News

Industry takes legal advice as Bribery Act kicks in

16 April 2010

A government adviser has warned construction firms that new legislation could “take them to the cleaners” if they fail to take action against corruption, Building reported.

The powers were conferred by the Bribery Act, which was rushed through parliament last week,  prompting construction firms to seek legal advice. One of the biggest worries is that they will now be open to prosecution for failing to prevent bribery, even by other companies. Penalties will include unlimited fines and 10 years imprisonment.

Neill Blundell, head of the fraud group at law firm Eversheds, said: “These are serious laws with tough penalties and businesses need to take steps to minimise their risk by showing that they have actively taken steps to prevent bribery.”

The act is vague about what companies have to do to prevent bribery, with the law simply requiring “adequate procedures”. Guidance notes to clarify this will be published later this year.

Graham Hand, chief executive of British Expertise, which assists firms working abroad, is advising on the guidance notes. He said: “If companies are doing nothing they will be taken to the cleaners, so to speak. There is a mixture of apprehension and happiness that the bill has passed, but at last something is being done to cut down on corruption abroad.”

He added that a court would have to decide whether adequate procedures had been in place, but suggested judges will be looking for measures such as training and internal publicity.

A PricewaterhouseCoopers report into crime in the engineering and construction sector this week found that corruption in the industry was a “perennial problem”.

A senior accountant at one major contractor told Construction News that bribes and corruption were endemic in the industry. “Classically, if a job is subcontracted that contractor will be forced to buy steel from a certain firm at a certain price, and the main contractor takes a kickback on that,” he said. “Or sometimes contractors have to pay a bribe to physically get on the site in the first place.”

Enforcement of the act is expected to start in six months.

Comments

I have worked in the construction industry for 50 years in ENGLAND (now retired) and I have never been made aware of corruption in the ENGLISH construction industry.
Our forced introduction into Europe seems to have been an enormous mistake.

Eddie Monk, 16 April 2010

The construction sector may be better than some because of its compliance training in relation to the Competition Act 1998 and Artiles 101 and 102 of TFEU. For the Bribery Act we await the "adequate procedures", which hopefully will be drafted by the Autumn and provide a defence to the corporate offence and I will cover at my 5 October course. I think some companies are very good and have a corporate culture of compliance a point I tried to make in my article for Chartered Secretary on the Bribery Act which was published today but others are not so squeaky clean. Showers all round will be needed.

Susan Singleton, 29 April 2010

Leave a comment