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'Facilitation payments' to foreign port officials, common in some countries, are outlawed by the Bribery Act
'Facilitation payments' to foreign port officials, common in some countries, are outlawed by the Bribery Act

Bribery Act spells trouble for UK food exporters

INTERNATIONAL NEWS - Jun 28th 2011, 11:39

A top lawyer has expressed concern that the UK's pending Bribery Act could lead to difficulties for food manufacturers exporting or producing abroad, especially to ‘high risk’ countries. 

The Bribery Act 2010 comes into force this July, and allows companies and directors involved in bribery or corrupt practices to be prosecuted for offering, requesting or accepting a bribe either in the UK or abroad, and even offering "excessive or unreasonable" corporate hospitality .

Individuals face up to 10 years imprisonment if found guilty under the act, which also has corporate offence carrying unlimited fines for a concern that "carries on a business" in the UK, but fails to stop bribery by ‘associated persons’ working on its behalf, even if it is ignorant of their activities.

Under current piecemeal bribery laws, a firm is only likely to be found guilty if senior management were complicit in the crime.

Corruption commonplace

Catherine Feechan, partner at Edinburgh law firm Brodies LLP, told that efficient supply chain operation was central to business profitability, and warned that some common industry practices might fall foul of the new legislation.

Many UK food firms partake in joint ventures overseas, Feechan said, and use overseas agents or distributors in areas where corruption is commonplace, a fact that the Act itself recognises.

Problems could arise when using overseas agents to ensure a smooth delivery process from port through to customs and production sites, or when ‘persuading’ foreign manufacturers to alter production schedules, she added.

Feechan said the issue needed to be pushed “up the agenda” for food firms, where managers might think: “’Oh well, we’ve got a foreign agent, that’s it, we don’t really need to think.’”

Instead firms should ensure with agents that anti-corruption policies are in place and monitor them carefully, she said, particularly in ‘high-risk’ emerging economies, where attractive export opportunities lie.

Facilitation payments

Feechan said that ‘facilitation payments’ were one key area of concern, where many businesses pay small sums to port officials to ensure prompt unloading of perishable foods, an “unavoidable” practice in many countries but one forbidden by the new Act.

“I’ve got a great deal of sympathy with companies. We all want the supply chain to work effectively, and the Act will push firms to ask questions they don’t really want to ask [of foreign agents or third parties]," she said, where potential bribery is 'out of sight, out of mind'.

"That said, companies don’t have a great deal of choice.”

Another issue was paying public officials abroad to smooth business relationships, a Section 6 offence under the Act, where UK food firms faced difficulties in ensuring that no such payments are made via agents or partners in a joint venture or consortium.

‘Adequate procedures’ are a defence to any bribery charge, but the definition of adequacy depends on the risks faced by a specific firm, and has been left deliberately open-ended by draftsmen.

Export dilemma

Feechan warned that companies will need to do more to prevent bribery and corruption throughout the supply chain, with ‘tailored’ policies and staff training, as well as possible external verification of the terms of anti-corruption policies.

But she said that full compliance with the Bribery Act could pose problems for UK firms in ‘high risk’ countries, although she didn’t condone any wrong doing.

“If you’ve got a boatload of, say, bananas, and you want them unloaded before they perish, in the right place at the right time, and it’s a choice between chucking the guy at the docks a couple of quid or losing the cargo then what do you do?,” she said.

Asked whether other EU countries had similar legislation, given that the Act could possibly put UK firms following the letter of the law at a competitive disadvantage, Feechan added: “No, we’re leading the way. We’re right up there with the US in terms of anti-corruption legislation." 

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