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House of Lords Bribery Act 2010 Committee Publishes Post-Legislative Scrutiny

On March 14, the House of Lords Select Committee (Select Committee) on the Bribery Act 2010 (Bribery Act) published its report, “Bribery Act 2010: post-legislative scrutiny,” to establish whether the Bribery Act is achieving its intended purposes.

In its report, the Select Committee concludes that the Bribery Act is an excellent piece of legislation, creating offenses that are “clear and all-embracing.” In particular, the offense of corporate failure to prevent bribery is regarded as effective and enables those in positions of influence in a company to ensure that the company operates ethically.

However, the report states that guidance from the UK Ministry of Justice (MoJ) is less helpful in providing small and medium enterprises with the information and advice needed for developing formal anti-bribery policies. For example, for companies considering exporting services, the Select Committee notes that the MoJ’s guidance should give more guidance on the point at which hospitality exceeds what a reasonable member of the public might think was acceptable and begins to influence the recipient’s course of action.

The Select Committee’s report reminds firms in the financial services sector that they must (where relevant) abide by legislation which goes beyond the Bribery Act, such as the revised Markets in Financial Instruments Directive (MiFID II). It also notes that the UK Financial Conduct Authority (FCA) “takes a stern line on hospitality” and considers sporting or social events as not meeting the requirement that hospitality should be “conducive to business discussions.” The FCA also considers activities provided after training events or conferences, such as evening dinners or attendance at rugby games, are often not appropriate—therefore firms regulated by the FCA have no choice but to observe the FCA’s guidelines. The Major Event Organisers Association considers this as an “overreaction” from firms’ compliance officers in implementing legislation, resulting in event organizers being unintentionally negatively impacted by the Bribery Act and MiFID II.

In the absence of judicial interpretation of the Bribery Act’s provisions on bribing another person or a foreign public official from a hospitality point of view, the Select Committee has suggested that it may help businesses to look at the situation from the point of view of the recipient of hospitality. For example:

  1. would the guests expect to be treated in such a way, regardless of the decision they might reach on the business in question;

  2. would the guests believe that the level of hospitality offered was an attempt to influence them improperly into making a decision which they might not otherwise have made; or

  3. what would a reasonable member of the public, who is properly informed, think of the hospitality a business is proposing to offer.

The Select Committee has encouraged professional organizations and trade associations to provide sector-specific guidance on where their members should draw the line on hospitality.

The Select Committee’s report is available here.

©2019 Katten Muchin Rosenman LLP

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John Ahern, Financial Attorney, London, Katten Law Firm
Partner

John Ahern, partner at Katten Muchin Rosenman UK LLP and head of the London Financial Services group, focuses his practice on banking, financial services, UK and European financial markets, and related regulations. His background in private practice and as in-house counsel at a global investment bank provides him with perspective on the unique regulatory issues facing the wholesale and private banking sectors. John advises multilateral trading facilities, broker-dealers and banks on trading, clearing and settlement as well as custody of securities—both physical and...

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Carolyn H. Jackson, International Attorney, Katten Muchin law firm
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Carolyn Jackson is a partner in Katten Muchin Rosenman UK LLP and is a Registered Foreign Lawyer. She provides US financial regulatory legal advice to a broad range of market participants, including commercial banks, investment banks, investment managers, broker-dealers, electronic trading platforms, clearinghouses, trade associations and over-the-counter derivatives service providers.

Carolyn guides clients in the structuring and offering of complex securities, commodities and derivatives transactions and in complying with US securities and commodities laws and regulations. 

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Nathaniel Lalone, Katten Muchin Law Firm, Financial Institutions Attorney
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Nathaniel Lalone, a partner at Katten Muchin Rosenman UK LLP, has a broad range of experience in the regulation of financial products and financial markets, and frequently provides regulatory and compliance advice to trading venues, clearing houses and buy-side firms active in the over-the-counter (OTC) derivatives, futures and securities markets. He is actively involved in advising clients on the implementation of MiFID 2 and MiFIR in the European Union as well as the international reach of US financial services regulation. He also has significant experience with structuring...

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Neil Robson, private equity fund managers counselor, Katten Law Firm, London
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Neil Robson, a regulatory and compliance partner with Katten Muchin Rosenman LLP, focuses his practice on counseling hedge and private equity fund managers and other investment advisers on operational, regulatory and compliance issues. He regularly addresses Financial Conduct Authority (FCA) and EU authorization and compliance under both the EU Alternative Investment Fund Managers Directive (AIFM Directive) and MiFID, cross-border issues in the financial services sector, market abuse, anti-money laundering and regulatory capital requirements, formations and buyouts of...

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