The practical effect of anti-corruption legislation is to expose international companies to significant potential liability in those parts of the world where corruption and linkage between politics and business remain.

The UK Bribery Act 2010

The UK Bribery Act reforms the criminal law to provide a comprehensive scheme of bribery offences that will enable courts and prosecutors to respond more effectively to bribery at home or abroad. The Bill received Royal Assent on 8 April 2010.

The Act aims inter alia to:

• Provide an effective legal framework to combat bribery in the public or private sectors.
• Replace fragmented and complex law.
• Create two general offences covering the offering, promising or giving of an advantage, and requesting, agreeing to receive or accepting of an advantage.
• Create a discrete offence of bribery of a foreign public official.
• Create a new offence of failure by a commercial organisation to prevent a bribe being paid for or on its behalf (it will be a defence if the organisation has adequate procedures in place to prevent bribery).

Notably, the Act unequivocally places the burden on commercial organisations to take direct action to prevent bribery, and in most situations makes "facility payments" and similar illegal.

See: Bribery Act 2010 and Bribery Bill: impact assessment.

Third EU Money Laundering Directive & the UK Money Laundering Regulations 2007

The Third EU Money Laundering Directive was adopted in October 2005 and represents Europe's commitment to tackle money laundering and terrorist financing. The Money Laundering Regulations 2007 are the UK government's implementation of the third directive. Similar implementations apply elsewhere in Europe.

See the UK Money Laundering Regulations 2007 , including Part 2 and subsequently on due diligence requirements, including in relation to Politically Exposed Persons.

US Foreign Corrupt Practices Act

The FCPA was enacted in 1977 to prevent US companies from making payments to foreign officials to secure business. The Act has achieved a significantly higher profile, thanks to the Department of Justice and the Securities and Exchange Commission becoming rigorous in enforcing its requirements after the FCPA was amended in December 1997 to align with the US signing of the OECD Convention. Also, in a wider sense, the events of September 11th 2001 have influenced the US authorities' attitude to international corruption.

The key purposes of the FCPA are:

• To prohibit bribery of foreign officials and related individuals [the net is potentially very wide], directly or through agents or other intermediaries.
• To require companies to keep records, file periodic reports with the SEC, and to maintain internal controls.

The practical effect of the FCPA is that US companies and their overseas subsidiaries need to:

1. Conduct thorough due diligence on counter-parties and third parties involved in foreign transactions. In the event of investigations by authorities, being able to show that relationships have been subject to due diligence can substantially mitigate presumption of knowledge.
2. Develop a written compliance programme, which makes employees aware of FCPA requirements, with training support covering situations that are likely to occur.
3. Conduct periodic audits of compliance programmes, internal controls and contract documentation.
4. Have a designated FCPA compliance officer, most probably in the legal department.

Notably, passive due diligence from public record research, contact with embassies, etc., is not likely to be sufficient. Active research is required, consistent with the importance and scale of the transaction, and records must be kept.

See also the US Department of Justice website: U.S. Foreign Corrupt Practices Act

OECD Convention

Twenty-nine OECD member countries and five non-member countries signed the "Convention on Combating Bribery of Foreign Public Officials in International Business Transactions" in December 1997.

The OECD Convention deals with "active corruption" or "active bribery", that is the offence committed by the person or corporate entity promising or giving the bribe, regardless of whether the recipient has induced the payment. The sanctions prescribed by the Convention are severe and include confiscation, forfeiture, judicial supervision and judicial winding-up. More important is the threat to the company's reputation and ability to conduct its business internationally.

The Convention establishes a standard to be met by signatory countries, namely that it is an offence to bribe to obtain or retain business or to gain other improper advantage, regardless of whether the company concerned is the best qualified bidder or could properly be awarded the business.

Full details can be found at these OECD web sites:
OECD Anti-Bribery Convention
The OECD Guidelines for Multinational Enterprises: Annual Report 2001

UK Anti-Terrorism, Crime & Security Act 2001

Part 12 of the ATCSA, enacted in February 2002, strengthens English law on international corruption and bribery to include cases involving foreign nationals.

Notably, anything done outside the UK, which constitutes a corruption offence in the UK, is also an offence under the ATCSA. The Act gives courts jurisdiction over crimes of bribery committed by UK nationals and UK incorporated bodies overseas. It is immaterial if the person who receives or is offered the reward has no connection with the UK, or if the offer is made outside the UK.

See this HMSO web site: UK Anti-Terrorism, Crime & Security Act