brokers to sign formal agreements under anti-corruption legislation

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As implementation of the UK Bribery Act (due April 2011) draws closer, shipbrokers are signing formal agreements with their principals, in response to a worldwide trend towards stricter anti-corruption legislation.

According to the International Transport Intermediaries Club (ITIC), the typical document presented to brokers will detail the principal’s prohibitions concerning the payment of bribes, in addition to other inducements. A ban on ‘inappropriate entertainment’ will also be included and brokers must observe the principal’s policies while allowing their records to be audited.

The Foreign Corrupt Practices Act 1977 (as amended) has been operating in the US for a number of years, where provisions are frequently inserted into contracts. It is expected that once the legislation comes into force in the UK, if an individual acting for a company (whether they be a third party agent, broker or employee) gives or receives a bride, the company must demonstrate it has adequate procedures in place to prevent such dishonest practices. If a company is unable to do this, they may face a fine or criminal prosecution.

Andrew Jamieson, ITIC Claims Director, said: “In recent times, a tendency has developed for companies to issue formal agreements setting out their ‘ethical trade policies’. ITIC has seen agreements from principals based in many different countries. These documents are often in the form of separate agreements sent to brokers to sign, although sometimes the provisions are included as part of commission agreements. Whatever the format, it is important to make sure that these agreements are not used as an excuse to insert other rights, obligations or responsibilities.

“Brokers reviewing these agreements should ensure that the text does not make them responsible for the acts of others in the chain. It is one thing to confirm you have not paid or received a bribe, but it is quite another to provide an undertaking that no-one else has. It is unlikely that brokers will be able to avoid signing these types of agreements, and the greater emphasis on regulatory compliance will make them more common. Brokers should ensure that the provisions are limited to their own actions and that any rights granted to the principal are reasonable and directly relevant to the transaction in question,” Mr Jamieson added.