The UK Act - which is broader than existing Australian laws against foreign bribery and the US Foreign Corrupt Practices Act (FCPA) - will apply to any Australian company that carries on any part of its business in the UK (as well as any UK companies or citizens).

"As a result, the biggest impact on Australian companies that are subject to the Act will be the need to have a closer look at existing compliance programs and make sure they are adequate to detect and minimise the risk of contravening the new Act," said Tim Robinson, a senior associate at Allens Arthur Robinson.

Risk professionals need to focus on what type of conduct will be prohibited under the new UK Act that is not currently prohibited under existing Australian and US laws, according to Robinson. There are two key differences, he said.

"The first is that the new UK Act prohibits facilitation payments - that is, payments of minor value to expedite or secure performance of a routine government action. Australian law and the FCPA both contain exceptions for facilitation payments and many compliance programs contain similar exceptions."

The second difference is that the new UK Act prohibits bribes paid to secure business from other private sector organisations, Robinson said.

"This has been illegal under the law of most Australian (and US) states for some time, but until now these laws have not been enforced against conduct which occurs overseas with the same level of publicity as the enforcement of laws against bribery of government officials."

VIEW ALL "Prosecutions are likely to attract significant publicity so damage to a company's brand and reputation are also likely" Tim Robinson, senior associate, Allens Arthur Robinson

The Act defines bribery very widely, to include giving or promising a benefit to a person with the intention of causing the person to breach an expectation that they will act in good faith, impartially or in a position of trust, he said.

"This means that existing commercial practices in some industries may need to be re-examined, as will the provision of excessively lavish corporate hospitality to employees of a company's customers."

One of the big differences from Australian law is that the Act imposes a strict liability offence for companies who "fail to prevent" bribery.

"This means companies will automatically commit an offence if any employee or agent (including suppliers and joint venture partners in some circumstances) pays a bribe," said Robinson, who noted that the UK Government recently issued six principles by which the adequacy of procedures will be measured.

"These include things such as the need to assess the risk of bribery in countries where the company does business, a clear message from the top of the organisation that bribery will not be tolerated and the need for due diligence to be conducted so that the company understands who it is doing business with including agents and intermediaries, joint venture partners and a company's supply chain."

As for penalties, companies can face an unlimited fine and debarment from EU government contracts, and Robinson said "prosecutions are likely to attract significant publicity so damage to a company's brand and reputation are also likely".

>> This article was first published in Risk Management Magazine. For daily news updates on Risk & Compliance, visit www.riskmanagementmagazine.com.au