This post was also written by Simon Hart.

The Director of the Serious Fraud Office (“SFO”) has recently articulated a robust interpretation of the SFO’s jurisdiction under the UK’s Bribery Act 2010, which comes into force on 1 July 2011. In doing so, the Director has challenged the understanding of many companies and their advisors. Whilst the debate may be seen by many as an academic debate for lawyers, the implications could have a significant impact on whether or not particular operations of a global company fall within the reach of the SFO.

The Director made it very clear that, in his view, if a global company had a UK subsidiary, but there was bribery in another part of the global company, the SFO would have jurisdiction under the Bribery Act. This interpretation is in contrast to statements made in the Guidance issued by the Ministry of Justice in March 2011 which indicated that such foreign companies would not themselves be regarded as “carrying on business in the UK” simply by virtue of having a UK subsidiary or a listing on an exchange. (“Carrying on business” is the test for determining whether an entity can be fixed with criminal liability under the corporate offence in the Act.)

Mr Alderman made it plain that the SFO would be adopting a very wide interpretation of the phrase “carrying on business in the UK”. Mr Alderman has said “What I have said to corporates is that it would be very dangerous for them to use a highly technical interpretation of the law to persuade themselves that they are not within the Bribery Act and that it is permissible for them to carry on using bribery. I have said that they could have a very unpleasant shock…”

Mr Alderman went on to explain “Our view is that if a foreign group has a subsidiary in the UK and in another country and that bribery occurs in that other country then that bribery is within the remit of the SFO.”

Ultimately, the much-debated jurisdictional provisions of the Act will be determined neither by the SFO nor those that the Act purports to cover, but by the English Courts. However, it is clear that the SFO will be looking to promote an anti-corruption agenda by highlighting the risks of engaging in corrupt activities anywhere in the world if the business has any connection with the UK.

To reinforce the message, Mr Alderman has emphasised that surprise arrests of overseas nationals at UK borders could be a possibility if they have engaged in bribery: “You can’t be sure that you won’t be stopped at the airport. We are not going to say, “if you turn up, you will be arrested”. It may or may not happen”.

Mr Alderman has also signalled that the SFO will be interested in prosecuting cases against foreign corporations where there has been bribery that has disadvantaged ethical UK companies. He has suggested that in such a case, there would be a strong UK public interest in bringing that foreign company before the UK courts. Mr Alderman has said that he is keen to test the new law against foreign companies despite the challenges in investigating, prosecuting and punishing a foreign company.

Despite Mr Alderman’s strong words, it remains to be seen whether the SFO will have the resources or the will to investigate and prosecute foreign corporates. Nevertheless, these recent statements highlight the fact that companies can only draw limited comfort from the commentary on jurisdiction in the Ministry of Justice Guidance.