UK anti-corruption
drive has US companies sweating
By Andrea Shalal-Esa
WASHINGTON, July 15 (Reuters) –
* Big focus on
beefing up internal compliance
* Britain expected to pursue several
high-profile cases
* Even insurers see opportunities in
anti-corruption area
* Defense contractors, pharmaceutical firms
seem vulnerable
WASHINGTON, July 15 (Reuters)
- U.S. companies, already sweating under heightened enforcement of anti-corruption
laws at home, are nervously reviewing their policies on how they wine and dine
business contacts abroad in the wake of tough new regulations imposed in
Britain.
The new law, which took effect July 1, bans all so-called
facilitating payments and does not expressly allow entertainment of government
officials and others.
The jury is still out on how rigorously British authorities will
choose to enforce the law. Companies in the defense, pharmaceuticals, energy and telecommunications sectors are seen as
particularly vulnerable.
At the same time, U.S.
companies are grappling with tighter rules at home too. New whistleblower rules
approved by the U.S.
Securities and Exchange Commission have also spurred companies to scrutinize
their existing compliance programs, according to legal experts in the United States and Washington.
"We have definitely seen an uptick
in our business in the anti-corruption and anti-bribery area," said Ed Rubinoff, a Washington-based expert on export controls and
foreign corruption with Akin Gump Strauss Hauer and Feld.
Just this week, U.S. lawmakers urged federal officials to
investigate whether News Corp (NWSA.O) broke the U.S. law banning bribes to foreign
officials. [ID:nL6E7I9069]
Akin Gump has added lawyers to handle the extra work, and now has
16 attorneys working on regulatory
compliance in the United States,
three in London and more in Abu
Dhabi, Geneva and Beijing, Rubinoff
told Reuters.
Lawyers at other big-name firms report similar trends, noting that
the British law and the new SEC rules offering incentives to whistleblowers
have galvanized some U.S.
firms that had less-than-stellar compliance programs in the past.
Paul Huey-Burns, a partner with Bryan Cave, urged clients to review internal
controls, rehearse how to respond to a possible whistleblower report, and
establish an unequivocal "no retaliation" policy to avert problems.
Attorneys are reluctant to identify specific companies that are
tightening their internal rules for fear of attracting unwanted attention from U.S. or
international regulators, but say the issue has attracted a lot of attention by
nearly all companies that do business overseas.
"There's a lot going on," said Sharie
Brown, who chairs DLA Piper's anti-bribery, anti-corruption and compliance
group.
FEAR-MONGERING
Legal experts say U.S.
companies are girding for the worst in Britain.
Senior British officials, however, are pushing back against what
they call fear-mongering by compliance professionals and lawyers on this side
of the Atlantic, and have told U.S. experts that they plan to focus on
significant violations, not reasonable business entertainment for government
officials.
Chastened by years of criticism from U.S. officials, British
authorities will likely be looking for some high-profile cases to demonstrate
their commitment to increased enforcement, said Brown, a former U.S. federal
prosecutor.
Initial cases would likely piggyback on probes already in the U.S.
Justice Department pipeline, and could involve firms in the defense,
pharmaceutical, energy and telecommunications sectors, given their frequent use
of third-party intermediaries and dealings with state-owned enterprises abroad,
she said.
The FBI last month told a meeting at SEC headquarters it was
keeping a close eye on deals between global aerospace firms and state-owned
airlines, possible violations involving the 2014 World Cup and 2016 Olympic
Games in Brazil, and
the reopening of South Sudan's oil industry.
OPTING OUT
Insurers also see opportunities in the compliance arena. Marsh, a
unit of Marsh and McLennan Companies Inc (MMC.N) and the world's biggest insurance broker,
this week launched a new insurance policy that covers companies and individuals
for bribery-related investigations that can result in "significant legal,
accounting, auditing, and consulting costs."
The UK law differs from the U.S. Foreign Corrupt Practices Act in
several ways, casting a wider net for which foreign officials are covered, and
imposing unlimited fines on companies that do business in Britain if they
cannot prove they have adopted adequate measures to ban bribery. [ID:nL6E7HS2EZ]
U.S. companies are urging British authorities to provide more
detailed guidance on how they will interpret the new law, said Justin Williams,
a partner with Akin Gump in London.
Williams said the new law lets British authorities opt out of
pursuing cases that could jeopardize the UK national interest, which means that
despite the tough new law, Britain could still avert prosecutions in cases like
the one involving BAE Systems Plc. (BAES.L)
Britain's
Serious Fraud Office in 2006 halted an investigation into alleged bribes paid
by BAE Systems in connection with a huge arms deal with Saudi Arabia
amid fears that it would threaten UK national security. BAE later
paid $400 million to settle related charges raised by the United States.
"It's by no means certain that a case like that would be
brought under the new regime," Williams said. "We're going to have to
see how the enforcement works."
BAE Systems carefully reviewed the new UK law, and concluded policies
and procedures put in place after the Saudi arms deal would exceed the new requirements, Brian Roehrkaesse, a U.S.-based spokesman for the company, told
Reuters. (Reporting by Andrea Shalal-Esa, editing by
Matthew Lewis)
http://www.reuters.com/article/2011/07/15/usa-bribery-idUSN1E75R1FK20110715