Goldman Sachs Group Inc. (GS) and U.S. law firms are luring lawyers away from the U.K. fraud prosecutor as companies prepare to comply with the world’s “most draconian” anti-bribery law.
The U.K. Ministry of Justice has said it will introduce new proposals as soon as next week, leaving companies scrambling to hire lawyers to help prepare compliance plans. Under the law, U.K. companies without adequate controls to prevent corruption may be prosecuted if a bribe is paid by third parties on their behalf anywhere in the world, even if officials didn’t know.
Kwadjo Adjepong, who worked on the Serious Fraud Office’s probe into the collapse of London hedge fund Weavering Capital, joined Goldman Sachs as a vice president in its compliance department last month, SFO spokesman David Jones said. Covington & Burling LLP, White & Case LLP and Arnold & Porter LLP have also hired lawyers from the SFO as the Bribery Act creates work for firms preparing compliance plans.
“There is a real thirst for knowledge on the Bribery Act, a thirst for having the right kind of advice from someone who’s been on the other side,” said Robert Amaee, the former head of anti-corruption at the SFO who joined Washington-based Covington & Burling, in January. “A good deal of my time is spent in helping clients understand the Bribery Act.”
Washington-based Arnold & Porter in February said it hired Kathleen Harris, the former head of the SFO fraud business group, as a partner in its London office. Charlie Monteith, a senior policy adviser and the head of assurance at the agency, left for New York-based White & Case.
Another former SFO prosecutor, Matthew Cowie, who oversaw an investigation of BAE Systems Plc, left in June to join the U.S. law firm Skadden, Arps, Slate, Meagher & Flom.
The Ministry of Justice may weaken some parts of the law initially put forward by former Prime Minister Gordon Brown’s Labour government last year, SFO officials said. The proposal was criticized over clauses that would have classified fancy dinners or sports tickets for foreign officials as bribes.
Chris Walker, the SFO policy chief, told a defense industry conference in January that the revised law may allow a company to fund a factory visit and hospitality for a public official. A month’s stay on a private yacht after the trip would “raise red flags,” he said.
British business groups pressed the ministry to make the law more business-friendly and clarify provisions that may be too vague to defend in a prosecution.
Jim Bligh, a policy adviser at the Confederation of British Industry, said the Justice Ministry should clarify rules on corporate hospitality and how much due diligence a company must conduct on its suppliers, affiliates and joint ventures.
“There’s a lot of fuzzy edges,” Bligh said. “You’ve got to know what people are going to prosecute.”
The ministry said that the act would allow prosecutors to charge U.K. companies and foreign firms which carry “on a business or part of a business in the U.K.”
“The mere fact that a company is listed for London Stock Exchange purposes may not, in itself, be enough to amount to carrying on a business or part of a business in the U.K.,” the ministry said in a statement. “It will always be for the courts to decide in individual cases.”
The SFO, which prosecutes white-collar crime, is investigating allegations of overseas bribery at companies including Johnson & Johnson’s DePuy International unit and at Alstom SA’s U.K. division. Last month, KBR Inc.’s M.W. Kellogg Ltd. subsidiary agreed to pay 7 million pounds ($11 million) to the SFO to end a four-year probe into bribes paid to Nigerian officials.
The SFO’s budget continues to shrink. Since Richard Alderman, the agency’s director, took the post in 2008, the government has cut its operating budget to about 34 million pounds ($55 million) from 52 million pounds, according to the SFO’s annual report.
Vivian Robinson, the SFO’s general counsel, who has called the new law one of the most world’s “most draconian,” said earlier this month that the agency would take a “common-sense” approach to policing hospitality functions at sporting events like Wimbledon.
The guidance may also allow “facilitation payments” made to foreign officials to expedite a routine procedure in some circumstances.
The “paramount question” regarding facilitation payments is whether a prosecution is “in the public interest,” Robinson said at a conference organized by the Clyde & Co. law firm this month in London.
The SFO might not be the agency to enforce the law. Under separate government proposals, it may be split up, with its lawyers joining the Crown Prosecution Service and investigators becoming part of a National Crime Agency.
“There will always be a prosecutor, it doesn’t really make a difference at this stage,” Bligh said. “The crucial thing is that the right guidance comes out.”
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