Guidance By Howard

8 May

After finishing the case study series, I now turn to keeping my word and writing my own Guidance. Rather than try to write the whole thing at one fell swoop, I will write it section by section, and publish as I write. I’ve tried to make it humorous, but readable. And while it is written half tongue-in-cheek, it’s only half. I actually mean every word; I wish this is the guidance that the UK would have written. It’s certainly more forthright: I’ve tried to say some things that I think the UK would have liked to have said, but couldn’t for fear of starting an international incident.

I will follow the general format of the Guidance as it was published, starting with the forward, general policy, principles, and then case studies. The first section, the Foreward, is the most unserious of the entire lot. But it sets the tone for what I want to accomplish, which is giving a realistic assessment of what a Bribery Act Compliance Program should look like, in my opinion.

[Disclaimer time: as I always say, “I’m a lawyer, but I’m not your lawyer.” This is commentary, not legal advice. If you want legal advice, hire outside counsel or a consultant. In case you haven’t noticed, there are one or two out there that would love to structure your program for you. If you want my advice on who, look below (well below) for my post entitled “Getting Advice.” I say plainly who I’d recommend. I’m not on that list. I’m not licensed to practice in the UK, and I wouldn’t know a barrister from a solicitor if both were sitting next to me.]

Begins the Guidance:

Foreword

The UK has come under criticism for being soft on foreign bribery. It is an embarrassment that the criticism is entirely justified. To be fair and just, however, we should point out that the UK government’s priorities stem from the colonialist era where foreign bribery was more than accepted, it was diplomatically necessary to maintain peace in an empire that exceeded Alexander’s.

In that vein, our allies should remember that those leveling the criticism—mainly in the US—also have only recently been enforcing their own anti-corruption laws. How many prosecutions were there in the first 10 years of the Foreign Corrupt Practices Act? In the first 20? Like a reformed addict, the US, after decades of paying hundreds of millions of dollars (probably billions of dollars) in bribes in every country around the globe now finds it expedient to find fault, and presumptuously believes in their right to express that feeling. Like a child who believes he knows better than his parent, the US would instruct us in an area of law that we were enforcing when the US was merely a glimmer in George Washington’s eye.

But if “the times” can be defined in such short duration as the last 5 years, then mea culpa, the UK has fallen behind them. One thing that is certainly true, we have been infected with the regulatory overreaction virus that originated and incubated in our wayward progeny, and has now found it’s way across “The Pond.” As Sarbanes-Oxley was a reaction to the new millennium’s corporate governance scandals, so to the UK Bribery Act is a reaction to our humiliating surrender in the investigation of BAE. I believe we would have made a different decision in that case, had we known we’d come to this.

Some criticism is obviously justified, but the judgmentalism must stop.

In publishing this Guidance, we seek to further two goals: first, to reassure UK companies that their world is not over and certain harmless activities may continue. Second, we wish to inform UK companies, as brightly and clearly as we can, where the new line is, so they should not step over it.

The challenge we face is providing companies—especially smaller companies with more limited resources—with enough guidance through which they can achieve comfort that they remain within the law, while maintaining prosecutorial discretion. We will not surrender our right to prosecute companies that cross the line, even if we’re not quite ready to tell them exactly where the line is. That is not the fault of the MOJ, however. It is the fault of the ingenious fraudsters and those who use corruption as a tool to bend the marketplace to their will. They are more creative in their construction of bribery schemes than we are imagining rules to stop them. We will therefore not bind ourselves in the face of the unknown to a strict set of prescriptive rules which we might in the future wish were different. Rather, this Guidance will provide minimum standards for smaller companies, and leave larger companies guessing whether we will find their procedures adequate. To be fair, however, that’s not really a change from where they stand now.

I say to our US colleagues who might be critical of such a stance, where’s your Guidance?

As with many things, the proof of the pudding is in the eating. The toughest law in the world means little without rigorous enforcement. The UK Bribery Act is the strictest law of its kind. For those who would use corruption as a tool of commerce, I put you on notice that the MOJ and the SFO (and the FSA and the FCA and whatever other agencies we create in the next year…we’ll see how the infighting goes) will use the tools the Bribery Act gives us. In fact, to make it clear that our stand on corruption is real and enduring, I am directing the SFO to bring their first case under the Act before the end of July. Don’t be surprised if it involves private-sector bribery, either.

And to all companies who do business in or through the UK, a warning: there’s a new Sheriff in town, and his name is Ken Clarke.

Signed,

The Ken that Exists in Howard’s Head
Secretary of State for Justice

****

Tom Fox and I have posted our second episode of This Week in FCPA. We hope you enjoy it.

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