Blighty's new anti-bribe law will do more HARM than good

Ban on palm greasing could knacker UK in global trade


Analysis We used to draw a distinct line between what was acceptable business conduct here at home and what we did abroad with Johnny Foreigner.

Inviting Bertie from your major customer to Henley or the Derby, or waving Cup Final and Olympic tickets in his face was entirely acceptable. Slipping him £500 for an order was bribery and both illegal and immoral.

But what you did abroad was an entirely different matter: bribery was until very recently tax deductible.

The Bribery Act has rather changed this. There's still considerable confusion as to whether, if Bertie is a public servant, you can actually take him on corporate away-days worth thousands. You can most certainly buy him a pint and have no problems, but as with so many new laws this has been written so loosely that many are still a little unsure of where the boundary lies.

Those people selling expensive corporate Olympics packages have complained that this very uncertainty has led to a large fall in demand. If a few thousand quid to take a favoured customer to the, say, men's 100 metres finals can be looked upon as a bribe then who is going to risk jail for that?

Given that we are in the opening stages of the season for corporate jollies it probably is worth having a discreet word with a lawyer who knows - just to be on the safe side.

This is of course very different from the system of old. Which was, essentially, that soft soaping someone with experiences and days out was just absolutely fine while any mention at all of cash was not just legally but also socially verboten.

At home, in Britain, that was. Having worked in some pretty odd and even rough places I've done my share of bribing people, but even so I would be profoundly shocked if I was asked for a bung in Blighty. But the system also most definitely facilitated the payment of bribes to Johnny Foreigner.

At one point, working in Russia, I needed to get cheap railway prices out of the Russian railroads to make the numbers on a metals shipment add up. The only way known to do this was to make a deal with the North Koreans who had special state-set prices on said railways. Which is how I found myself inside the N. Korean embassy in Moscow handing over $10,000 in crisp notes to their KGB-style guy after the successful conclusion of the shipment.

Yes, of course, it's terribly naughty subverting the employees of a communist dictatorship, but the reaction here at home was the most interesting. When I made gentle enquiries to the taxman as to how I might account for this transaction, hinting gently at first, he finally pointed out that since I'd paid the bribe in a foreign currency to a foreign chap that was just fine. Just list it as a business expense and it was tax deductible.

If the taxman or I had even thought about an under-the-table cash exchange during our chat about the tax treatment of the railroad bribe, the other would have been mortally offended. But we were both entirely happy with discussing doing much the same thing with foreigners.

Not that this is entirely new, and we might as well call it what it is: hypocrisy. India was once filled with Brits taking local mistresses (“bibis”), living with them, fathering children with them and acknowledging them in a manner that no one at all would do at home - only to return to Britain, after a decade or two devoid of uxoriousness, and marry “properly” to some white girl.

The rules, whatever they are, have long been different inside Britain and outside it: the Bribery Act, which came into force last July, changes that and I'm not entirely sure for the better.

For what happens when you try to do business in a country that doesn't have this social rule (even if they do have similar legal constraints) against douceurs, sweeteners and outright corruption? Being constrained by the British rules is going to, um, harm our export performance, we might say.

My own personal experience of both business and life is that you can draw a line across the border between southern and northern Europe, and one between western and eastern, and to the north and west of these lines we've one essential mindset: here's a set of rules so how do we obey them. Head south and east, and the intellectual energy seems to be more about subverting those rules.

These lines don't correspond exactly to country boundaries: in Spain, Catalonia seems a great deal more law abiding on such matters than Murcia where almost every building permit in recent decades seems to have been bought. The Russian-speaking bits of Ukraine has always appeared to me to be more, um, “cash” based than the Ukrainian-speaking west of the country even though standards of probity there aren't all that much to write home about.

That the world is a better place without the bribery I'd fully agree: recent work in Germany has left me marvelling at how it is possible to have reams of rules and pettifogging bureaucracy and yet the place actually works. Requests, permits and licences are simply granted as long as you have obeyed said rules. This is not, to put it mildly, the general experience to the south and east of my lines.

What concerns me about the recent changes in our own law is how the transition will work. We'll work out soon enough (usually after a couple of prosecutions) where the dividing line between hospitality and bribery lies. My key fear, though, is the impact on our performance in other lands - nations where our rules are not just odd but positively antithetical to the entire business culture. Take this for example:

Huawei and ZTE suffered a PR blow this week after it emerged that executives from the company had been convicted of bribery offences in Algeria and sentenced in their absence to ten years each in jail.

If bribery in Chinese business circles is so prevalent and aggressive as to affront even an Arab near-dictatorship then what hope have British businesses got when we're still not sure whether tickets to the rugby are an illegal bribe or not? ®

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