Transparency International issues anti-bribery guidance on due diligence for transactions

Transparency International ("TI") has issued guidance for anti-bribery due diligence in mergers, acquisitions and investments (the "Guidance"). The Guidance is intended to provide a practical tool for companies undertaking anti-bribery and corruption ("ABC") due diligence in the course of mergers, acquisitions ("M&A") and other investments. The Guidance builds on a consultation paper issued by TI in July 2011.

This Guidance comes amid increasing prosecutions in the US arising from M&A activity. TI states that almost 50% of US corruption related prosecutions in 2007 were connected to M&A transactions. Further, the coming into force of the Bribery Act last year will in some cases make it possible to prosecute parent entities for the acts of subsidiaries (where the subsidiary "performs services" for the parent). There is also a risk (highlighted by the Ministry of Justice Guidance on the Bribery Act) that a parent entity would not be able to show that it had adequate procedures in place if it had not implemented proper policies and procedures to deal with the anti-corruption risks in its M&A and investment activities. These trends therefore throw into sharp relief the need to conduct due diligence – when appropriate, and in a proportionate manner - when considering new acquisitions and investments.

Click here to read our Corporate Crime team's e-bulletin which reviews the guidance.