Ready Or Not, Here Comes the UK Bribery Act

(Business Law Currents) The countdown to the debut of new anti-bribery legislation from the United Kingdom is set to take the world by storm, regardless of whether the corporate executives have fortified risk management policies. Far from being limited to a regional legal matter, the new regulations are expected to raise the bar for corporate anti-corruption standards globally.

In comparison to existing anti-bribery legislation such as the Foreign Corrupt Practices Act, the UK Bribery Act is expected to cast a wider net of potential liability due to its broad extra-territorial reach over any entity with a “demonstrable business presence” in the United Kingdom.

By relegating the offence of failing to prevent bribery as a strict liability offence, the Act eliminates the defense that organizations were unaware of corrupt practices carried out by employees or affiliates. As a result, non-UK companies could find themselves ensnared via agent liability or other indirect means. Moreover, the Act, which imposes a heavy liability burden on senior corporate executives, has been designed specifically to target corruption in the private sector as well as the public sector.

Arriving amidst a global push for more robust anti-bribery controls, the UK Bribery Act joins ongoing legislative efforts around the world to crack down on corruption. In the United States, the SEC recently finalized details on the Dodd-Frank Whistleblower Program, a move intended to assist the Commission with anti-bribery investigations. Within the Asia Pacific region, Hong Kong and Indonesia are in the process of drafting legislation to address anti-money laundering and to criminalize bribery in the private sector, respectively. Moreover, earlier this year, China amended its criminal legislation to criminalize the bribery of foreign officials and officers of international public organizations.

via Ready Or Not, Here Comes the UK Bribery Act.

UK Bribery Act Guidance Induces No One

(Westlaw Business) The UK is cracking down on corruption with a new anti-bribery law that will effectively flip the burden of proof from prosecutors to defendants in bribery cases. With almost a presumption of guilt, companies operating in the UK will need to be able to establish that they have taken robust measures to prevent bribery for fear of facing unlimited fines or jail time if they do not.

The Bribery Act (“the Act”) paves the way for Britain to become a world leader in anti-sleaze by codifying and significantly expanding existing bribery laws throughout the UK. But with recent Ministry of Justice’s guidance on the Act leaving more questions than answers, businesses and legal advisers are scratching their heads as to how exactly to avoid being caught.

The Bribery Act

The new Bribery Act applies to all companies operating within the UK (including overseas companies) and through the creation of a new strict liability offence (an offence where prosecutors need not establish intent to commit a crime) and third party vicarious liability has reversed existing bribery rules to place the onus on businesses to prove that they are not involved in bribery either through their employees or connected third parties.

The Bribery Act will apply throughout Britain from April 2011 and will, unusually for the UK, extend to even the remotest parts of Scotland and Northern-Ireland. Seeking to ensure the highest standards of integrity, it will lead the way in the UK’s offensive on international corruption but has caused consternation among companies and law firms alike who fear that the Act’s far ranging provisions may mean that they become liable for offences committed outside of their control.

With only a statutory defence of “adequate procedures” as a way out of bribery prosecutions many are wondering exactly what needs to be done to avoid prosecution. Particularly confusing is the somewhat bizarre use of the word “adequate”. With the section 7 offence only biting on the occurrence of bribery, many are puzzled how a company could argue that it had adequate procedures in place to prevent bribery when ostensibly it didn’t. Of little solace is the Ministry of Justice’s guidance that gives some suggestion as to what will be considered adequate in the eyes of prosecutors.

via UK Bribery Act Guidance Induces No One.

BP Suit’s Complex Legal Structure Scrutinized – WSJ.com

As dozens of attorneys prepare to gather next week in New Orleans for a kick-off hearing to the sprawling oil-spill case against BP PLC, legal experts are newly scrutinizing the complicated legal structure it will use.

In recent years, thousands of suits filed across the U.S. in some of the biggest product liability and personal injury cases—from harmful diet drugs to smelly Chinese drywall—each have been consolidated into “multidistrict litigation” cases.

The idea is to roll numerous suits of similar nature filed in U.S. district courts into one case before one judge, for efficiency’s sake. The 1968 law that created the process stemmed from a price-fixing case that gummed up federal courts involving more than 25,600 claims against electrical-equipment manufacturers.

But critics of the consolidation say these cases become so unwieldy they sometimes drag on for years. While the cases concern similar topics they can include those seeking class-action status with hundreds of plaintiffs as well as individual wrongful-death suits. The critics point to asbestos litigation filed in the 1980s that has yet to be resolved or the civil case tied to claims from the 2001 terrorist attacks on the World Trade Center, which is still in its initial stages.

Texas plaintiffs’ attorney Lisa Blue said multidistrict litigation cases are “like glue.”

“It’s much more expensive, more time consuming, more infighting,” said Ms. Blue of Dallas. “They get consumed in minutia. They’re a defense lawyer’s dream. You get to charge the client a lot more.”

via BP Suit’s Complex Legal Structure Scrutinized – WSJ.com.

UK liability limits to double after BP spill | FT.com / UK / Business

Britain’s oil companies face the doubling of the maximum payment for third-party costs resulting from pollution, amid concerns that the current limits are inadequate after BP’s massive oil spill in the Gulf of Mexico.

In the UK, individual companies are responsible for environmental or other material damage if their installations fail. There is no legislative cap on their liabilities for any clean-up.

