x Abu Dhabi, UAEThursday 27 July 2017

Bribery law puts onus on UK firms to check UAE operations

Lawyers say British companies in the UAE need to stay up to speed with tough new bribery laws in the UK that apply to firms with dealings in foreign countries.

Lawyers are warning British companies operating in the UAE to put stops in place ahead of tighter rules to prevent bribery that go into effect in two weeks.

The UK Bribery Act, proposed in 2009 and approved last year, outlines harsh punishment for British businesses and individuals using bribes to win contracts and advance their commercial interests.

Foreign companies with operations in the UK or dealings with UK-based firms are also subject to the act, which has been hailed by some people as a step towards levelling the global playing field for British companies but criticised by others as tricky to enforce in countries where gift-giving customs could be construed as bribes.

Neill Blundell, a partner at the global law firm Eversheds, based in the UK, said the regulations going into effect on July 1 meant many UK companies with local partners in the UAE would scrutinise their relationships more carefully and include anti-bribery provisions in contracts. UAE laws require businesses, outside free zones, to have majority local ownership, meaning UK and other foreign companies that want a presence in the country need a local partner.

"[Local partners] are going to be more likely to find those [British] entities asking them about the way they do business," Mr Blundell said. "They will come under the microscope as an associated person, and all of them are having to create policies and programmes. In the global marketplace, you're probably going to see as they participate in transactions that they are asked more about what they do and how they do business."

Mr Blundell and other lawyers are advising clients to take pre-emptive measures before the act goes into effect to avoid being caught up in investigations and prosecutions under it.

Rebecca Kelly, a partner at Clyde & Co in Dubai, said companies with UK connections should put in "adequate procedures" to prevent bribery. For large companies, that could mean communicating clear policies against bribery to thousands of employees as well as checking up on the activities of business partners. For small companies, simply informing employees of the rules could suffice under provisions of the act that prescribe action proportionate to a company's size and resources.

After the act is in full effect, UK companies with dealings in the UAE will "need to exercise a higher level of due diligence on the appointment of an agent", she said.

"Historically people may have engaged with an agent here and may not even have travelled here to meet that agent … Once this act goes live, they should be encouraged to come over here and meet with the agent and explore what other business interests the agent has," said Ms Kelly.

The UK act is one of the toughest pieces of bribery legislation in the world, and is expected to have repercussions for UK companies and citizens in many jurisdictions.

The impact on companies in the UAE, however, may be muted by an already strong set of local laws that cover corruption, fraud, breach of trust and bribery.

"There is nothing in this act that should be a surprise to anybody operating in the UAE, where there are heavy penalties for bribery and corruption," said Ms Kelly.