Corporate crime update

• Under the Bribery Act there is an extended jurisdictional reach which will bring foreign corporations in certain circumstances within the jurisdiction of the SFO. To trigger the extended jurisdiction rules, a foreign corporation needs to be carrying on business or part of its business in the UK.
• As regards hospitality and entertaining expenditure, Mr Alderman considered normal expenditure in buying meals for clients or prospective clients as being perfectly acceptable, as is taking them to sporting events. It is also lawful to take people from one country to another to show them, for example, the company's facility in that other country if that is the best way of demonstrating to them what the company can do. It is only when the hospitality becomes excessive or lavish that the SFO start to think about whether or not what is being paid actually amounts to a bribe.
• Another issue concerns facilitation payments. They are unlawful in the UK and the position will not change under the Bribery Act. The OECD has called on member countries to be more vigorous in their attack on these payments.
• The SFO has offered to talk to companies about their procedures. There has been a lot of interest in this and many companies have come forward. They have found the dialogue to be practical, realistic and helpful. Foreign corporations have also been interested to gain a better understanding of the impact that the extended jurisdiction is likely to have on them and whether they are doing enough to develop a true anti-corruption culture.

See SFO speeches.

The key provisions set out in the UK Regulation include:

• A person (“P”) must not deal with funds or economic resources belonging to, or owned, held or controlled by, a designated person if P knows, or has reasonable cause to suspect, that P is so dealing;
• A person (“P”) must not make funds or economic resources available, (1) directly or indirectly, to a designated person or (2) to any person for the benefit of a designated person, if P knows, or has reasonable cause to suspect, that P is so making funds or economic resources available. Funds or economic resources are made available for the benefit of the designated person only if that person thereby obtains, or is able to obtain, a significant financial benefit.
• No person may intentionally participate in activities knowing that the object or effect of them is (whether directly or indirectly) to circumvent any of the prohibitions, or to enable or facilitate the contravention of any such prohibition.

The Regulation states that it applies to nineteen designated persons including:

• Members of the Mubarak family including:
  • Hosni Mubarak (former President);
  • Suzanne Saleh Thabet (spouse of Mr Mubarak); and
  • Alaa Mubarak and Gamal Mubarak (sons).
• Certain senior former officials in the former Mubarak-led government including in some case their spouses and children.

Companies, particularly financial institutions, should be aware that the sanctions regime has broad application beyond the designated persons. Article 2(1) of the EU Regulation states that the key provisions apply not only to the designated persons listed in the sanctions regime but also 'legal persons, entities and bodies associated with them'. Article 2(2) goes on to say that funds cannot be made available 'directly or indirectly'. As a result, firms should bear this in mind when looking at transactions which may involve entities which they believe or have reasonable cause to suspect may be associated with designated persons.

A copy of HM Treasury's notice is available here.

Libya

On 21 March, the EU amended the list of persons and entities subject to the asset freeze. This EU list was further amended on 23 March following a further UN Resolution on 17 March, and then there were further amendments to the EU list on 12 April.  There were further amendments to the Libyan EU Regulations on 25 March.

A link to copies of the relevant Regulations can be found here.