Controversies United Kingdom

New law puts finder’s fees in spotlight

Dealers risk arrest under act aimed at large-scale corruption

The law does not require prosecutors to show dishonest intent

LONDON. Art dealers in Britain could fall foul of new anti-bribery legislation which comes into effect next year. The Bribery Act makes it an offence to give or accept bribes and also introduces a new corporate offence: a company may commit an offence if it fails to prevent bribery by its employees or associates, even those working abroad.

Art lawyer Pierre Valentin of legal firm Withers warns that the widespread practice of paying finders’ fees to individuals who bring in new business could constitute bribery under the new act.

“Whilst the payment of commission remains a perfectly legitimate business practice, the days when this is paid or received without consideration of the nature of the relationship between the payer, the payee, and the other parties to the transaction may well be over,” said Valentin.

The new act “will capture the payment of commission to intermediaries owing a duty of trust to art collectors…without the collector’s consent to such payment,” he explained. “For example, if you pay a commission to the decorator of an art collector because the decorator assisted you in selling a painting to this collector you could be committing an offence if the collector is not aware that you are making this payment.”

The new law has a wide territorial scope. If the representative of a British firm commits an act abroad which would amount to bribery if committed in the UK, the firm may be committing an offence even if it is unaware that its representative has acted improperly.

The act is a strict liability offence so the prosecution will not need to show a dishonest intention on the part of the person giving the financial advantage or receiving it. It addresses behaviour which induces “improper performance” without the need to show corruption or fraud. The only defence available to a commercial organisation accused of the new corporate offence will be to show that the company took appropriate steps to prevent bribery.

The government will issue guidelines before the act comes into effect detailing the measures companies can take to protect themselves from breaching the new law. Christopher Battiscombe, director of the Society of London Art Dealers, says firms will have to introduce new training procedures for employees once these guidelines have been published.

The act applies not only to the payment of money but also to practices such as excessive corporate entertainment. “Art market professionals will have to evaluate whether the level of entertainment is appropriate in the circumstances, or whether it risks inducing the recipient to act improperly,” said Valentin.

Although the act is not aimed at the art trade and will most likely be used to target large companies, Valentin warned that the prosecution of art dealers is not impossible. “It only takes one prosecutor to receive a complaint from a collector or a dealer in competition with another dealer for an investigation to be launched.”

The Bribery Act received royal assent in April and comes into effect in April 2011. The maximum penalty for individuals found to be in breach of the act is ten years’ imprisonment while companies face unlimited fines.

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Comments

21 Dec 10
20:14 CET

ADRIAN SMITH, PERTH

Thank you for bringing this to my attention. This has ramifications for my industry (jewellery valuation). I do not accept commissions of any sort and neither do any other members of the AIJV (Assoc. Independent Jewellery Valuers) but whilst there is nothing inherently unethical with accepting commissions, they will have to be approached in a much more transparent way. This is a very good thing.

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