Asset managers show discrepancies over compliance with Bribery Act, according to E&Y survey

LegalOperational RiskRegulation
30 Jan, 2012

Major discrepancies exist among asset managers surrounding compliance with the UK Bribery Act more than six months after the law was enacted, a survey by Ernst & Young (E&Y) has discovered.

Some 85% of European asset managers told E&Y they reviewed expenses claims and maintained records on donations, entertainment and gifts although numerous firms have not clarified thresholds for entertainment and gifts. Reporting thresholds for gifts and entertainment range from £25 to £500. However, some organisations do not even have reporting thresholds

“There needs to be a lot more clarity regarding thresholds and limits on what people can spend on hospitality and gifts,” said John Smart, UK fraud investigation and dispute leader at E&Y. “Benchmarking will lead to greater consistency in the industry,” he added.

The Bribery Act, widely considered to be the world’s toughest anti-corruption legislation, prohibits bribery and facilitation payments to any person for the procurement or advancement of business.

Prior to its enactment, some companies feared corporate hospitality would be impacted. This has not materialised, according to Smart. “There was a concern that taking clients to Wimbledon or the Six Nations would be prohibited. Fortunately, the Serious Fraud Office (SFO) has been incredibly helpful in providing advice on what is acceptable and what isn’t,” commented Smart.

However, there are fears that US-based organisations may not be up-to-date with the regulation. “A lot of organisations in the US believe that if they comply with the Foreign Corrupt Practices Act (FCPA), they are complying with the Bribery Act but this is not the case. The Bribery Act is much tougher than the FCPA. FCPA only prohibits facilitation payments or bribery of public officials while the Bribery Act includes private sector organisations as well,” highlighted Smart. “I suspect the percentages of organisations complying with the Bribery Act in the US will be substantially lower than in Europe,” he added.

The Bribery Act has already claimed several high-profile scalps. In July 2011, publishing giant Macmillan and insurance broker Willis were fined £11.2 million and £6.9 million respectively for failing to comply with the Act.