ALM Properties, Inc.
Page printed from: International News
Select 'Print' in your browser menu to print this document.
Leaked Government Documents Reveal Weakening of U.K. Bribery Act
The American Lawyer
Leaked government documents suggest that the U.K. Ministry of Justice has taken measures to radically weaken the jurisdictional reach of the country's new bribery act, which could in turn reduce the work generated by the proposed law for U.S. white-collar lawyers when it takes effect.
A draft copy of the new guidance, first obtained by The Guardian, reveals that international companies with London Stock Exchange listings but no other presence in the United Kingdom will be exempt from prosecution under the act.
"The government would not expect, for example, the fact that the company's securities have been admitted ... to trading on the London stock exchange, in itself to qualify that the company is carrying on a business in the U.K. ... for the purposes of [the act]," the guidance says.
Previously, such companies would have been subject to what has been described as the world's most draconian anti-corruption law, carrying unlimited fines and an increased maximum jail term of 10 years.
"If the reports of what is contained in the final guidance are indeed correct, then it is surprising that the MoJ has been willing to stray from the narrow confines of what it is obliged to provide under Section 9 of the Bribery Act into offering apparent blanket exemptions," says former Serious Fraud Office (SFO) anti-corruption head Robert Amaee, who joined Covington & Burling's London white-collar team in January. "It is by no means certain that there is a sound legal basis or that it is indeed desirable from a policy perspective to say that any non-U.K. registered company trading on the London Stock Exchange but not otherwise operating in the U.K. is, as a matter of course, exempt from the ambit of the term 'carries on a business, or part of a business, in … the U.K.'; a term which after all was left undefined by Parliament."
A spokesperson for the MoJ said: "We cannot comment on draft guidance which is yet to be made public. A common sense approach would mean that organisations which do not have a demonstrable business presence in the U.K. would not satisfy this test. The mere fact that a company is listed for London Stock Exchange purposes may not, in itself, be enough to amount to carrying on a business or part of a business in the U.K. However, it will always be for the courts to decide in individual cases whether a foreign company carries on a business or part of a business in the U.K."
After being rushed through parliament, the act was originally scheduled to take effect last October, but was delayed in order to allow companies to better prepare for its implementation. It was delayed a second time in February, reportedly to provide additional time for companies to put in place adequate procedures to prevent bribery. However, the leaked guidance suggests that justice minister Kenneth Clarke also used the time to review some of the act's more controversial features.
Critics within London -- John Cridland, head of business lobbying group the CBI, said recently that the act was "not fit for purpose" -- had feared that the legislation would hamper London's ability to attract international companies to list on its exchanges.
Unlike the FCPA, which only deals with government bribery, the U.K. act also covers corruption between commercial entities. And where U.S. legislation requires prosecutors to prove intent and awareness of the bribe at a senior level, the Bribery Act imposes strict liability on any company that fails to prevent bribery from taking place. This not only covers bribes made by its own employees, but also by any individual "associated" with the company.
This article first appeared on The Am Law Daily blog on AmericanLawyer.com.