BExA’s seminar on managing corruption risk: top takeaways

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As the 10th anniversary of the UK’s Bribery Act approaches, and with Brexit challenging UK exporters to look beyond the EU for new markets, BExA recently organised a seminar on how UK exporters can manage corruption risk in developing countries. The event took place on 19 November at Quadrant Chambers in London, and was hosted in association with IBLF Global.

The session began with an overview of the legal landscape by Mark Norris, Partner at Sullivan and BExA joint Deputy Chairman and Head of the Legal and Compliance sub-Committee, who delivered a presentation titled ‘The legislative background: The impact of the UK Bribery Act and how to ensure compliance’. This was followed by a panel discussion on ‘Enforcing the law, changing the culture’, led by Brook Horowitz, CEO of IBLF Global, and joined by Lewis Barnes, Industry Liaison Officer at the National Crime Agency; Geoff de Mowbray, BExA Chairman and CEO of Dints International; and Mark Norris.

In setting the scene for the discussion, Norris explained that earlier this year, a Select Committee – appointed by the House of Lords – had provided post-legislative scrutiny on the Bribery Act 2010.

One of the issues that the Select Committee had highlighted in its report was the need for more training for British companies, particularly SMEs, on the complexities of the Act – which drove BExA’s decision to run the seminar. “Compliance with the UK’s Bribery Act touches our members and is something that they were very keen to know more about,” Norris said.

In this post-event wrap-up, we bring together some of the main takeaways and key insights.

  1. The UK’s anti-bribery legislation is amongst the ‘toughest in the world’

“The act is quite straightforward, it’s a very relatively short piece of legislation,” said Norris. “But it’s also probably the toughest anti-bribery legislation in the world.”

He highlighted that, for one, the Act has introduced a new strict liability offence for companies failing to prevent bribery. “This new corporate criminal offence places a burden of proof on companies to show that they have adequate procedures for the prevention of bribery.” Companies face criminal prosecution if they fail to prevent bribery but can defend charges if they prove they had “adequate procedures” in place.

Norris cited the controversial example of a 2018 “failure to prevent” case, the first since the UK Bribery Act came into force, which saw British refurbishment company Skansen Interiors charged with failure to prevent bribery – despite reporting the illegal conduct to UK police.

He also outlined the Act’s other offenses (those related to bribing another person, being bribed, and the bribery of foreign officials); provided an overview of what constitutes bribery (particularly in the context of facilitation payments – the payment of a small amount to a government official to secure or expedite a routine governmental action – and hospitality and promotional expenditure); and outlined the six principles for the prevention of bribery, as issued by the Ministry of Justice (namely proportionate procedures, top-level commitment, risk assessment, due diligence, communication and training, and monitoring and review).

He noted that although guidance from the likes of the Ministry of Justice existed, it cannot be considered as law, or followed as such, which made navigation of the Act complex, and appropriate training essential.

“We’ve definitely set the bar high as the UK, which does give us a huge opportunity to differentiate ourselves,” said de Mowbray. “But it won’t be easy and it won’t be fast.”

  1. Nevertheless, companies should not be discouraged from engaging in overseas business

“We want British companies to get out there and sell more. It is not British companies’ responsibility to end global corruption,” said a representative from the Department for International Development (DFID), seated in the audience, in response to suggestions from other guests that the Act could indeed have an adverse impact on the number of companies that choose to export.

For its part, DFID leads the cross-government Business Integrity Initiative, established in 2018, which provides practical guidance to micro, small and medium-sized enterprises on issues such as bribery and human rights concerns to help businesses trade with and invest in new markets.

The DFID representative explained that the Department had recently launched a new fund to support Collective Action Initiatives, which aim to reduce corruption and promote human rights to improve the investment climate in emerging markets.

Nonetheless, the response to the details of the Act from many seminar attendees was that it would be British companies themselves – and not government – that would be left holding the baby. “How can companies possibly compete when the cost of compliance is being driven up?” asked an audience member.

Norris suggested that there needs to be a benefit for businesses that do comply with the strict letter of the law, which could come in the form of enhanced governmental support to win overseas contracts, such as an increase in access to finance from UK Export Finance.

Another audience member suggested that UKEF could be taking a firmer stand by limiting its cover to countries where it believes that business can only be won legitimately.

“I’ve been in meetings with UKEF where they’ve warned people ‘this is a difficult market’, but then when you go on the UKEF website, you’ll see that they’ve got oodles of cover for some of these places. Could DIT and UKEF not just be looking at credit assessments of a country, but actually saying if you want to do business in the public sector in that country, it’s not deemed open enough for us to issue cover there. It seems a simple thing for the government to do – there are undoubtedly many markets that fall into that box,” he suggested.

Concluding the session, Horowitz of IBLF Global noted that a “large and complex culture change needs to happen at all level of business – from British multinationals investing in the emerging and developing markets to their local distributors, agents, joint venture partners that are part of their value chains.” “It’s not just about a piece of legislation or the occasional prosecution in the UK – that’s not going to change the game”, he said. “It’s market forces combined with clear management and incentives – that’s what will shift the goal posts: British companies should be playing in forward position.”

 

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