Local firms warned over tough UK law

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Local firms warned over tough UK law 
Bangkok Post: 8 Feb 2011
CORRUPTION
Local firms warned over tough UK law

Local firms could be left behind by its regional peers unless they tighten compliance with stricter international anti-corruption laws, says a local expert.

Peerapan Tungsuwan, a partner at Baker& McKenzie, said the new UK Bribery Act that was enacted last April will compel multinational firms to overhaul their internal procedures for dealing with counterparties.

Unlike the US Foreign Corrupt Practices Act (FCPA), which applies only to public officials, the new UK law is of broader scope, applying to both the public and the private sectors, she said.

It offers no exemption for extravagant business expenses made in good faith or the "grease payments" that firms may offer to counterparties as a reward for routine functions, said Ms Peerapan.

The law has been hailed as an achievement in replacing the old act, which fell short of matching the one in the US.

However, the UK government has faced criticism for delays in issuing guidelines for compliance. These are now expected about mid-year.

The Bribery Act sets out four offences - offering a bribe, accepting a bribe, bribing a foreign public official and failure of a commercial organisation to prevent bribery.

UK companies and their directors will be held liable if an employee or other associated person bribes another person with the intention of obtaining or retaining business or a business advantage for the company. But it is an acceptable defence if they can prove they had in place "adequate procedures" designed to prevent persons associated with it from undertaking such conduct.

Ms Peerapan warned that local firms either directly or indirectly related to UK companies as distributors or suppliers could lose business opportunities if they cannot comply with this law. The strictness of the Bribery Act will compel executives to be more proactive in their guidelines and reactions.

"The law applies to all companies conducting business in the UK. It is far-reaching and will affect secondary and tertiary suppliers and subcontractors to UK firms, as all will need to ensure compliance," she said.

From a broader perspective, Thailand could suffer from losing investors who regard relatively lax compliance as merely a hidden business cost, said Ms Peerapan.

"In my professional experience, it has been regrettable to see many local firms being cut out of investors' regional strategies or M&As due to dissatisfaction with transparency in legal compliance during due diligence. This could cause us to lose opportunities to benefit from the current boom in Asia," she said.

This is particularly true as the country ranks poorly with Transparency International in terms of perceived corruption, only slightly improving to 78th out of 178 last year from 84 out of 180 in 2009.

Singapore and Malaysia are perceived as the least corrupt countries in Southeast Asia, with rankings of first and 56th, respectively.

"Local firms are familiar with compliance to the FCPA, and the US has recently stepped up enforcement of the law. But they should be aware that the UK's law is stricter," said Ms Peerapan.

http://www.bangkokpost.com/business/economics/220409/local-firms-warned-over-tough-uk-law