Editors' Blog

A welcome breath of reform for bribery laws

Posted 25/11/2008 by Richard Lloyd

A radical — and to many, long overdue — overhaul of the UK’s bribery and corruption laws looks set to take place following a new report by the Law Commission. The existing anti-corruption regime, which is largely drawn from three statutes passed in the late nineteenth and early twentieth centuries, has been heavily criticised by several parties, including the Organisation for Economic Co-operation and Development (OECD) and non-profit Transparency International, for having little impact in policing bribery and corruption at British companies.

Reforming Bribery, the Law Commission report published on Thursday, recommends that the current “patchwork of offenses” concerning bribery be replaced with two general offenses — one concerned with giving bribes and one concerned with taking them. In a clear echo of America’s Foreign Corrupt Practices Act, the report also recommends a specific prohibition against bribing foreign public officials. In addition, it suggests that negligently failing to prevent bribery by an employee or agent should also be an offense.

The Law Commission was asked by the Government in March 2007 to write the report. The report is expected to form the base of a draft bill that could come before Parliament in the first half of next year.

The recommendations have been broadly welcomed by lawyers. “Because the old law was complicated, vague, and disparate, it was unpredictable and full of loopholes,” Eoin O’Shea, a corruption and economic crime expert at LG said. “These proposals create a new and loophole-free statutory regime.”

O’Shea did warn that a crackdown on negligent failures to prevent bribery would place a greater regulatory burden on smaller companies. “It’s fine for large multinational companies, but for smaller companies, it would force them to put new compliance measures in place,” he added.

Alistair Graham, litigation partner at White & Case, said that the report showed that the UK had taken some lessons from the US and that, if implemented, the proposals might lead to the adoption of a “more hard-line, US-style approach to dealing with bribery and corruption”.

The UK’s existing bribery laws have come in for heavy criticism in recent years. An October report by the OECD’s Working Group on Bribery found that “current legislation makes it very difficult for prosecutors to bring an effective case against a company for alleged bribery offenses.”

The UK authorities have also been criticised for their handling of an investigation into alleged corruption at BAE Systems. The defense contractor was accused of paying $2bn (£1.3bn) in bribes to Saudi officials to secure an $85bn (£56bn) arms deal, signed in 1985. An investigation by the Serious Fraud Office into the arms deal was dropped in December 2006, but the deal is now the focus of an investigation by the US Department of Justice.