Foreign companies are not exempt from Bribery Act despite government guidance suggesting so
By Michelle Perry | Published 16:05, 30 March 11
However I was correct in predicting that guidance by the justice secretary Kenneth Clarke has tried to water down the new anti-corruption laws, or at least give the impression that he has done so with some vague wording.
The Ministry of Justice guidance states that the government would not expect “ the mere fact” that a company’s securities were listed in London, in itself, “to qualify that company as carrying on a business or part of a business”.
The act states that any company carrying on a business or part of a business in the UK falls under the remit of the act and a listing typically constitutes doing business. If listing one’s securities doesn’t constitute doing business then why bother in the first place? If the answer is: raising one’s profile. Then that is arguably doing business as well or is ultimately a means to doing future business.
Now I’m pretty sure all sorts of experts in and out of government have gone over the wording with a fine toothed comb to ensure that it is sufficiently vague in parts, so that it doesn’t scare off foreign companies or investors from the UK, but also doesn’t recast primary legislation.
What the guidance succeeds in doing however is adding to confusion among corporates that were hoping for clarity in the guidance; which ironically defeats one of the main purposes of delaying the guidance.
One anti-fraud expert called me from South Africa today to say that companies there were discussing the act’s scope to find out if a listing in the UK would pull them into the act’s remit.
“The Ministry of Justice is saying one thing and the SFO is saying another. It’s confusing,” said my contact.
Richard Alderman, director of the Serious Fraud Office, however today assured me that foreign companies or their subsidiaries won’t be exempt because it is rare – if at all possible – that a company ever has a “mere” listing without carrying out other business activities in the UK.
To reiterate the guidance does not have the force of law. The SFO will probing companies, irrespective of provenance, if it suspects bribery.
Or as Alderman puts it: “Don’t rely on a loose interpretation of the act as you might get an unpleasant surprise.”