* Companies race to overhaul procedures ahead of next April
* UK Bribery Act tougher that U.S. FCPA
* SFO to be "pragmatic" if companies have ethical cultures
* Adequate procedures to equal adequate defence
By Kirstin Ridley
LONDON, Nov 4 (Reuters) - Vexed British and overseas companies with businesses in the UK are in a race to tighten ethical procedures as the country poises to impose one of the most draconian anti-corruption laws in the world.
Britain's bribery laws have for years been criticised as not fit for modern times by the likes of the OECD, the international Organisation for Economic Cooperation and Development that helps governments tackle economic, social and governance problems.
But the Bribery Act, due to come into effect next April, has unsettled those eyeing a new offence of failure to prevent bribery, which makes businesses with any UK interest criminally liable if staff, subsidiaries, intermediaries or "associated persons" offer bribes on their behalf across the world.
"We've got a team on it," said one drug company official. "This is not just a one-off. It's a question of having to put a system and processes in place permanently ... It's about clarifying the rules for employees and other companies we work with -- and the need to keep monitoring things."
As always, much depends on definitions. Companies can be dragged into the dock and handed unlimited fines if they cannot show they have "adequate procedures" to prevent bribery. Guilty individuals face up to 10 years in prison and unlimited fines.
The planned act is more draconian than the relatively fierce U.S. Foreign Corrupt Practices Act (FCPA), for it also bans the bribery of people other than public officials as well as "facilitation payments" -- to speed up services such as visa applications or approval for aircraft take-off slots.
Multinational firms with businesses in the UK have demanded clarification of the new rules, which are expected to hit those industries especially relying on myriad overseas partners, such as oil and gas, pharmaceuticals, insurance and private equity.
"It is certainly causing waves," says Charles Hewetson, a partner at London law firm Reed Smith.
"We've done a couple of seminars (on the implications on business of the act) and have got a better turnout than I can remember for any other topic. We did one with the Middle East Association where we had standing room only."
A consultation process with industry ends next Monday and the UK government plans to publish guidance in the new year.
PRAGMATISM
The World Bank estimates that $1.0 trillion is spent each year on bribery, and the UK was shamed in the latest annual Corruption Perceptions Index, when anti-corruption group Transparency International (TI) said the country dropped to 20th place from 17th last year, trailing nations such as Qatar.
But the new act leaves companies facing difficult decisions. The "prudent" ones are already talking to partners in far-flung parts of the world and ending relationships with joint ventures whose services come at too great a risk, regulators say.
The Serious Fraud Office (SFO), the UK agency tasked with enforcing the new rules, says it will take a pragmatic approach to companies that prove they have an ethical culture, because "there will always be rogue elements who step out of line".
But there will be a "zero tolerance" of facilitation payments and lavish corporate hospitality offered in return for corporate gain, warns Robert Amaee, the SFO's head of anti-corruption and proceeds of crime.
"You need to show you have done everything you can (to prevent any bribery)," he told Reuters.
The SFO, which has been criticised for being too lax, ponderous and reliant on plea-bargaining, vows it will proactively unearth corporate misbehaviour -- and come down hard on those who try to sweep corruption under the carpet.
But with an annual budget expected to be frozen at 39 million pounds ($63 million), it still relies heavily on its whistleblowing hotline, which gets more than 300 calls each month, and for companies to come clean when they spot graft.
Much will depend on whether companies feel they have something to gain by self reporting.
"Where ... it is thought that the chances of regulators finding out about a problem are fairly slim, the regulators run the risk that they will not get to hear of things," notes Reed Smith's Hewetson. ($1=.6233 Pound) (Additional reporting by Ben Hirschler and Simon Meads in London and Jens Hack in Munich; Editing by Jon Loades-Carter)