Citizen Nades - Beware UK’s Bribery Act

AFTER RM600,000 was paid to a bank account in December 2009 in Singapore, the donor emailed the recipient and said: "Santa popped over early for a quick turn down (the address of the bank)."

When the payment was held up by queries from the bank, the angry recipient told the donor: "Rudolf must have stopped to speak to the girls."

The latter's response was: "Sorry about this, must have been an Xmas f*** up." When the money was finally transferred on Christmas Eve, the recipient wrote: "Great news, Santa left his parcel, much appreciated."

If you thought that the money was from a Russian oligarch to his son to spend for Christmas you were wrong. Neither was it from a Chinese billionaire sending money to his son to play at the casino.

These were coded words for sending bribes across three continents – Asia, Europe and the Americas. This was part of the evidence uncovered by a joint investigation involving the City of London Police, the Federal Bureau of Investigation (FBI) and the Special Inspector General for Afghanistan Reconstruction.

The contract was for a job in war-torn Afghanistan – supply of RM20 million worth of bomb disposal equipment. The "donor" was a British company and the recipient was a US-based Australian-born businessman, Robert Gannon.

Last week, two directors of a British defence firm – Robert Gillam, 66, and Simon Davies, 46 – were jailed for paying a bribe to win the contract.

Jailing Gillam for two years, Judge Wendy Joseph QC said: "Corruption is a cancer in commercial and public life and those that indulge in it can expect sentences of immediate custody despite previous good character.

"There was an attempt to disguise the nature of the e-mails and the nature of the payments made – the offending was conducted over a significant number of months and motivated by the prospect of significant financial gain.

"As to harm, there's substantial financial gain to the defendant and after he helped the company undercut a rival firm."

Gillam was also barred from acting as a company director for the next five years, and ordered to pay RM20,000 in prosecution costs. Jailing Davis for 11 months, Judge Joseph said: "I accept that his culpability is lower than that of Gillam, but it can only be described as a significant role."

You may ask: "Why pay so much attention to a British case?" With so much money being spent in the UK on purchases such as defence equipment, software and so much money being spent in promoting tourism and trade, it's better to be safe than sorry.

The Bribery Act 2010 was introduced to update and enhance UK law on bribery including foreign bribery in order to address better the requirements of the 1997 OECD anti-bribery convention. It is now among the strictest legislation internationally on bribery. It came into force two years later and made companies registered in the UK come under the extra-territorial reach of the law. The companies will be in breach if they fail to prevent bribery if an employee, subsidiary, agent or service provider pays bribes to another person anywhere in the world to obtain or retain business or a business advantage.

A foreign subsidiary of a UK company can cause the parent company to become liable if the subsidiary commits an act of bribery in the context of performing services for the UK parent.

But that is not all. The Act creates four prime offences:
» Two general offences covering the offering, promising or giving of an advantage, and requesting, agreeing to receive or accepting of an advantage;
» A discreet offence of bribery of a foreign public official; and
» An offence of failure by a commercial organisation to prevent a bribe being paid to obtain or retain business or a business advantage (should an offence be committed it will be a defence that the organisation has adequate procedures in place to prevent bribery).

Ignorance is not bliss. There is no requirement that an organisation authorises, encourages or even be aware of, or otherwise involved in, the payment of the bribe. For the organisation itself to be guilty of the offence, it is sufficient that a person associated with the organisation paid the bribe.

This puts the burden of prevention of bribery on the commercial organisation. Legal experts say that one of the defences is that the company regularly trains its staff on integrity or has produced a set of rules of compliance for its staff.

The Bribery Act has important implications for Malaysian companies and even government agencies which do business in the UK as its territorial scope is extensive.

The corporate offence of failure to prevent bribery in the course of business applies to any relevant commercial organisation defined as a body incorporated under the law of the United Kingdom (or United Kingdom registered partnership) and any overseas entity that carries on a business or part of a business in the United Kingdom.

A foreign company which carries on any part of its business in the UK could be prosecuted for failure to prevent bribery even where the bribery takes place wholly outside the UK and the benefit or advantage to the company is intended to accrue outside the UK.

In London, many Malaysian owners of property have to start worrying. Its mayor Sadiq Khan says that sale restrictions will be brought in to stop London becoming the world's capital of money laundering.

"We shouldn't be embarrassed of saying our homes are homes, not gold bricks for investment for investors in the Middle East and Asia. I've got nothing against luxury properties being built in London. What we can't have is London being the world's capital for money laundering," the Evening Standard quoted him as saying.

If the money had been brought into the UK legitimately, Malaysian buyers will have nothing to worry, but those who remitted via money changers under the havala system will have plenty to answer for in the crackdown.

Therefore, the million ringgit question is: "Are we willing to incorporate some of these clauses into our anti-corruption laws? We wait with bated breath for the answers.

R. Nadeswaran is editor (special and investigative reporting) at theSun. Comments: