News & what's on - Written by on Monday, December 12, 2011 15:13 - 0 Comments

Overseas corporations: more warning shots

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Yesterday the Daily Telegraph reported that ENRC is in talks with the SFO over corruption allegations.

ENRC is a FTSE 100 natural resources extraction company which operates in Kazakhstan, China, Russia, Brazil and Africa (the Democratic Republic of Congo, Zambia, Mozambique and South Africa). It has a head office in St. James London.

According to the Daily Telegraph a spokesman for ENRC said:

“There is no formal SFO investigation into the company”. He added: “There was nothing new in the [Sunday Times] story. The internal audit committee investigations and liaison with appropriate regulators, including the SFO, is entirely normal practice for a major company that is serious about investigating all allegations properly and striving to meet corporate governance best practice.”

Reporting a story which appeared in the Sunday Times the Daily Telegraph reported that ENRC and its advisers were summoned to a meeting at the SFO with SFO director Richard Alderman and others.  The Daily Telegraph reported that at those meetings warnings were allegedly given to ENRC that the SFO reserved the right to raid the offices of directors and executives if the company fails to co-operate.

The ENRC story has been running for some time.  Against that backdrop it is likely that any investigation will focus on pre-Bribery Act laws.

However, this story, if true, is entirely consistent with the various threats issued by the SFO’s director in recent months.

Indeed, in our view, the investigation of overseas parented businesses for corruption is the SFO’s number 1 priority a theme we emphasised at our mining masterclass and last week in Texas when speaking to various oil and gas industry representatives.

As recently as the end of last month, in yet another stark warning to overseas companies to take on board the application of the Bribery Act, the SFO director had this to say:

“Some of you I am sure will work for UK branches or subsidiaries of foreign corporations.  You may think that the corporation has a problem under the Bribery Act only if your branch or subsidiary is responsible for the corruption.  This is wrong.  Foreign corporations are within the jurisdiction of the SFO if they carry on business or part of their business in the UK.  This is a very wide test.  If it is satisfied, then the corporation is guilty of an offence if the bribe is paid anywhere else in the world.

I know that there is a lot of anxiety about this and indeed a lot of legal argument about what that test means.  Ultimately our Supreme Court will need to give us all guidance no doubt in a number of years time.  What I say to boards of corporations though is that it is better to be on the safe side and to avoid paying bribes.  Please be under no illusions about this.  Finding a foreign corporation within our jurisdiction that has committed bribery anywhere else in the world and has undermined an ethical UK corporation is a high priority of the SFO.”

An investigation into overseas businesses is firmly on the agenda for the SFO.

 

 

 

 

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