Friday, 27 May 2011

Bribery Act Panic

There is a great deal of senseless panic being whipped up about the implications of the UK's new Bribery Act, that comes into force on 1 July 2011. An article by the City Editor, Chris Blackhurst, in yesterday's Evening Standard exemplifies the worst of the reporting. He talks about the harsh potential penalties and implies that these may be applied to 'gifts, hospitality and promotional expenditure'. Naturally the financial consultancies love this sort of stuff because it increases the demand for their conferences and courses on the subject and of course helps to sell lots of expensive consultancy - most of it a complete waste of money.

Oddly Blackhurst chose to ignore a previous article in his newspaper (11 March 2011) where UK Justice Secretary, Ken Clarke, is quoted saying;

a "common sense" approach would be used and stressed no actions could take place without approval by the Director of Public Prosecutions or the Serious Fraud Office - avoiding the "fatuous prosecutions" sometimes brought under health and safety law.
"Neither will bring silly prosecutions," he said, adding that it would be "completely safe" to take clients motor racing or to a football match.
"Taking customers to Twickenham is normal," said Mr Clarke - himself no stranger to corporate hospitality boxes. "But if you took them for a Caribbean cruise with the wife, that's different.
"It is normal business hospitality to get to know your customers better. No one is going to call that dishonest."
Now ok, I accept that at the end of that first article it quoted "Legal experts" as saying "Mr Clarke's assurances will not necessarily protect business figures from being jailed" and went on to quote someone from an outfit called "World-Check" saying "The guidance does not provide a defence to any of the new offences created." Except that World-Check and 'legal experts' may not be synonymous - and the former is a commercial company with a vested interest in panic.

I accept that the Evening Standard is right up to a point, the guidance notes from the Ministry of Justice as well as what the Justice Secretary has said could be ignored by the judges. But I don't think they will be. I think common sense will govern and I also think that the Director of Public Prosecutions - who can be replaced by the Justice Secretary - will act as a responsible gatekeeper and will prevent frivolous prosecutions.As a backstop this or a future government will simply amend the legislation if it does not work as intended. Reasonable corporate entertaining will not be caught within the ambit of the new law.

Whilst we await some case law to develop I urge company secretaries to read the MoJ guidance for themselves. But remember that if all this panic and selling frenzy from consultants and lawyers results in masses of unnecessary bureaucracy then that will set standards for courts to view as 'normal'. And you company secretaries and compliance chaps will have created the very rod that will be used to beat you.

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