UK BRIBERY ACT
JV Risk
Liable for Actions of Company A
Company A (non-UK incoporated)
Company B (UK Incorporated)
during the course of a project sited in such jurisdictions, or that it would be particularly difficult to undertake a project without bribery occurring prior to its inception. The extra-territorial reach of
Facilitation payment
JV Company Supplier
Goods supplied to JV Company on more favourable terms following the facility payment
exercise to satisfy themselves that the third party does not have an historic record of undertaking actions that breach the Act, and that the third party has in place a robust anti- bribery and corruption policy which (as appropriate) is communicated periodically through training and education for all staff.
Jurisdiction Risk The jurisdictions in which natural
resources are located are often higher risk jurisdictions from a bribery risk perspective. A high-risk jurisdiction is one with a Transparency International corruption perception index score of less than 3. The index ranks countries and territories
the Act means that, regardless of where in the world the project is undertaken, entities with a “close connection” to the UK need to be continually mindful of the Act. Those undertaking projects in high- risk jurisdictions need to undertake a thorough risk assessment of the jurisdiction in which they propose undertaking the project, prior to
its commencement. Persons working in high-risk jurisdictions should receive increased levels of training to effectively combat the increased risk of bribery. It also is particularly important for multinational companies to
be sensitised to political/regional unrest and the prospect of (or actual) regime change in the higher risk jurisdictions in which they operate, as and when that regime change or unrest takes place. Every new administration likes to make its mark, and appear different from its predecessor; hence, in some instances, a new administration may mean one which is more amenable to or forgiving of corrupt practices.
Governmental Approval Large-scale energy projects often involve increased levels
... regardless of where in the world the project
is undertaken, entities with a “close connection” to the UK need to be continually mindful
according to the perceived level of public sector corruption, with a score of 0 representing a highly corrupt jurisdiction and 10 representing a very ‘clean’ country. According to the 2011 index,
Russia, one of the world’s biggest producers and exporters of oil and gas, has a score of 2.4. Nigeria, the exporter of numerous commodities, including iron ore, coal, uranium and multiple agricultural products, also has a score of 2.4. High levels of actual or perceived public sector corruption suggest that it may either ‘customary’ for bribery to occur
90 June 2012
of interaction with public officials, due to the requirement to obtain the governmental licences or approvals necessary to undertake the project. For example, governmental approval may be required when undertaking the construction of a new gas pipeline; the exploration of coal may require a licence; and exporting metals to a third country may require a permit. Depending on the jurisdiction in question, obtaining the requisite approvals can take a significant amount of time, thereby delaying the successful completion of the project. To expedite the process, participants may
be tempted to make, or might be expressly asked to make, some form of ‘payment’ to those granting the relevant licences and approvals. Such payments, which are called ‘facilitation payments’, would be caught by section 6 of the Act: the bribery of foreign public officials, if the intention is to influence the public official in the course of their employment. The only defence available to those who have made a facilitation
payment is if the written law of that particular jurisdiction permits or requires making facilitation payments to public officials. Arguing that facilitation payments are ‘customary’ in the relevant jurisdiction is not an adequate defence for making such payments, if the custom is not expressly stated in written law. Therefore, market participants who have been asked to make, or are considering making, a facilitation payment to a public official in order to receive a required approval or licence, will need to seek the advice of local counsel in the relevant jurisdiction to
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