Next week David Green will take on the role of director of the Serious Fraud Office (SFO). He replaces Richard Alderman whose four year tenure saw the introduction of the UK Bribery Act.
Prior to the move Green had acted as head of the Central Fraud Group, a division of the UK’s Crown Prosecution Service.
The Bribery Act, which came into effect in July 2011, requires private equity firms with operations in the UK to put in place “adequate procedures” to prevent situations of bribery. Without these procedures in place a private equity owner risks liability for the actions of a portfolio company employee.
During Alderman’s reign liability was interpreted in relation to the extent to which a private equity owner is involved with the management of the portfolio company.
Just majority ownership would not cause liability but placing a partner within the company could be seen as active involvement, according to legal sources.
The industry feared this would mean an increase in costs. Worldwide any firm making investments in the UK would have to determine whether placement agents and advisors were conducting appropriate due diligence, training and monitoring or risk being liable for any corruption at the portfolio company level, according to sources.
The SFO said it welcomes discussions with private equity firms relating to corruption issues they find in takeover targets during advanced stages of due diligence.