Following K2 Intelligence’s headline sponsorship of the 14th Annual International Bar Association’s Anti-Corruption Conference at the OECD in Paris, Steve Holt, head of the Financial and Forensic Investigations practice at K2 Intelligence in London, highlights three key bribery and corruption issues for companies and their legal advisors to be aware of that were outlined by the head of the Serious Fraud Office (SFO), David Green CB QC.
Deferred Prosecution Agreements and Self-Reporting
More than six months have now passed since the SFO made its first application for a Deferred Prosecution Agreement (DPA) following its investigation of Standard Bank. The DPA—which allows a prosecution to be suspended for a period of time subject to the defendant meeting certain specified conditions—was approved by Lord Justice Leveson and was considered by Mr. Green to be made “in the interests of justice.”
At the conference, Mr. Green made it clear that the SFO will only consider applying for a DPA in cases in which such an outcome would serve the interests of justice, which would include the self-reporting of identified issues.
Therefore, companies must report bribery and corruption issues as they are uncovered, and agree to unconditionally co-operate with the agency and its inquiries if they expect to be considered for a DPA.
Co-operation, Negotiation Tactics, and Uncertainty
The expectation of unconditional co-operation with inquiries was re-iterated by Mr. Green, as it has been in several other public appearances by the SFO, as being a prerequisite of any potential future DPA.
However, he also warned those charged with representation of companies to adapt their “litigator” position when dealing with the SFO, reminding the audience that the agency is not in the business of negotiation.
Mr. Green also chastised those professional advisors expecting to obtain certainty for their clients in such circumstances by comparing the uncertainty faced by companies under investigation for wrongdoing to that faced by an individual under investigation for burglary.
Even if a company is to offer full, unfettered access to people and data, and engages in a meaningful way with the SFO, there are no guarantees that a DPA will be offered to the company.
Corporate Criminal Liability
Corporate criminal liability also fell under the microscope of Mr. Green, who shared his frustration at what he called the “ludicrous” conflict between obtaining justice against corporate malfeasance and the identification principle whereby it must be demonstrated that the controlling mind of the corporate entity was complicit in the illegal acts.
This conflict, he argued, was more “painful” for smaller companies, where the controlling mind can be more easily identified, than for larger companies, citing the example of Tom Hayes and UBS. Hayes, a former employee of UBS, was found guilty for LIBOR rigging, while UBS has not faced criminal charges in the UK.
To solve the issue, and avoid the need to identify the controlling mind of a company, Mr. Green proposed that a new corporate offence of failing to prevent fraud and economic crime be introduced.
Such an offence would require companies to ensure that robust economic crime prevention and detection policies and procedures were not only in place, but were demonstrably followed by employees.