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This transcript is for anyone with a hearing impairment or who for any other reason cannot listen to the MP3 audio file.
The following is the text spoken by OUT-LAW journalist Matthew Magee.
Hello and welcome to OUT-LAW Radio, where we hope to keep you up to date with the latest news and the most fascinating features from the world of technology law.
My name is Matthew Magee, and this week we look into a new bribery bill that will soon become law. In some circumstances it penalises companies even for corruption engaged in by rogue employees. We ask: what can companies do to avoid prosecution?
But first, here are some of the top stories from OUT-LAW.COM, where you can read breaking technology law news throughout the week.
New police unit formed to take-down web pages
and
HP ordered to pay £200 million in tendering court case.
A police unit has been created to force a take down of web pages which break the UK's terrorism laws. The Government has set up a webpage through which the public can tell the police about pages they think are illegal.
The Terrorism Act of 2006 gave police the power to demand that websites or material on websites be removed from the internet if they shared information that would be useful to terrorists or glorified acts of terrorism.
The Association of Chief Police Officers (ACPO) created a new unit to act on reports from the public and to look for material that might break the Terrorism Act.
The Government has created a page within its direct.gov portal where individuals can report material that they think is illegal. Illegal hate content, such as messages calling for racial or religious violence, can also be reported via the portal. The Government said that submissions from that page would be directed straight to the new police team.
The High Court has ordered Hewlett-Packard to pay BSkyB £200 million in interim damages following a ruling last week over a contract tendering process.
The damages must be paid by 17 February. Last week HP subsidiary EDS was found guilty of fraudulent misrepresentation in the way that it won a contract from broadcaster Sky to build a customer relationship management system. HP is seeking permission to appeal the ruling.
The High Court found that while EDS's sales processes in general did not involve fraudulent misrepresentation about how much the system would cost and how long it would take, as Sky had claimed, it did rule that one EDS employee was dishonest in his claims about how long it would take.
That meant that HP could no longer rely on a cap on its liability to Sky contained in the contract it had signed with the broadcaster. The Court has now told it to pay £200m within a fortnight while it calculates the final damages.
Those were some of the top stories from this week's OUT-LAW News.
With an election looming time is running out for many of the government's legislative plans, but there is one law that the government appears to be determined to get onto the statute books: the Bribery Bill.
This new law will update tangled, outdated and confusing laws on bribery and create a clearer legal framework for companies worried about where they stand.
It will also, the government surely hopes, improve the UK's international standing on the sensitive issue. The UK has generally not been seen as a country which clamps down on bribery but when the Serious Fraud Office dropped its inquiry into British Aerospace arms sales to Saudi Arabia in 2006, the UK's reputation sank to a new low.
The Bill is likely to at least help to improve Britain's standing on bribery internationally. More pressingly for companies though, it will create a new offence by which companies will be liable not just for actively engaging in corruption but even for failing to prevent it.
Claire Shaw of Pinsent Masons, the law firm behind OUT-LAW, is a former prosecutor for the Serious Fraud Office. Before she outlined what companies should do to make sure they are not caught out by the new law, she explained why the UK's reputation on bribery needs some rehabilitation.
Claire Shaw: The OECD convention was signed up to by a number of jurisdictions including the UK and the UK Government has been roundly criticised in recent years about frankly the hypocrisy in signing up the things but not doing anything about UK companies and UK businesses effectively corruption activities overseas. What really brought everything to a head was the BAE case and I think it has been well documented in the press, you know there is the allegation that this is really political influence being brought to bear on an independent prosecuting agency. The following matter that is obviously seen in the press is the big debacle and the case that it has been dropped, or that element of the case I should say was dropped. It was then seen as even more blatant hypocrisy on the part of the UK that they just weren't putting their money where their mouth is. And I know there were quite heated debates at OECD meetings about what the UK were actually doing in practice as opposed to just saying the right things.
There are other problems within the existing bribery laws, she says. For a start, it's very difficult to make them do the job of holding corrupt companies to account.
Claire Shaw: There have historically been very few corruption prosecutions. It is a difficult concept for a jury to get its head around to be honest because there is all sorts of rather aged legal concepts like principal and agent, and if the principal actually agrees to the corruption then can the agent be held liable. So there were lots of legal hurdles to getting a successful prosecution off the ground.
What the new law does is to make it much clearer what bribery is and in what situations employees and companies will have committed an offence.
Claire Shaw: The Act now creates specific offenses of bribery. One is on the part of the payer of the money and it is an offer as well as a payment and the other offence is for the recipient. So it is the receipt of money or the agreement to receive money is caught by each of those offences. And that is in much clearer language; one of the difficulties with the old Act, if you like, was that corruption has never required dishonesty but it does require the payment in question to be a corrupt payment and it was an incredibly frustrating and circuitive argument when judges said on previous cases, you know the corrupt payment has a tendency to corrupt which does not help anybody. The new Act actually specifies that the intention has to be to influence a public official in their position of authority.
Where the law introduces a new concept though is in the idea that companies will be liable for employees' corruption unless they have put adequate procedures in place to prevent it. But, says Shaw, the big question companies will need an answer to is: what are adequate procedures?
Claire Shaw: There is also a new offence aimed at corporates. Corporates are seen as having the deeper pockets and effectively funding the criminal justice system by paying fines. And the new offence for a corporate is failing to prevent corruption within your business organisation and a defense to that is that you had adequate procedures in place, it was just effectively a rogue trader or a bad apple that managed to get through the net. And there has been a lot of discussion at business level, and probably understandably, but you know, what is adequate, what is going to be adequate and what is not going to be adequate and will be prosecuted or not. You'll never going to get prescriptive advice from a prosecution agency such as the SFO on what will be adequate and what won't. They don't want to fetter their discretion and set up too firm guidelines or rules because each case is judged on its merits.
So what are companies to do? Shaw's advice to firms is: make sure yours is not the worst offender.
Claire Shaw: The best advice is to say, well if you were prosecuting this company what would you look at. And if you consider that the offence still has to be made out to very high criminal burden of proof beyond reasonable doubt then you'd look at a company and you would only prosecute those where there was blatantly not adequate procedures; that there would be a one line policy on a website, that the Board weren't setting the right tone, nobody was following through with training, and there just wasn't the infrastructure so there is no hotline for reporting, whistleblowing incidents or no training given to finance staff on what are the red flags of the corrupt payments. And those are the sorts of case where a company is going to be prosecuted not those where the Board has bought into the idea, you've had training, you've got your policies and procedures and you publicise those internally as much as you can do.
Once companies they have their procedures in place, though, they can't just rest easy. Shaw says that a spruced up UK enforcement regime is not the only thing that companies have to worry about. The arm of the US law, she says, is getting longer all the time.
Claire Shaw: Clients are often concerned about their exposure to the US and something that they need to be aware of is that it is not just having US subsidiaries, having shares floated on the US market, it's a much wider jurisdictional footprint, so if you are an executive travelling to the US for meetings they will be caught by the US Travel Act, if you send e mails or have bank transfers or conduct business in US dollars you'll get to be caught by US jurisdiction under the Banking and Wire Fraud Act. So there is a very, very wide jurisdiction. You still have a sort of vaguely gentlemanly aspect to negotiations with prosecutors in the UK; in the US it is very different. They take no prisoners and they really hold all the cards, they've got all the power and you might choose to fight a case in the UK, you would rarely choose to fight run in the US.
That's all we have time for this week, thanks for listening. Why not get in touch with OUT-LAW Radio? Do you know of a technology law story that you think we should cover? We'd love to hear from you on radio@out-law.com. Make sure you tune in next week; for now, goodbye.