|
|
UK government last week issued guidance over its incoming bribery legislation, which sought to allay concerns that the bill would effectively outlaw corporate hospitality and promotional expenditure, such as branded Christmas gifts. However, private equity firms are concerned about the lack of clarity involving their status as owners of portfolio companies, with some querying whether they would be held liable under the act if wrongdoing was found at one of their portfolio companies.
The bill states an offence will be committed where a “relevant commercial organisation” fails to prevent bribery by a person “associated” with them, even if the organisation was not aware of the transgression. Jonathan Hitchen, a partner at the law firm Allen & Overy, warned that private equity firms could easily be caught out by their portfolio companies. “If the firm is active within the business, as private equity firms tend to be, then it will become much more difficult for the firm to distance itself from the acts of the portfolio business,” he said.
Henry Sallitt, managing director at FF&P Private Equity, added: "It’s another regulatory burden we are painfully aware of. Given the ambiguity in the act, we've been in contact with our portfolio companies to make them aware new standards will be put in place once our compliance team decides what constitutes a breach."
Full article (FN subscription needed)