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. Last Updated: 07/27/2016

British Firms, Executives Face New Bribery Statute

Britain is making life a little bit harder for its companies -- and executives -- operating abroad.

In a move to bring its legislation on foreign practices in line with European Union guidelines, London enacted a new bribery and corruption act earlier this year that could have serious consequences for the thousands of Britons and British firms doing business in Russia, a country where greasing palms is considered an art form.

While the new law came into force in February, most companies operating here only found out about it last week, when the British Foreign Office sent the head of its economic crime department, Ian Richards, to Moscow to warn members of the British Business Club that they need to be more vigilant in their business dealings.

"Legally, things will change for U.K. businesses, because now it is considered a crime to indulge in bribery overseas," Richards told The Moscow Times in a recent interview.

Richards said there is a wide definition of bribery in the new act that includes, for example, so-called facilitation payments, which could include payments or gifts to officials.

In Russia, it is commonplace for companies to send gifts to officials on holidays and birthdays or pay small "fees" to fire or sanitary inspectors to avoid inspections or onerous paperwork. And while Western countries have long considered such transactions a criminal offense abroad, Britain didn't -- until now.

British businesspeople surveyed Monday said the new law could prove burdensome.

"We are very well aware that part of business culture is to be friendly and open with people you work with, in Russia too," said Don Scott, the co-chairman of the British Business Club and the head of the Russian telecom company Avantgard. "If we will be prosecuted for such relations, it makes it difficult to imagine our future business."

According to a recent study by corruption watchdog Transparency International, bribery is an $11 billion a year business in Russia -- $7.5 billion of which works its way around Moscow alone.

"Honestly, I am sure that bribery in some form has taken place here and I don't want to criticize companies for that," Richards said. "I accept that it has been a part of how they do business here."

Scott agreed that solving business problems in Russia requires "creativity," but the topic of bribery is rarely mentioned in negotiations.

"I have no problem working with people, and I also am ready to show my appreciation," he said.

If Russia's business culture is going to change, however, it will have to start from within, Scott said.

"The Russian government has to do a great deal more to stop this practice before anyone else will take major steps forward," he said.

As for the new law, Scott said: "It just means that we need to be a little more vigilant and make sure that we are seen to be doing the right thing."

According to the British Embassy, U.K. exports to Russia grew 30 percent to $1 billion in the January-September period, while imports from Russia dropped slightly to $2 billion.