F&C welcomes call for new anti-corruption legislation

F&C welcomes a report to be released tomorrow by the UK Law Commission calling for new anti-corruption legislation in Britain. F&C believes it is essential for the UK to raise its standards in the area of anti-corruption enforcement, as this is fundamental to the interests of investors.

According to the firm, the current lack of robust legislation and enforcement in the area of corruption may undermine the efficiency of capital markets by creating uncertainty for UK companies that have to compete in markets facing a high incidence of corruption.

The Law Commission's review is timely, coming at a time when the UK's relative standing in the area of corruption has slipped - as measured by Transparency International's 2008 Corruption Perception Index. Moreover, an anti-bribery working group of the OECD sharply criticised the current positioning of the UK's anti-corruption legislation in a report released last month.

Karina Litvack, Head of Governance & Sustainable Investment at F&C, said: "We hope that this review will prompt the UK government to take action and introduce new legislation in the near future so that, at a minimum, its anti-corruption law will enable the UK to comply with the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions".

"No company relishes tough policing, but what companies do value is clarity and certainty, and a level playing field. At the moment, British companies face a mix of different enforcement regimes, including a very muscular US Department of Justice that is not shy about prosecuting non-US companies for actions taken outside the US. The French and Germans have also begun to toughen their stance, and yet the UK's approach has been not only feeble, but compromised by political interference - as illustrated by the BAE Systems Al Yamamah case."

F&C has been a leading advocate for higher anti-corruption standards, both in the UK and abroad. The firm's engagement at individual company level focuses on urging adoption of strong anti-corruption policies and internal controls that include board level oversight. F&C also encourages companies to develop confidential internal reporting systems (a.k.a. whistleblower protection systems or "hotlines") for employees, suppliers and other business partners, to factor anti-corruption into remuneration policy and to report publicly on the effectiveness of these policies and processes.

Karina Litvack concluded: "The current legal regime is no good for companies trying to adopt a consistent and credible anti-corruption stance, because it makes room for companies to bend the rules and get away with it - and therefore does not reward good behaviour. But it is even worse for investors, who benefit from the efficient investment decisions that come from open and fair competition. We are hopeful the Commission's recommendations will deliver the consistent enforcement we need to achieve this."