Leading article: Britain has no grounds for complacency

The previous Government's Bribery Act has been delayed and watered down. It will not come into force until July, rather than next week. And yesterday the Justice Secretary, Kenneth Clarke, issued guidance that makes clear the limits of the Act. Both tweaks are a response to business lobbying.

We tend to assume that Britain has Scandinavian levels of propriety when it come to business. Mr Clarke said yesterday that the new law reflects the UK's "leading role" in the fight against bribery. But our recent history is not, in fact, so glorious that we can afford to be complacent. The Serious Fraud Office investigation into a BAe arms deal with Saudi Arabia was called off in 2006 after pressure from Downing Street. And in 2009 the British construction firm Mabey & Johnson was found guilty of paying bribes around the world, from Jamaica to Iraq.

Further, weakening the new law over the liability of business for acts committed, albeit inadvertently, "through the supply chain" overseas opens a dangerous loophole. Firms often use middle-men abroad who do deeply unethical things at one remove. The Dutch oil trading firm Trafigura used a local company to dispose of its toxic waste in the Ivory Coast in 2006. The exemption of hospitality payments is another glaring loophole. The difference between lavish hospitality and a bribe is often very hard to define. While it is clearly unreasonable for every outing for clients to be treated as a corrupt payment, it makes no sense to make such spending immune from investigation.

The business lobby says the Act could undermine the Government's ambitions to boost exports and asks whether Britain can afford business scruples at a time when we are desperate for economic growth. Mr Clarke is right to argue that this is a false choice. Britain's prosperity is a historical consequence of free trade, and bribery undermines free markets. The problem is that the watering down of the Act suggests the Government lacks some of its Justice Secretary's convictions on this. It now falls to the courts to interpret the Act as it was originally intended and to bring corruption to book wherever it takes place.