three months after the guidance is available.

The Act was passed in the final days of the Labour government, which lost power last May. The new coalition government has been under intense business pressure to water down the legislation before it takes effect.