US Businesses Plead Ignorance to New UK Bribery and Corruption Laws

LONDON, March 1 /PRNewswire/ -- New UK laws which could put workers behind bars and hit companies with unlimited fines are passing into law unnoticed by US businesses with offices in the UK.  According to research from international law firm Eversheds, which looked at both UK and international companies, many US businesses are in the dark over the new Bribery Bill, due to receive Royal Assent shortly, with 50% of US businesses unaware that failing to prevent bribery will be a criminal offense. A failure by a business to deal with bribery issues could lead not only to the individual directors facing prison but also the business facing a substantial fine.

The laws, which are expected to come into force later this year, will mean that all businesses need to have 'adequate procedures' in place to prevent bribery and corruption occurring.  These will include an anti-bribery policy, training of staff, closer scrutiny of purchasing decisions, clear rules on corporate entertainment and gifts as well as a hard line taken on those found to be 'greasing palms' to win business.

Eversheds' Corruption Clampdown report reveals a lack of knowledge and understanding about the new laws. The report, which in addition to UK companies, canvassed the opinion of almost 100 US executives, found that three in five (60%) organizations don't have robust systems to prevent bribery from taking place. Well over half (66%) of those surveyed admitted that they have either not been offered or as yet received training on bribery and corruption issues.

There is also confusion about what constitutes bribery, with nearly three in ten (29%) of those surveyed in the US being unaware that under the legislation it is illegal to give, promise or offer an advantage to help secure business. Half of US respondents (50%) were unaware of the new corporate criminal offence of failing to prevent bribery committed by employees or agents acting on behalf of the company.

Neill Blundell, Head of Fraud Group at Eversheds, said:

"Our survey found that there is a real lack of awareness, understanding and training in relation to the Bribery Bill and that many UK and US businesses aren't set up to minimize their exposure to corrupt business practices.

"The new laws bring significant responsibility for directors who will need to carefully monitor all procurement and sales activity within the business, including deals done by agents and intermediaries. If for example, an agent used to secure business commits bribery to win a contract, the business could be held criminally responsible for failing to prevent the act of bribery by the agent.  If any directors or officers of the business have become aware that the agent has acted in such a way and failed to act, they too could face prosecution and imprisonment.

"This worryingly relaxed attitude towards the Bribery Bill could see businesses fall foul of the new law which could lead not only to directors going to prison but the company facing a severe financial penalty."

The survey also highlighted some opposition to the new regulations in light of the current economic climate. Over a third (32%) of US executives believe that the new legislation goes too far and presents unnecessary challenges in a difficult economic climate, with 23% claiming it will make the UK a less attractive place to do business. Additionally, over a quarter (27%) of those working for a company headquartered in the US believe that the UK needs a new financial crime regulator to enforce the legislation.

Neill Blundell concludes:

"While companies may have been focused on pulling their business through the economic slump, they simply can't afford to overlook this new legislation. These are serious laws with tough penalties and businesses need to take steps to minimize their risk by showing that they have actively taken steps to prevent bribery. This includes delivering training on ethical business practice from Board level down, and ensuring that there is a policy in place which is communicated throughout the organization.

"Businesses should also monitor the activity of agents and intermediaries acting on behalf of the organization to ensure that bribery and corruption is not taking place."

Key Findings

The research was conducted in January 2010 among a cross section of businesses, from SMEs through to large organizations across all sectors. In total 97 US executives were interviewed. UK results are also available on request.

US Awareness:

• 50% of respondents were unaware that failing to prevent bribery will be a new corporate offence
• 88%  of respondents don't know that the maximum jail sentence is 10 years

Understanding:

• 71% don't know that company directors can be found liable of bribery and face prosecution

Preparation:

• Three in five (60%) admit that their organization didn't have adequate systems in place to prevent bribery taking place, or that they were unaware of any systems
• 57% of people that work for a company headquartered in the US have neither received or been offered training

Attitudes:

• Over a third (32%) believe that the new legislation goes too far and presents unnecessary challenges in a difficult economic climate
• 34% say it makes the UK a more attractive to do business, while 23% say it makes it less attractive
• Over a quarter (27%) of those surveyed believe that the UK needs a new financial crime regulator to enforce the regulations.
• 48% think that the Serious Fraud Office would be most effective in enforcing the legislation

Notes to editors

About Eversheds

Eversheds LLP and its world wide offices have over 4,500 people providing services to the private and public sector business and finance community. Access to all these services is provided through 47 international offices in 29 jurisdictions. Eversheds combines local market knowledge and access with the specialisms, resources and international capability of one of the world's largest law firms.

www.eversheds.com

SOURCE Eversheds LLP