But if they default on their payments, then under a voluntary industry agreement the rest of the industry guarantees to deal with the costs for any pollution damage and for the reimbursement of public authorities. The current liability limit is $120m per incident and UK Oil and Gas, the industry association, is proposing to raise that to $250m (€196m, £160m) in the wake of the BP disaster.

Scrutiny of offshore drilling safety regimes has intensified since the explosion of the Deepwater Horizon rig on April 20 that killed 11 workers and led to 4.9m barrels of oil spewing into the waters of the gulf. No new oil has flowed into the gulf since July 15, when the well was capped. BP announced last week that its own costs for cleaning up the spill and compensation payments had risen to $6.1bn so far.

UK Oil and Gas said that the proposed increase would be voted on at an emergency meeting by signatories to the Offshore Pollution Liability Agreement, or Opol, on Wednesday. Under the agreement, which was signed in 1974, each member undertakes to maintain a financial obligation to Opol of $120m for any one incident, thus guaranteeing the payment of any claim from a party that cannot meet its own obligations.

via FT.com / UK / Business – UK liability limits to double after BP spill.

Importance of Anti-Corruption Due Diligence for International Transactions

When acquiring a company, an acquirer may inadvertently inherit significant financial liability and reputational damage associated with a target company’s prior violations under anti-corruption legislation. In order to minimize this risk, anti-corruption due diligence is becoming an increasingly important part of M&A due diligence for international transactions. U.S. enforcement authorities have made clear their expectation that acquirers and investors will conduct anti-corruption due diligence on transactions presenting corruption risk. U.S. counsel have followed this guidance and now frequently engage in detailed anti-corruption due diligence for international transactions. The same approach is being taken in Canada as many Canadian companies are subject to both U.S. and Canadian anti-corruption legislation and Canadian enforcement authorities have recently committed significant resources to robust anti-corruption compliance enforcement. U.S. acquirers are also insisting on anti-corruption due diligence when acquiring Canadian companies. The benefits of anti-corruption due diligence for both the acquirer and the target are discussed below.

continued Importance of Anti-Corruption Due Diligence for International Transactions.

Senators Pressure DOJ to Take Action Against Oil Spill Companies | National Law Journal

Democratic members of a Senate committee examining the Deepwater Horizon oil spill said today that they want the U.S. Department of Justice to throw the book at the companies responsible. Republicans were a little more cautious.

At a hearing this morning, senators urged Associate Attorney General Thomas Perrelli to pursue civil liability against BP, Transocean, and any other companies that could be found at fault. They also repeatedly pushed for criminal investigations of the companies.

“We need to ensure that those harmed by this accident are fully compensated,” said Sen. Jeff Bingaman, D-N.M., chairman of the Senate Committee on Energy and Natural Resources.

Senators expressed frustration with current law, which threatens to cap liability for the Gulf of Mexico spill, beyond clean-up costs, at $75 million. BP has said it will pay all “legitimate claims” associated with the spill, but that has not lessened lawmakers' skepticism.

“Exxon said many of these same things” — after the 1989 Exxon Valdez oil spill — “and then they litigated all the way to the Supreme Court,” said Sen. Robert Menendez, D-N.J. He asked Perrelli about pursuing a written consent agreement with BP.

Perrelli tried to reassure senators, telling them that the $75 million cap might not apply in the case of the Deepwater Horizon, especially if the government has evidence of gross negligence or willful misconduct. He declined to say whether it has such evidence now. “There are many facts to be developed,” he said.

Sen. Byron Dorgan, D-N.D., wondered whether BP's public commitment to pay “legitimate claims” might be used against the company in court. “Is their representation legally binding on them?” Dorgan asked.

“They've certainly made that commitment very publicly,” Perrelli said. “We intend — in a court of law or elsewhere — we certainly intend to have them uphold that commitment.”

At Dorgan's request, Perrelli said the department would consider ways to make BP's assurances legally binding. He also said it would consider ways to stop a planned $1 billion dividend payout to shareholders of drilling-rig owner Transocean, which also faces liability claims.

via Law.com – Senators Pressure DOJ to Take Action Against Oil Spill Companies.

Feds Want More Corporate Data | Law.com

The U.S. Treasury and Justice departments want to require states to collect more information about the owners of corporations and limited liability companies to help crack down on domestic shell companies that launder money and help finance terrorists.

That effort is putting law enforcement officials at loggerheads with state treasurers, the business community and the American Bar Association.

Besides imposing new duties on the states, legislation introduced in the Senate also could bring lawyers and others who are compensated for helping to form corporations and LLCs under federal anti-money laundering requirements as well as potential criminal penalties for providing false information. About 2 million corporations and LLCs are formed each year in this country, according to various official estimates, and the states generally do not obtain the names of the people who will control or benefit from those companies.

“States that offer corporations to individuals without insisting on information on beneficial ownership undermine the efforts of law enforcement to prevent crime, recover stolen assets and collect tax,” said former Senate investigator and financial crime expert Jack Blum, a Washington, D.C., solo practitioner who has testified in support of legislation. “We grant corporations the privilege of limited liability and, in return, the state tells the people exactly what the corporation is doing. Secrecy is not and never has been the real purpose of corporations.”

via Law.com – Feds Want More Corporate Data.