The UK Bribery Act one year on
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Jonathan Middup, partner at Ernst & Young Fraud Investigation & Dispute Services, looks back on the first year of the UK Bribery Act to see if the British perception of corrupt practice has changed.
Next week will mark one year since the UK Bribery Act came into effect and many businesses are still struggling with the finer points of how this legislation impacts them.
With a lack of high profile corporate cases, others have begun to question the Serious Fraud Office’s appetite for enforcement.
Despite this the Bribery Act has already had far-reaching effects. The Act has become embedded in compliance programmes. It has meant that businesses have paid attention to facilitation payments, third party relationships and corporate entertainment, and it has seen allegations of bribery and corruption treated far more seriously than in the past.
Our Global Fraud Survey 2012, which surveyed executives, counsels and finance chiefs, has produced encouraging evidence that attitudes towards bribery and corruption are changing in the UK.
Whilst it is remarkable that 4 per cent of UK responses to the survey agreed that cash payments could be justified to help to win or retain business, this has reduced from 8 per cent of UK responses in 2010.
By comparison, global responses in 2012 revealed that 15 per cent of businesses considered that such payments could be justified and 11 per cent of respondents from Western Europe. Insofar as perceptions of the level of bribery are concerned, 14 per cent of UK responses in 2012 thought that corrupt practices happen widely in business in this country, but only 2 per cent of UK responses thought that it is common practice in their sector.
As was the case in previous years, the UK perception of levels of bribery and corruption in this country are lower than the average of responses from the rest of the world: 39 per cent of global responses thought that bribery happens often in their country and 12 per cent thought that it is common practice in their sector.
However, all of these responses are consistent with our long-standing observation that people are inclined to think of bribery and corruption as something that tends to happen elsewhere – be that another sector or another part of the world. The best protection for companies that want to combat bribery within the organisations is to work out where it is at risk and concentrate controls on those areas.
Blanket compliance such as low-threshold hospitality registers or untargeted training can be wasteful and may not provide the protection businesses need. However, it would be a mistake to take no action.
Getting it wrong can hurt a business deeply and it’s always much easier to comply with this type of legislation from the start, rather than trying to contain any damage at a later date.
Our survey also found that only 26 per cent of executives consider that UK enforcers are willing to prosecute cases of bribery and corruption, and are effective in securing convictions. But we urge caution to those businesses which question the intent or resources of the enforcement authorities.
The Serious Fraud Office continues to state its intent to take tough action and our experience is that bribery incidents can take a long time to surface. Businesses not taking the right action now to encourage a culture of integrity are only likely to be storing up difficulties for the future.