Bribery Act: firms need to act now
Anthony Barnfather, leading regulatory law specialist at Manchester solicitors Pannone, says the construction industry, which has already been the subject of significant regulatory action in respect of anti-competitive practices, is particularly vulnerable to investigations because of the size and number of contracts which they enter into.
Barnfather said: “The Act comes at a time when regulators are under unprecedented political pressure to make examples of individuals and organisations alleged to be involved in corruption. Given the contractor/subcontractor relationship and the use of agents, the sector is particularly vulnerable to ‘kick-backs’. Previously regulators have concentrated on bribes of overseas agents, but in future will be much more focussed on business within the UK.
“Authorities, including bodies such as the US Department of Justice, have a wide range of intrusive powers available to them to investigate and prosecute bribery and corruption. These include not only criminal investigations and prosecutions but also severe civil penalties.
“It is also important to understand that the obligations placed on organisations by the Act are supplementary to those imposed by money laundering and other regulatory legislation, including those under foreign enactments such as the US Foreign Corrupt Practices Act.”
The criminal courts have demonstrated their readiness to impose deterrent sentences on corporates and individuals alike. In the past few weeks, a court has imposed a fine of $12.7m in the Innospec case and last week sentenced Mr Robert Dougall (a former executive at a subsidiary of Johnson & Johnson Plc), the first British manager to be prosecuted by the Serious Fraud Office for overseas bribery, to 12 months imprisonment.
Both of those cases have involved close co-operation between the SFO in the UK and foreign regulatory enforcement bodies.
Barnfather added: “Penalties are likely to increase when new offences under the Act are prosecuted, as organisations such as the SFO respond to criticism by vigorously pursuing individuals and corporates, and as the courts seek to send a message about how seriously they regard bribery and corruption.
“In this climate of tightening regulation and tough punitive sentences, businesses should ensure that they have proper procedures in place to avoid falling foul of the new legislation.”