scmp.com: UK bribery law will affect HK businesses
World's strictest rules to be enacted in July
Irene Jay Liu
Updated on Apr 01, 2011
Britain yesterday released guidelines for the world's strictest
anti-bribery legislation, which affects UK companies operating in Hong
Kong and on the mainland.
The UK parliament passed the 2010 Bribery Act last April, which
affects not only British firms but any company that conducts any part
of its business in the country, as well as those that provide services
to British companies. It goes into effect in July.
Until the British law was passed, the United States had the strongest
anti-corruption legislation in the world in the shape of the Foreign
Corrupt Practices Act, or FCPA, which bans the bribery of foreign
officials. The UK's new law goes further, by also outlawing commercial
UK firms may also be liable for acts of bribery by a third-party
service provider, such as an agent or contractor, if the bribe was to
get business, keep business, or gain a business advantage for its UK
"One of the key issues that companies confront in Asia, and especially
in China, is the use of agents, consultants and third-parties," said
Gary Seib, a partner at Baker & McKenzie in Hong Kong who heads the
Firm's Global Dispute Resolution Practice.
Firms can defend themselves against bribery charges if they can show
that they have "adequate procedures" in place to prevent bribery.
But Seib said that the burden of implementing those procedures fell to
the UK company, not local agents. "Let's say that you have a local
agent in Hong Kong or Taiwan. They may not be concerned with
implementing due diligence procedures - the burden will be on the UK
entity. It's the same situation in relation to the [American Foreign
Corrupt Practices Act]."
Seib emphasised that companies operating in Hong Kong and the mainland
should be mindful of local anti-corruption laws as well.
"We see, for example, local investigations take place. China, for
example, has revised its Criminal Law, which has been dubbed the
'Chinese FCPA'. Hong Kong has its own anti-bribery laws.
"Taken as a whole, there's nothing in the guidelines that wasn't
anticipated, it represents what we have been saying for years is 'best
practice' for companies subject to home legislation which impacts on
overseas operations. The more savvy companies with Asian operations
have for a while been mindful of the issue of anti-corruption and put
in place internal operating procedures because of the US FCPA and what
was expected under the guideline," said Richard Tollan, a partner at
law firm Mayer Brown JSM and a former detective inspector in Hong
Kong's commercial crime bureau.
"I think the message is, if you haven't started getting your house in
order, then you really need to do it now," Tollan said.
But for many Hong Kong companies, anti-corruption procedures could be
an entirely new concept.
A survey of top firms in Hong Kong, Singapore and South Korea,
released in April last year, found nearly half "failed to display any
evidence of taking significant steps to counter bribery". The survey
by Experts in Responsible Investment Solutions studied the
anti-bribery policies of nearly 2,000 FTSE All-World Developed Index
firms for the survey.
"There are many corporates in this part of the world who are not aware
of it, or haven't responded. There's room for much greater awareness,"
A spokesman for the Hong Kong Trade Development Council said it had
not heard about the newly published guidelines, but said that the
council would examine the issue.
"We will always monitor anything that will impact business with
another country. If it has immediate impact on Hong Kong, we will
decide whether to inform our members," he said.
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