ABSTRACT

The Ministry of Justice Guidance1 takes a very superficial view of joint ventures and differs from the approach recommended in this book in the ways summarised in Table 32.1.

Table 32.1 Differences Between the Official Approach and the Recommended Approach

Relating to Collaborative Relationships

Ministry of Justice, OECD and TI Focus

Recommended Focus

Based on perceived country and sectorial risks suggesting there are demand and supply sides to bribery

Considers that perceived country risks are influential but not determinative

Risk assessment is more granular and specific, based on contexts and decision-centricity

Limited to the Bribery Act 2010 Takes account of US legislation, including the Foreign Corrupt Practices Act (FCPA) and the Dodd-Frank Wall Street Reform Act

Considers offences under the Fraud and Companies Acts

Considers fraud risks and assesses their relationship to bribery offences

Framed as a legal problem Framed as a managerial, operational and motivational challenge with legal input

Emphasises the importance of consistent standards across all joint ventures

Assumes joint ventures will be primarily in Less Developed Countries

Considers joint ventures in all countries, including the USA and the UK

776 B r i b e r y a n d C o r r u p t i o n

Relating to Collaborative Relationships

Ministry of Justice, OECD and TI Focus

Recommended Focus

Concerned primarily with bribes paid (outgoing bribery) and demonstrating adequate procedures (which relate only to Section 7)

Covers incoming, outgoing and competitive bribery, conflict of interest and fraud

Recognises the limited application of adequate procedures and incorporates special provisions to avoid corporate liability under sections 1, 2 and 6

Claims that the Bribery Act assists UK companies in international markets

Considers that the Act creates serious disadvantages in international markets for UK-based companies

Ambiguities are to be resolved after the event through prosecutorial discretion

Considers that the Act creates almost unmanageable uncertainty. Does not accept that a business can be managed when the line is drawn only after the event

Emphasises the criticality of selfdisclosure and negotiated settlements with the SFO

Takes a pragmatic approach to self-disclosure and recognises the risk involved

Due diligence is focused on red flags concerning joint venture participants

Establishes an integrated methodology for due diligence on all phases of joint ventures, with additional focus on end parties, specific transaction types and decisions

Prioritises compliance, putting commercial considerations into second place. The suggestions may result in adversarial relationships with other participants

Prioritises commercial goals but fully supported by compliance. Mutually supportive relationships with participants

One of the most serious uncertainties in the Bribery Act is the extent to which UK companies may be criminally liable for the behaviour of their partners in joint ventures, including collaborative enterprises with parent, subsidiary and sibling companies. This chapter specifically addresses joint venture risks and recommends the following approach:

• Risk Assessment − All existing and planned joint ventures should be comprehensively risk-

assessed2 and managed on a through-life basis – meaning from identifying a prospective relationship through to operation and termination.3