Legislators involved in regulating international trade have certainly been working overtime in the past few years. In the world of Customs Law we have seen:

• The introduction of Authorised Economic Operator (AEO) certification as a response to the heightened threat of international terrorism
• The introduction of Senior Accounting Officer (SAO)provisions holding Financial Directors or other senior accountants personally liable for corporate tax declarations
• The raising of the bar for achieving customs (re) authorisations (such as Customs Simplified Procedures)
• The Modernised Customs Code (although we are still waiting for the Implementing Regulations, the planned changes under the MCC are significant)
• The tightening of Money Laundering Regulations.

The Bribery Act has radically overhauled the UK's existing legislation that has been criticised at international level. In fact, the old legislation was one of the reasons why the UK's score on Transparency International's Corruption Perception Index has dropped from 8.4 to 7.7 (the UK is now ranked 17th).

What is contained under the new legislation?

Under the new legislation there are 4 offences:

• Offering a bribe;
• Accepting a bribe;
• Bribing a foreign public official;
• Failure of a commercial organisation to prevent bribery.

The last of these has caused significant consternation amongst business leaders. Failure to prevent bribery is a strict liability offence that covers, amongst other things, the activities of third parties acting outside the UK "on behalf of the business". For those that already operate under the US Foreign Corrupt Practices Act (FCPA) this will be a familiar concept, however, for those that don't, this legislation will certainly cause a few issues and problems for companies.

The scope of the legislation is extremely wide. Multinational companies that have jurisdictional presence within the UK (whether by carrying on business within the UK or by having the parent or subsidiary entities incorporated or formed under UK law) can be held liable.

The legislation does provide for the defence of "having adequate procedures in place" to prevent bribery but we are still awaiting guidance from the new Government (the Act was passed in the dying days of the Labour government) as to what this actually means?

What are the penalties?

Corporate bodies found to have committed any bribery offence could face unlimited fines. Individuals could face a maximum 10 year prison sentence (this includes senior officers of companies held liable through their consent or connivance with a general or foreign public official offence by their company).

What does this mean for my customs operations?

The Act defines bribery as:

"...The Act by which a person offers a financial or other type of advantage to another person with a view to inducing them to act improperly..."

Arguably, there are three main area of risk in the sphere of customs:

• The actions of third-party agents/brokers
• Applying for beneficial rulings
• Appointment of third parties.

The actions of third party agents/brokers

It is an unfortunate fact that customs officials in certain countries obtain certain "facilitation payments" in order to clear or speed up goods through customs. Under the new legislation this will be expressly forbidden. Businesses will have to instruct and control any agents or brokers that they use to ensure that this does happen or they may find themselves facing prosecution. So using one simple example, if any of your agent/brokers are paid significantly higher than others, you may be required to answer why that is.

Achieving beneficial rulings

Certain provisions under the EC Customs Code provide for rulings within Members States that become binding on other Member States (for example- Binding Tariff Information). Seeking to influence such a ruling in any Member State will also be considered as an act of bribery. If you are pan-European with premises throughout the EU, it is perhaps advisable to seek rulings in Member States that are higher on the Transparency International Report than ones that are lower placed.

Appointment of third parties

Businesses need to ensure that the appointment of third parties is clearly controlled and scrutinised. Favours in kind for successful tenders example, are also covered by the legislation and would lead to prosecution.

Next Steps

As the legislation is in its infancy and official guidance has not yet been published, it is important for businesses to be proactive and to start to take preventative steps. We realise that from speaking to our clients that the biggest difficulty in developing and implementing controls. We have extensive experience in working with clients to improve visibility and accountability in this area. Please feel free to contact us on (01905) 619229 or email us at This e-mail address is being protected from spambots. You need JavaScript enabled to view it