With less than two months until the Bribery Act 2010 comes into force, brokers and lenders are beginning to ask: ‘Am I guilty?!’
For centuries, businessmen have been treating their favourite clients to corporate lunches, Christmas gifts and other tokens of their appreciation. However, when the Bribery Act 2010 comes into force this April, some of these ‘standard practices’ may well become criminal offences.
Much of the worry stems from the fact that the Act does not clearly define what a ‘bribe’ actually is. According to the legislation it could be a payment, a financial inducement or in fact “any other advantage”.
Jonathon Newman, Brightstone Law LLP, said: “The lines of acceptability are somewhat vague. Each case is fact sensitive and a degree of caution and good sense will need to be applied in each instance.
“So, in terms of corporate entertainment, hosting a small get-together at your office for a broker may be perfectly reasonable and acceptable, but treating an introducer to an all-expenses-paid trip to Monaco for two weeks for a single transaction may not be.”
To add to the severity of the Act, for the first time ever companies will be liable for the corrupt activities of third parties as well as their own staff.
The Financial Services Authority (FSA) has predicted that many broker firms will be liable under the new laws because “there is significant risk of illicit payments being made to, or on behalf of, third parties to win business.”
Yet despite these warnings, many brokers and lenders know very little about the Act. Some heard about it for the first time just few weeks ago.
Gavin Diamond, Head of Finance at Cheval, said: “I have not seen any recent press about the Bribery Act but was alerted to it by our compliance consultant.”
James Rainbird, MD of Pink Pig Loans, added: “I only heard about the Act in January during an Association meeting, but my ears were certainly pricked when I heard the news. I think it is inevitable that this will affect businesses within the financial sector. We have always declared our fees and the remunerations received from our lenders, but I am sure not all companies do the same.”
The level of concern from brokers and lenders within bridging and commercial lending differs hugely, with some saying that they are not at all concerned and others doing all they can to learn more about the Act and protect themselves as a consequence.
In terms of corporate hospitality, the overall opinion seems to be that ‘reasonable’ practices, where there is no intention that improper business transactions are carried out, will remain acceptable after April.
Gavin Diamond said: “It must stand to reason that the Act is aimed at preventing the inducement to act improperly rather than rendering de minimus corporate gifts and entertainment to be illegal. I can only hope that guidance notes will be published to assist companies in putting practical procedures in place to prevent getting caught out by the new Act.”
James Rainbird added that the opinions of a company’s legal team will play a large part in the way a company changes its activities as a result of the act.
Some lenders though are actually welcoming the Act. Mark Posniak, Head of Marketing and Operations at Drawbridge Finance, said that there are “definitely some positives” to be gained from the Act because it will help to create a “level playing field”.
“We already disclose all our payments to brokers and we are not overly concerned by this latest Act. I don’t think that companies who offer a good product and have a good proposition have ever worried about bribery because there is no need for it,” he said.
Over the next few weeks we will continue to learn more about this Act and how it will be imposed upon financiers on a day-to-day basis. But the real consequences of the Act will not be known until after April, when it is likely that a company will only discover that it is guilty after the sentence has been made.
By Katie-Jill Rowland
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