Employment

Bribery and corruption have always been part of business life, in the oil industry just as much - if not more than - other walks of life. The sheer sums of money involved and, often, the range of opportunities to gain a commercial advantage through corrupt practices tend to make an industry more prone to corruption.

But the industry's own efforts to root out corruption in its midst have been mirrored by a global legislative push to pursue these issues across all industries.

Here in the UK, tackling business practices at an international level has long been a legal sore point. This is partly because the legislative basis for much of our anti-bribery law is extremely long in the tooth, relying on the courts for case law to fill gaps as they have arisen over the decades. The resulting patchwork is riddled with weaknesses - most notably the challenge of holding UK companies to account for suspected bad practice abroad.

The publication of a draft Bribery Bill last year sought to bring about a root and branch overhaul of these ageing laws.
Assuming it reaches the statute books - most likely later this year - the Bill will essentially prohibit giving or receiving bribes, through the creation of two new general offences. A bribe need not be financial; offering any advantage in exchange for an improper action would be caught.

In addition to these general offences - which can also cover bribes purely within the private sector - the Bill would create a specific new offence of bribing a foreign official, with the intention of obtaining or retaining business, or gaining an illegal commercial advantage.

The incoming law is also expected to take a robust view on the potentially grey area of 'facilitation payments'. These are where an individual - often a public official - will take a small payment in exchange for performing their duty more promptly, or at all. This is a different proposition to sums which are legitimately due under a law or procedure, but organisations must take great care in determining on which side of the line a particular payment falls. Prosecutors have discretion as to whether to prosecute those making these payments, however best practice is to err on the side of caution and avoid making the payment.

Another innovative and potentially far-reaching aspect of the Bill addresses the conduct of third parties operating on behalf of a UK company - for example, where their knowledge and local contacts are vital in negotiating for business in a foreign market. Any company using third party representatives should limit this potential exposure by ensuring they carry out proper due diligence.

Yet it remains the 'extraterritorial' effect of the new regime which promises to deliver the biggest shake-up. As well as acts of bribery actually committed here, anyone with a close connection to the UK can be charged, even if the offence was committed entirely in another country. As well as individuals ordinarily resident in the UK, this covers companies and other corporate bodies incorporated in, or doing business in, the UK.

While the scope of the new legislation is clearly broad, this is matched by the severity of the penalties available, with the possibility of prison sentences of up to 10 years and unlimited fines.

The Bill has still to make its way through Parliament and the final details may change before it reaches the statute books. However, as it will potentially impact on many of the business processes used day to day by oil companies overseas, now is the best time to review current practices and make any necessary changes.

The good news is that liability may be reduced or avoided where adequate systems were in place to prevent bribery in general, even if these failed in a specific instance.

Such systems should include clear personal responsibility for preventing bribery, embedded throughout the organisation. Training on corporate codes of conduct and bribery law should be regular and thorough, particularly as they relate to sensitive areas such as corporate hospitality.

Rather than just being a box-ticking exercise, anti-bribery policies must be backed up by disciplinary procedures with the teeth to respond effectively to any breaches. With this in mind, business should encourage or even oblige employees to blow the whistle on any wrongdoing and protect those doing so.

In addition to reviewing internal processes, now is the time to scrutinise all existing relationships with government officials and intermediaries, to ensure they stand up to the more rigorous legal controls.

It is also important to remember that UK companies conducting business overseas are still bound by laws of the country in which they are operating. The UK has joined over 140 countries in signing the UN Convention Against Corruption and countries in the EU have agreed to further measures to combat bribery and corruption, many of which impose even tougher penalties for bribery.

A recent study, published by the United Nations Office on Drugs and Crime examines the anti-corruption policies of the world's top 500 companies, highlighting the various pros and cons of each approach. The report is part of a growing set of readily available resources on this topic - including dedicated ethics websites and regular events - and is worth considering when drafting or updating internal procedures.

As British efforts to toughen up on bribery and corruption - at home and abroad - are mirrored in other jurisdictions, the oil industry's historical reputation is likely to place it near the top of the list for scrutiny. Any lingering belief that corruption is simply a regrettable requirement of doing business in some parts of the world, or that the dubious practices of local representatives can be kept at arm's length, are now dangerously outdated.

Catriona Munro is a Partner in the EU, Competition & Regulatory team at Maclay Murray & Spens LLP.