More legal news
28 February 2002
UK purchasers abroad could fall foul of the government's anti-terrorism act, which makes 'facilitation' payments anywhere in the world illegal. David Arminas reports
The aftermath of 11 September rolls on and the UK government has vowed to do its bit to weed out terrorists, including passing legislation against corruption and bribery.
However, although the government's aim is commendable, thanks to the Anti-terrorism Crime and Security Act 2001, purchasers find themselves between a rock and hard place.
Bribery of all kinds, including controversial "facilitation" payments, is outlawed wherever they take place under sections 107 to 110 of the act.
Britain now leads all other major developed countries in extending domestic laws and definitions of bribery and corruption.
UK courts will take no notice of whether the practice in question is legal or acceptable in the country where the bribes take place.
If UK purchasers follow the letter of the law, they will be a shining example of socially responsible employees to the rest of their profession in other countries.
But the act is also a bitter pill for UK purchasers to swallow as they compete with the world's best businesses for overseas contracts.
The Confederation of British Industry has pointed out that there is now no level playing field. UK plc stands to lose business to companies from other countries whose laws are either not as stringent as those of the UK or whose public prosecutors turn a blind eye to offences.
This bitterness is even more pronounced because a recent Organisation for Economic Co-operation and Development international survey found UK companies the least likely, aside from Canada, to tolerate bribes in their business dealing.
UK purchasers have every right to ask themselves "why me?" as they face difficult decisions under the threat of a seven-year jail sentence for making facilitation payments.
There are usually considered small amounts paid to get something done today that would normally take several days, although there has never been a definition of what "small" means.
Purchasers may believe the act puts them in a dangerous position because they don't know exactly what is ruled out.
But the government's intention is to rule everything in. The act makes no attempt to define "small", nor what is meant by a facilitation payment. All payments are suspect. All gifts and other gratuities are, one can only presume, included in the ban.
In reality, though, facilitation payments are likely to remain a grey area. The Home Office admits it is not about to snoop around procurement departments for the small stuff.
Facilitation payments are considered the thin edge of a wedge, leading to bigger corruption problems that will from now on be of increasing interest to the Home Office, as the government steps up its fight against international terrorism.
The Home Office has also thrown a lifeline to purchasers when faced with requests for facilitation payments. As with all cases, it must be decided whether enough evidence exists for a conviction and, if so, is it in the public interest to prosecute?
UK authorities will also take into consideration whether the nature of the payment is corrupting and under what circumstances the payment was made.
Great dangers are hidden in this area, says the legal profession. Small payments can grow over time and reach amounts that may attract the attention of UK government officials.
Lawyers suggest that it is even more important for purchasers to keep records of such events, including a protestation by the company, whether or not the payment was made and to whom, to protect their companies in the event of prosecution.
There appears no foreseeable let-up by governments in their endeavours to fight terrorism. Businesses can expect increasing examination of their activities.
In this atmosphere, purchasers should keep a closer eye on international relationships conducted on their behalf and should get more involved in developing corporate codes of conduct.
Now, more than ever, they need to make sure they have protected themselves against any suspicion of improper behaviour. A good-natured gift offered to a foreign official, under the extraordinarily far-reaching legislation now in place, may turn out to be not so harmless after all.