Broadening the UK's horizons in international markets
Whilst the various reported reactions
to ‘Brexit’ demonstrate polarised views
on the opportunities and threats to UK
businesses, we are nevertheless left in a
position of having to make it work for us.
Some reports have been extremely
positive in that since deciding to leave
the EU, the UK has been approached by
a plethora of countries wanting to enter
into new trade deals. Of course whilst
the UK has been a member of the EU
such freedoms to negotiate have not
been available. It has been suggested
that the offers have come from around
27 countries with a combined GDP of
£40 trillion which when compared with
the combined GDP of the EU (estimated
to be at around £12 trillion), seems to
be a massive opportunity and certainly
deviates from the despondency and
angst which was forecast.
If these trade deals come to fruition
then a very different landscape may be
presented to UK exporters. The list of
potential trading partners is expected to
grow and the distance between these
more attractive friends and the UK is
also going to expand considerably. It
may well be the case that there is a
growth in UK exporters seeking agents
in far flung places to help sell their
products. Exciting times are no doubt
ahead, but equally there are potential
risks and pitfalls for the unwary.
Transparency International is a global
movement with the objective of
eradicating corruption and they publish
a ‘Corruption Perceptions Index’
showing how 175 countries rank against
each other in terms of how corrupt their
public sector is perceived to be.
The lower their ranking, the more corrupt
the country is perceived to be. Indeed,
the rankings are used by risk analyst and
forecasting experts. If we consider some
of the countries which are reportedly
proposing to offer enhanced trading
terms with the UK, there is a range of
rankings from the more ‘safe’ nations
near the top of the list such as New
Zealand, Canada, Australia, Germany
and Japan to others whose position
on this Index may well set alarm bells
ringing. A leading risk analyst has
considered the economic activities of
close to 200 countries between August
2012 and August 2014. It found that
sub-Saharan Africa and the Middle East
held the most risk in terms of corruption
and also the oil, gas and mining
industries were found to be those most
frequently exposed to the demands of
bribery. In these sectors there are often
public sector considerations and this
provides a further layer of potential risk
as will now be explained.
The Bribery Act 2010 sets out various
offences and which are policed by the
Serious Fraud Office. The legislation is
centred around the proper performance
of individuals and in this context their
acting in good faith, impartiality or
acting in accordance with a position of
trust. If an individual intends to bring
about the improper performance of
others in their performance of their
function or rewards that improper
performance then an offence is
committed. Similarly if that individual
has knowledge or a belief that others
have acted improperly in their role
through inducement then an offence
is committed. In order to make
the assessment of any breach of
expectation of proper performance, this
is on the basis of what a reasonable
person in the UK would expect to be
the proper conduct of that person’s
role. Overseas local customs or practices
must be disregarded unless they are
specifically allowed or required in written
laws in that country. There is a separate
offence of the bribery of a foreign
public official where a financial or other
advantage to influence the official in the
performance of their official functions
is made. In the landscape set out above
and with the UK legislative position, it
can be seen that there are treacherous
waters ahead for individuals when
conducting business overseas. Actions
of agents and distributors can also steer
businesses towards the rocks. Although
individuals are at risk personally from
rewarding corrupt practice, businesses
can also fall foul by failing to take
adequate steps to prevent corrupt
practices. Policies need to be rigorous
and adhered to in order to protect a
business and indeed those who work
within it. Training of staff to spot the
warning signs and to appreciate the
policies in place and the legislation
behind them is another key step to
protect business interests.
At first it seemed that the Serious Fraud
Office had been slow on the uptake
insofar as dealing with bribery and
corruption offences has been concerned.
Very few cases were reported in this
area. This can no longer be described
as the case with a number of bribery
investigations and newly prosecuted
cases forming part of the Serious Fraud
Office’s workload. Indeed, there have
been a number of high profile cases
in recent months where the Serious
Fraud Office has enjoyed some success
in this particular field. Against this new
landscape which could see an increased
reliance on riskier overseas markets, it
is therefore imperative for exporters to
take the issue of eradicating or at least
mitigating the risk of corrupt practices
seriously as suggested, particularly as
unlawful activity can easily find its way
into transactions whether through the
direct activities of employees or indeed
the more indirect effects of agents in
unfamiliar markets where their activities,
through geography, are more difficult to
control and monitor.
Effective anti-corruption policies and
training can be a significant step in the
right direction, as is obtaining sound
advice should any fears or concerns
arise.
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