The head of the Serious Fraud Office (SFO) is at loggerheads with ministers who are seeking to exempt overseas companies from Britain's new Bribery Act.
Speaking at an anti-corruption conference in Russia last week, Richard Alderman said he wanted the act to have a "wide jurisdiction", allowing the SFO to pursue overseas companies listed in the UK – even if they had little business activity here – whenever it was in Britain's public interest.
He said the SFO would go after corrupt foreign firms where it was clear they had won business that would otherwise have gone to a British firm.
"UK companies want to know what the SFO will do in order to support them in doing business in challenging environments throughout the world when their business rivals seek to obtain a competitive advantage over them by using corruption. My concern is with bribes that put ethical UK companies at a disadvantage, with the consequential effect on their employees. That seems to me to be a very clear example of where the UK public interest is engaged. I need to be able to support companies in those circumstances where they are at a disadvantage."
Last week the Guardian published a leaked draft of a guidance paper being prepared by the justice secretary, Kenneth Clarke, before the act comes into force this year. The paper stated: "The government would not expect … the fact that the company's securities have been … admitted to trading on the London stock exchange in itself to qualify the company as carrying on its business in the UK."
The wording of the act makes clear that a new offence of failing to prevent bribery applies to all corporate entities carrying on all or part of a business in Britain. Anti-fraud experts are concerned that Clarke is seeking to rein in the scope of the act and, in doing so, is exceeding his powers.
Clarke has come under intense pressure from business lobby groups including the Confederation of British Industry (CBI), the London Stock Exchange and the multinational chairman's group, whose members include BP, Shell, Diageo, Unilever, and Vodafone. The CBI director general, John Cridland, has said the act was "not fit for purpose".
In January Clarke agreed to delay its introduction in response to pleas from what he said were "frightened" corporations seeking further guidance. British multinationals are believed to be concerned about whether the activities of their overseas joint ventures could lead to their being captured by the act.
The Bribery Act is also being reviewed as part of a wider "growth review" designed to remove obstacles to UK investment and economic growth. The act was passed by parliament in the dying days of the Labour government last year and came 13 years after Britain promised to introduce new legislation – in line with much of Europe and the US – when it ratified the OECD's anti-bribery convention. There have been 11 periods of pre-legislative consultation.
One source who heard Alderman speak during his Russian trip, organised by the International Business Leaders Forum, said: "He was saying to companies: Do not rely on an over-technical interpretation of what it means to be 'carrying on business in the UK' in order to get around the act. He said it was difficult to understand how you could list [on the stock market] in the UK and not, in some way shape or form, be carrying on business there."
Alderman is known to have written to Clarke expressing concern about further delays to the act and their impact on the UK's international standing.
Alderman told one of his Russian audiences: "It could be for example, that a foreign company pays a bribe to obtain a contract that would otherwise have gone to an ethical UK company. The ethical UK company in those circumstances has to close one of its operating subsidiaries with the loss of many jobs. There is an immediate impact on the employees of the subsidiary, their families and surrounding communities. There is a very clear nexus in my view to the UK in those circumstances and I believe that it is important and in the public interest that I am able to take action.
"These are the cases that I am going to be particularly interested in. The impact in my jurisdiction of being able to take enforcement action will be very great. It will help the competitive position of UK companies and it will be very warmly welcomed."
Corporate governance experts have also voiced concerns about possible moves by ministers to water down the Bribery Act before it becomes law. George Dallas, director of corporate governance at F&C, said: "We believe the integrity of the London financial markets is one of its greatest competitive advantages and that investors implicitly expect that a London listing confers a higher standard of practice than would apply for companies listed in their home markets."
Dallas said a carve-out for overseas companies on corruption standards would send the wrong signal, adding that such a move would be in marked contrast to the US Foreign Corrupt Practices Act. About 80% of actions under this US law relate to overseas companies.
"Discriminating in favour of overseas-domiciled companies when enforcing anti-corruption law strikes us as misguided and counter-productive. It creates market and competitive distortions and can breed corporate cultures that promote circumvention of the law and leads to insecure contracts," said Dallas.
