The Guardian newspaper reported on 15th March that the Bribery Act guidance being drafted by government lawyers should exclude foreign companies that list on the London Stock Exchange simply to gain access to London’s capital markets, provided they have no actual presence in the UK. Every year, plenty of foreign companies make use of London’s capital markets by listing a UK holding company.
Under Section 7 (5) of the Bribery Act such companies would ordinarily have been caught by the Act’s provisions and would be subject to the jurisdiction of the British courts:
“relevant commercial organisation” means—
(a) a body which is incorporated under the law of any part of the United Kingdom and which carries on a business (whether there or elsewhere),
The Guardian further reports that pressure has been brought to bear on the government to make changes, presumably by the City institutions, as this provision, if left untouched, would dissuade foreign companies from coming to London to list, and the City’s bankers, accountants and lawyers would lose out on substantial revenue, as these companies would look to other jurisdictions to do their listing.
From a practical viewpoint this seems to make sense: if a company that had no physical presence here at all was involved in bribing people abroad, how would the British prosecutors gain access to the evidence necessary to prove it? And how would they compel witnesses and obtain documentation? Some countries’ prosecutors may cooperate but others may chose not to work alongside British prosecutors. The practical and logistical difficulties of such prosecutions would be enormous and expensive, and it would be difficult in truth to justify them on public interest grounds (setting aside whether the Serious Fraud Office has the resources to pursue them). In our view, foreign companies with no presence here and who are not committing crimes here should properly be dealt with by the countries in which they are doing business. When do the extraterritorial provisions of the Bribery Act become an invasion of another country’s sovereignty?
If this report is accurate, it is not clear how this change will be brought about as it would seem to involve a departure from the wording of the legislation itself. We suppose that the prosecutors may be told not to pursue such cases, rather than the government get involved in amending the primary legislation.
More will be revealed shortly, we are told: the Guardian has predicted that the guidance may be published in the week commencing 21st March. If not, watch this space.