Brokers to sign formal agreements under anti-corruption legislation
As implementation of the UK Bribery Act (due April 2011) draws closer, shipbrokers are signing formal agreements with their principals, in response to a worldwide trend towards stricter anti-corruption legislation.
According to the International Transport Intermediaries Club (ITIC), the typical document presented to brokers will detail the principal’s prohibitions concerning the payment of bribes, in addition to other inducements. A ban on ‘inappropriate entertainment’ will also be included and brokers must observe the principal’s policies while allowing their records to be audited.
The Foreign Corrupt Practices Act 1977 (as amended) has been operating in the US for a number of years, where provisions are frequently inserted into contracts. It is expected that once the legislation comes into force in the UK, if an individual acting for a company (whether they be a third party agent, broker or employee) gives or receives a bride, the company must demonstrate it has adequate procedures in place to prevent such dishonest practices. If a company is unable to do this, they may face a fine or criminal prosecution.
Andrew Jamieson, ITIC Claims Director, said: “In recent times, a tendency has developed for companies to issue formal agreements setting out their ‘ethical trade policies’. ITIC has seen agreements from principals based in many different countries. These documents are often in the form of separate agreements sent to brokers to sign, although sometimes the provisions are included as part of commission agreements. Whatever the format, it is important to make sure that these agreements are not used as an excuse to insert other rights, obligations or responsibilities.
“Brokers reviewing these agreements should ensure that the text does not make them responsible for the acts of others in the chain. It is one thing to confirm you have not paid or received a bribe, but it is quite another to provide an undertaking that no-one else has. It is unlikely that brokers will be able to avoid signing these types of agreements, and the greater emphasis on regulatory compliance will make them more common. Brokers should ensure that the provisions are limited to their own actions and that any rights granted to the principal are reasonable and directly relevant to the transaction in question,” Mr Jamieson added.
Wikipedia on the UK Bribery Act
The Bribery Act 2010 is an Act of the Parliament of the United Kingdom. It was introduced to Parliament on 18 November 2009. The bill was passed into the statute book on 8th April 2010.
The Acts defines four new criminal offences:
- offering or paying a bribe
- requesting or receiving a bribe
- bribing a foreign public official (a specific offence required to comply with the OECD Convention)
- a corporate offence of failing to prevent bribery being undertaken on its behalf.
The act defines ‘bribery’ in wide terms, to capture the differing ways in which bribes are made or received. It sets out several scenarios, or “cases”.
The one which is expected to apply to most businesses is the offence of giving a bribe, specifically:
"The defendant offers, promises or gives a financial or other advantage intending to induce another person to perform improperly one of their functions in their position of trust and responsibility, or as a reward for improper performance"
The legislation applies to all companies, partnerships and individuals based in England, Scotland, Wales and Northern Ireland, as well as foreign companies and individuals doing business in the UK.
! It has a global reach, applying to acts or omissions taking place anywhere in the world.
Wikipedia on Foreign Corrupt Practices Act
The Foreign Corrupt Practices Act of 1977FCPA) (15 U.S.C. §§ 78dd-1, et seq.) is a United States federal law known primarily for two of its main provisions, one that addresses accounting transparency requirements under the Securities Exchange Act of 1934 and another concerning bribery of foreign officials.
Persons subject to the FCPA
Issuers – Includes any U.S. or foreign corporation that has a class of securities registered, or that is required to file reports under the Securities and Exchange Act of 1934
Domestic concerns – Refers to any individual who is a citizen, national, or resident of the United States and any corporation and other business entity organized under the laws of the United States or having its principal place of business in the United States
Any person – covers both enterprises and individuals.
Requirements
The anti-bribery provisions of the FCPA make it unlawful for a U.S. person, and certain foreign issuers of securities, to make a payment to a foreign official for the purpose of obtaining or retaining business for or with, or directing business to, any person. Since 1998, they also apply to foreign firms and persons who take any act in furtherance of such a corrupt payment while in the United States.
The meaning of foreign official is broad. For example, an owner of a bank who is also the minister of finance would count as a foreign official according to the U.S. government. Doctors at government-owned or managed hospitals are also considered to be foreign officials under the FCPA, as is anyone working for a government-owned or managed institution or enterprise. Employees of international organizations such as the United Nations are also considered to be foreign officials under the FCPA. There is no materiality to this act, making it illegal to offer anything of value as a bribe, including cash or non-cash items. The government focuses on the intent of the bribery rather than on the amount.
Regarding payments to foreign officials, the act draws a distinction between bribery and facilitation or "grease payments", which may be permissible under the FCPA but may still violate local laws. The primary distinction is that grease payments are made to an official to expedite his performance of the duties he is already bound to perform. Payments to foreign officials may be legal under the FCPA if the payments are permitted under the written laws of the host country. Certain payments or reimbursements relating to product promotion may also be permitted under the FCPA.
