Skip to main content

British Justice Secretary Kenneth ClarkeDARREN STAPLES

It was supposed to be the biggest, most far-reaching piece of anti-bribery legislation in the world. But Britain's delayed Bribery Act, now set to come into force July 1, appears weaker than first promised, according to " guidance" for prosecutors released by the British government on Wednesday.

Canadian mining and oil-and-gas companies with global assets and links to London were said to be concerned that the British law -- like the U.S act -- could entangle them, even if they only had a stock-exchange listing.

Of course, no one actually publicly supports the idea of paying bribes. Businesses' concerns stem from situations like buying a subsidiary in a developing country that could unknowingly be involved in payoffs. For instance, the high-profile investigation of Germany's Siemens AG resulted in billions of dollars in fines and has focused attention on the issue.

The guidance for prosecutors published Wednesday suggests that a mere listing in Britain will not necessarily be enough to trigger an anti-bribery investigation and expose a Canadian company, or any other foreign firm, to massive fines.

Writing in the Financial Times, British Justice Secretary Kenneth Clarke said it would be up to Britain's courts to interpret whether a company was "carrying on business" in Britain and fell under the legislation.

"Mere listing on the London Stock Exchange, or just the fact of having a U.K. incorporated subsidiary, would not necessarily mean the act applies," Mr. Clarke said. "But to be clear: this is not a 'carve-out.' Under the terms of the act, it has always been a decision for the courts."

Paul Conlin, an Ottawa lawyer who specializes in foreign trade and bribery laws, said the guidance should give Canadian companies concerned about the reach of the law "some comfort." But he said the act remains a "high-water mark" for anti-bribery legislation around the world.

Under another provision, companies subject to the act will also be liable for the actions of "associated persons," a group that could potentially include Canadian-based suppliers or contractors. British firms may require them to have more comprehensive anti-bribery procedures in place as well, Mr. Conlin said.

The British guidance came a day after Canada was singled out as a laggard on anti-bribery enforcement by the Organization for Economic Co-operation and Development, Mr. Conlin noted, underscoring the fact that Canada is falling behind some of its key trading partners in this area.

Canada's laws against foreign bribery have long been criticized as poorly enforced -- they also lack the "extra-territorial" reach of those in the United States and Britain, according to a partner with Ogilvy Renault LLP, which is set to merge with British-based Norton Rose.

Canadian companies with business overseas and in Britain and the U.S. are going to have to bring in new anti-bribery procedures and protocols to conform to foreign laws, rather than domestic ones, Mr. Conlin said: "I think with Canadian companies that do business internationally, we're heading to a highest-common denominator approach."

Anti-corruption activists criticized the guidance for prosecutors, saying the act had been weakened.

The guidance released Wednesday can be found here.