Source: http://www.guardian.co.uk
Speaking at an anti-corruption conference in Russia last week, Richard Alderman said he wanted the act to have a "wide jurisdiction", allowing the SFO to pursue overseas companies listed in the UK – even if they had little business activity here – whenever it was in Britain's public interest.
He said the SFO would go after corrupt foreign firms where it was clear they had won business that would otherwise have gone to a British firm.
"UK companies want to know what the SFO will do in order to support them in doing business in challenging environments throughout the world when their business rivals seek to obtain a competitive advantage over them by using corruption. My concern is with bribes that put ethical UK companies at a disadvantage, with the consequential effect on their employees. That seems to me to be a very clear example of where the UK public interest is engaged. I need to be able to support companies in those circumstances where they are at a disadvantage."
Last week the Guardian published a leaked draft of a guidance paper being prepared by the justice secretary, Kenneth Clarke, before the act comes into force this year. The paper stated: "The government would not expect … the fact that the company's securities have been … admitted to trading on the London stock exchange in itself to qualify the company as carrying on its business in the UK."
The wording of the act makes clear that a new offence of failing to prevent bribery applies to all corporate entities carrying on all or part of a business in Britain. Anti-fraud experts are concerned that Clarke is seeking to rein in the scope of the act and, in doing so, is exceeding his powers.
Clarke has come under intense pressure from business lobby groups including the Confederation of British Industry (CBI), the London Stock Exchange and the multinational chairman's group, whose members include BP, Shell, Diageo, Unilever, and Vodafone. The CBI director general, John Cridland, has said the act was "not fit for purpose".
In January Clarke agreed to delay its introduction in response to pleas from what he said were "frightened" corporations seeking further guidance. British multinationals are believed to be concerned about whether the activities of their overseas joint ventures could lead to their being captured by the act.
The Bribery Act is also being reviewed as part of a wider "growth review" designed to remove obstacles to UK investment and economic growth. The act was passed by parliament in the dying days of the Labour government last year and came 13 years after Britain promised to introduce new legislation – in line with much of Europe and the US – when it ratified the OECD's anti-bribery convention. There have been 11 periods of pre-legislative consultation.
One source who heard Alderman speak during his Russian trip, organised by the International Business Leaders Forum, said: "He was saying to companies: Do not rely on an over-technical interpretation of what it means to be 'carrying on business in the UK' in order to get around the act. He said it was difficult to understand how you could list [on the stock market] in the UK and not, in some way shape or form, be carrying on business there."
Alderman is known to have written to Clarke expressing concern about further delays to the act and their impact on the UK's international standing.
Alderman told one of his Russian audiences: "It could be for example, that a foreign company pays a bribe to obtain a contract that would otherwise have gone to an ethical UK company. The ethical UK company in those circumstances has to close one of its operating subsidiaries with the loss of many jobs. There is an immediate impact on the employees of the subsidiary, their families and surrounding communities. There is a very clear nexus in my view to the UK in those circumstances and I believe that it is important and in the public interest that I am able to take action.
"These are the cases that I am going to be particularly interested in. The impact in my jurisdiction of being able to take enforcement action will be very great. It will help the competitive position of UK companies and it will be very warmly welcomed."
Corporate governance experts have also voiced concerns about possible moves by ministers to water down the Bribery Act before it becomes law. George Dallas, director of corporate governance at F&C, said: "We believe the integrity of the London financial markets is one of its greatest competitive advantages and that investors implicitly expect that a London listing confers a higher standard of practice than would apply for companies listed in their home markets."
Dallas said a carve-out for overseas companies on corruption standards would send the wrong signal, adding that such a move would be in marked contrast to the US Foreign Corrupt Practices Act. About 80% of actions under this US law relate to overseas companies.
"Discriminating in favour of overseas-domiciled companies when enforcing anti-corruption law strikes us as misguided and counter-productive. It creates market and competitive distortions and can breed corporate cultures that promote circumvention of the law and leads to insecure contracts," said Dallas.
Source: http://www.guardian.co.uk
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