UK Bribery Act: the British act against corruption is not something that Belgian business can just ignore

Brussels, 30 August 2011

Businesses have to buckle down to setting up a preventive programme against corruption

The UK’s Bribery Act came into force on 1 July 2011. This corruption statute, which incidentally goes much further than the already infamous US Foreign Corrupt Practices Act (FCPA), has been causing much ado in Britain for some time now. Because the statute is extra-territorial in its effect, Belgian companies had better be on the look-out. The slightest connection to Britain could have far-reaching consequences and give rise to serious penalties. Thus, Belgian companies have to get down to setting up a prevention programme against corruption so as to reduce their vulnerability.

Why Belgian business had better watch out

Belgium has a law against active and passive corruption but, by contrast with the USA and Britain, there is no watchdog organisation to monitor compliance. In the meantime, Belgian companies have also become familiar with the USA’s FCPA, but the UK’s Bribery Act goes quite a bit further still. Whereas the US act is directed at bribes to government staff, the Bribery Act also encompasses private individuals. The new British statute lays down a number of new offences: the active offence of offering, promising or giving financial or other benefits; the passive offence of demanding, consenting to acceptance of, or acceptance itself of such benefits; the active offence of bribing a government official; liability by commercial organisations for failing to prevent bribery and liability of senior officers (managers, directors, chairmen, etc.) who have knowledge of corruption or turn a blind eye to it.

“It is very far-reaching,” says Rudy Hoskens, a partner at PwC Belgium and a specialist in dispute analysis and investigations, “and the act is not always consistently clear. For example, take the part dealing with the liability of commercial organisations for failing to prevent bribery. Businesses have to be able to prove that they have implemented adequate procedures for preventing people involved in the business from committing bribery. But what exactly are these adequate procedures?”

In England, the new law has been causing commotion for some time even before it came into force. And, in Hoskens’s view, Belgian firms would be best advised to pay it due attention since its impact is far from just restricted to Britain alone. “Even if a company in this country has any kind of a connection to the UK, the penalties can be imposed,” warns Hoskens. “This includes Belgian firms doing business with Britain or that have plants, facilities or distribution networks there. Or even if the company is registered in the UK or has a representative office there, it falls within the law’s ambit. And, what’s more, it applies to companies from Belgium that have a British board member or one of whose directors lives in Britain.

Watch out is the watchword

In Hoskens’s view, (Belgian) business will be well advised to take a good look at who they do business with. They can do so by proper vetting. “We get a lot of enquiries from businesses wanting to screen potential business partners, but that’s generally where businesses wanting to team up with people from suspect countries and territories. But the checks are not systematic. Even in take-overs and business amalgamations, it’s a step that’s all too seldom taken. Such deals involve all kinds of vetting from the financial due diligence to the labour conditions, but in terms of compliance, it’s rarely if ever done. In these kinds of cases, business will be well advised in future to also examine whether the other party to a merger or acquisition is duly compliant with the FCPA and the Bribery Act,” says Hoskens.

And, as far as corruption prevention programmes and the adequate procedures required under the act are concerned, Hoskens believes that we have a lot of work ahead of us in Belgium. It has to be said that a prevention programme means more than just issuing an ethical charter. But what more can businesses do? Business ethics are naturally an important basic component in preventing corruption, but businesses can do a great deal more. It is crucial for a business’s anti-corruption policy to be fully supported and bought into, right through to the top of the organisation. Due diligence continues to be essential, and it’s also necessary to assess the risks of corruption and identify what places within the business are most susceptible to such practices.

Other effective measures are developing and implementing clear, practical guidelines and accessible measures. Finally, there’s also regular checking of and potential adjustments to those rules. Rudy Hoskens: “That way, businesses can still properly arm themselves against the risks of corruption, though I see that this is not yet being structurally applied in Belgian companies. It’s still far too sporadic, and often done too late. Businesses don’t have to start panicking here, but they shouldn’t be resting on their laurels. Doing too little now may yet later come back to haunt them with a vengeance.”