‘Questionable Guidance’ From Justice Secretary

By Bill Waite

Richard Alderman, head of the U.K.’s Serious Fraud Office, told the Daily Telegraph on the day the new Guidance for the Bribery Act was issued last week, that the SFO will pursue U.K.-listed foreign companies if they engage in bribery.

He said, “My view is that we have a very wide jurisdiction. I would say companies should not rely on over-technical interpretations of the Act”. His comments reflect what he has been saying here in London and abroad for many months – that he will use the Act to ensure that U.K. commercial enterprises are not disadvantaged by complying with it. In other words, he’ll prosecute foreign companies where he can. To reinforce this he’s even invited U.K. companies to tell him where foreign companies listed in the U.K. are breaching the Act.

Why then has Ken Clarke, the secretary of state for justice, who’s also an eminent QC, been forced to advance the questionable guidance that a business listed on the London Exchange didn’t mean the courts would find that “it was carrying on business” in the U.K.?

At the heart of the problem is the breadth of the drafting of the Act. This has long been discussed by many commentators including me. If the words and phrases are clear and unambiguous then the courts are bound to give effect to those words and Richard Alderman and others know that.

The recent friction between the SFO and Lord Justice Thomas and Mr Justice Bean suggest to me at least that the judiciary will remain staunchly independent in this area and reject guidance where they consider that it conflicts with the statute.

So is the Guidance of any use at all? In part, yes. The obvious points about proportionality should provide a degree of comfort. The observations on Facilitation Payments and Hospitality should do much to dispel the Evening  Standard-generated hysteria in this area and the observations around the degree of control a company has in a joint venture and other commercial arrangements are of course useful.

In other areas the Guidance has offered no help whatsoever – specifically in relation to successor liability.  If there is to be a “control test” imputed into the Act through the Guidance, what is the position where a business acquires another and then discovers a problem? Clarity here would mean a great deal to all businesses but nothing at all has been said. And what about the issues of double jeopardy?  In this age of international multi-agency enforcement some help – or at least the suggestion of help – would be very welcome.

There is one issue where Ken Clarke and I agree. Ultimately it will be for the prosecutors and then the courts to decide. But I suggest it would be a brave board that unreservedly accepted the secretary of state’s “guidance” at face value.

Bill Waite is a founder of The Risk Advisory Group and an expert on anti-bribery and corruption legislation. He formerly practiced as a criminal barrister before joining the Serious Fraud Office in 1991 as a prosecutor. He is frequently called upon to comment in the media and is a regular speaker in Europe and the U.S. A full version of his comments above can be found here.