BulletProofBlog the blog on crisis communications

Each week, Bulletproof Blog™ features exclusive interviews with thought leaders on issues of critical importance to companies and countries. This week, with the enactment of the UK Bribery Act 2010 just days ago, we interview Jonathan Armstrong, a Partner in UK office of Duane Morris LLP, about what is being called the “toughest enforcement standard in the world” when it comes to matters of corruption.

Mr. Armstrong counsels multinational companies across Europe on matters of risk and compliance. He has handled legal matters in more than 40 countries involving corporate governance, reputation, internal investigations, branding, and global privacy policies. An expert on the UK Bribery Act 2010 and its impact on the international anti-corruption landscape, Mr. Armstrong shared his insights with Bulletproof™:

What are the most significant ways in which the UK Bribery Act 2010 differs from the United States’ Foreign Corrupt Practices Act (FCPA)?

Jonathan Armstrong: The Bribery Act 2010 differs in a number of important respects from the FCPA.  First, it differs in scope. The UK legislation applies to bribes paid to public and private officials and it has a range of new and unique offenses, such as failing to prevent bribery. The UK legislation bans facilitation payments – in contrast to the FCPA, which allows small ‘grease’ payments. Like the FCPA, however, it does seek to have an extra-territorial effect.

The second major difference is in terms of penalties. The UK legislation imposes a maximum penalty of 10 years in jail and/or unlimited fines for individuals, companies, and partnerships, while the maximum prison term under the FCPA is five years.

Who is under the Act’s jurisdiction? Is its enactment a precursor to similar legislation in other foreign countries? Can we expect the increased focus on corruption in the US and the UK to be mirrored around the world?

Jonathan Armstrong: The new UK legislation applies to UK corporate entities – even if they are foreign owned – individuals who ordinarily reside in the UK, and non-UK nationals and entities if an act or omission forming part of the offense takes place within the UK.

I think we are already seeing increased focus on bribery and corruption in other countries, even absent specific new legislation. Already this year we have had significant corruption investigations by authorities in China, France, and Germany, in addition to those in the U.S. and the UK.  There is growing public pressure on governments around the world to police the activities of corporations doing business in their countries. Investigations in the last 12 months or so have featured more than 40 countries.

How does the Act alter the international anti-corruption landscape? What is next on the anti-corruption front? Are there issues emerging on the horizon that corporate compliance officers need to be aware of?

Jonathan Armstrong: Perhaps the most significant way in which the Act alters the international anti-corruption landscape is with the new offense of failure to prevent bribery. This is a strict liability offense, although companies and individuals may be able to fall back on an “adequate procedures” defense. More detail on “adequate procedures” will be published when the UK Parliament is recalled.

One of the trends that we are seeing is more innovative prosecutions – and the Shot-Show investigation in January – where a number of people were arrested in connection with a sting operation at a tradeshow – shows us the lengths to which the authorities will go to enforce anti-corruption laws. Personal criminal liability is definitely a focus on both sides of the Atlantic as well.  The increased levels of fines and settlements are also truly staggering. In 2007, for example, U.S. authorities raised $87 million in settlements and fines. In the first two months of 2010, that figure was $1.2 billion. Against this heightened climate of compliance and increasing legislative power, every corporation needs to put in place proper procedures and training regimes.

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Larry Smith is Senior Vice President of Levick Strategic Communications, the nation's top crisis communications firm, and a contributing author to Bulletproof Blog. Connect with Levick on Twitter: @Levick.