Businesses at risk in corruption law reform

10 August 2009

The failure of the SFO over many years to prosecute any case of overseas corruption successfully created an area of uncertainty which has benefited no-one.  Its recent victory in the Mabey and Johnson case may be changing this.  In 2010 the draft Bribery Bill will come into force, creating a new offence of negligent failure to prevent bribery. At that point no UK company should do business abroad without a thorough health check first.

According to a recent report by KPMG Forensic there is good reason for companies to look out. A KPMG survey shows that two thirds of companies believe that there are countries where bribery is fundamental to business practice, but only a third have ever pulled out of a national market as a result. It seems that less than half of firms conduct regular audits of third party business partners and local country representatives as part of their anti-corruption compliance controls. These companies risk prosecution.

The level of attention necessary to avoid falling foul of regulators, and of the criminal law, increases apace. Smaller businesses in particular can find this onerous. But it is better for any business to take precautions now to avoid the real pain of criminal investigation later. Installing a relatively simple system will reduce risks considerably.

H&R recommends that companies act now to give their new systems time to bed down before the 2010 legislation begins to bite.

The KPMG report can be found at http://www.kpmg.co.uk/pubs/Bribery_and_Corruption_Survey_2009.pdf