Serious Fraud Office to be absorbed by National Crime Agency
The proposed scrapping of the Serious Fraud Office (SFO) and the planned rules to reform M&A transactions emerged as key issues for City lawyers as the Conservative Party released its manifesto last month.
A major concern for corporate lawyers is tighter rules for takeovers. As the manifesto said: ‘We will ensure that foreign ownership of companies controlling important infrastructure does not undermine British security or essential services.’
One City corporate partner suggested this could make way for a Foreign Investment Review Board, in a similar vein to Australia. ‘They’re just planting the idea to get people used to it. The Americans and the Australians have a foreign investment approval process and perhaps that’s the intention here.’
Hogan Lovells London corporate head Ben Higson added: ‘One option would be an expansion of the scope or use of the public interest provisions built into the merger control regime – though this would go against decades of travel in the opposite direction. It is interesting to note that each of the industries outlined – telecoms, defence and energy – already have significant elements of non-UK ownership.’
The Conservatives’ pledge to incorporate the SFO into the National Crime Agency (NCA) has elicited a mixed response. Baker McKenzie partner Jonathan Peddie described it as ‘a big leap forward’, adding: ‘Placing fraud, bribery, money laundering, serious organised crime and terrorist finance strategies all under one roof recognises the need for a single strategy for an interwoven set of threats.’
Kingsley Napley veteran criminal litigator Stephen Parkinson, however, described Peddie’s comments as ‘a triumph of hope over experience’ and said: ‘In my experience, when you get major organisational change, it always leads to paralysis. The NCA’s focus is not on economic crime, [of that] it has absolutely no track record. The way you investigate and prosecute serious and complex fraud is very different from the way you investigate organised crime. The NCA is an unknown entity in this respect.’
The manifesto also states an intention to ‘modernise our courts, improving court buildings and facilities and making it easier for people to resolve disputes and fight justice’.
Other key policies for law and business include repealing section 40 of the Crime and Courts Act 2013 which, if enabled, would force media organisations to pay the legal costs of both sides in libel and privacy cases – even if they win.
Osborne Clarke media litigation specialist Ashley Hurst commented: ‘Section 40 has the potential to drive a coach and horses through the important principle of “loser pays” in media publication cases, where the media organisation is not a member of a formally recognised regulator. If it is abolished, media regulators will have to work on carrots rather than sticks to persuade media organisations to sign up to their rules.’
Meanwhile, Paul Hastings partner Ashley Winton said that the General Data Protection Regulation (GDPR) could also be adversely affected. The GDPR is due to come into force in May 2018, but commentators assume that if the Conservatives are elected in June, instead the Great Repeal Bill would include a mirrored version of the Regulation for English law. The manifesto instead pledges to create a new digital charter separate from the GDPR.
Winton warned: ‘If the UK does not maintain the same standards of data protection as prescribed by the GDPR, the transfer of personal data between continental Europe and the UK will become more difficult. This could have implications upon businesses and their service providers who need a free flow of personal data across Europe.’
tom.baker@legalease.co.uk