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Lisa Osofsky (Director Of U.K. Serious Fraud Office) Speaks On A Variety Of Topics

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U.S. enforcement officials are not the only ones who speak at FCPA conferences hosted by for-profit conference firms. (See here). “Foreign officials” do as well.

So let’s see, the conference firms are “domestic concerns” under the FCPA, a speaking slot is a thing of value, the foreign law enforcement official is a “foreign official,” and the thing of value to the foreign official helps drive attendance to the conference firm’s paid event. But, I digress.

Recently, Lisa Osofsky (Director of the U.K. Serious Fraud Office) delivered this speech at an FCPA conference and touched upon the following topics: SFO priorities, international cooperation, corporate cooperation and integrity, and the SFO’s use of technology.

Osofsky began:

“Thirty-four years after the FCPA was enacted the UK Bribery Act came into effect in 2011. Before the Act, British prosecutors were using outdated bribery laws from the late 1800’s and early 1900’s to pursue corruption. Since 2011, the dedicated prosecutors, analysts, and investigators of the SFO have been using the new tools that Parliament gave our agency. I want to recognise my predecessor, Sir David Green CB QC for his pioneering work. We now have three convictions under the Act (including a corporation), three Deferred Prosecution agreements (DPAs are brand new in English law), and three individuals awaiting trial. There are dozens of bribery and corruption cases in the investigative pipeline – just over half of our docket.

Three months ago, I was appointed Director. It is now my honour to lead the SFO team. It is my duty to continue the upward trend line, to bring bigger and better cases, and to make the world even more inhospitable for those who would lie, cheat, steal and bribe to line their pockets.

I want to pause for a moment on the importance of the task. This room is full of people who are – or have been – actively engaged in the fight against corruption: from law enforcement, to the private sector, to the compliance community, to NGOs, and to those in the academy.

This community – this extended white-collar community – full well understands the nature of the destruction. We have seen too much. We understand the damage when money intended to build schools or hospitals is siphoned into the pockets of crooked public officials instead of being used for bricks and mortar. We understand the personal devastation when con artists cheat hard working retirees out of their savings and pension monies – increasingly con artists affiliated with international, digital, organized-crime gangs. Think of the type of people who trade in such misery. We understand the damage to people. We understand the damage to democracy. We understand the damage to the rule of law. It is why we do what we do. And those of us in this room, most of us at least, have the privilege of working in and for governments that are truly dedicated to the anticorruption mission, countries genuinely based on a rule of law that understands the value of independent prosecutors.”

Is it really the “duty” of law enforcement to “continue the upward trend line, to bring bigger and better cases”? What is a bigger and better case? And what does it say about the “rule of law” when an important U.K. company such as Rolls-Royce escapes the most serious consequences of egregious criminal conduct because it would hurt the company too much? (See here for the prior post).

Regarding international cooperation, Osofsky stated:

“From what I have seen during my three months in post, the growing collaboration among the international law enforcement community is inspiring. There is much we have learned from each other. There is much help we have given each other. And there is room for more learning, more help and more coordination. The sad truth is that criminals do not care two pence for international boundaries. Just the opposite, they use borders to try to thwart us, to make it difficult to chase them and their schemes and their ill-gotten money across international lines.

What does this mean for those of us in law enforcement? How do these imperatives translate into action?

  1. It means we in law enforcement can and will work more closely together across the globe.
  2. It means that we in law enforcement will look for even greater cooperation from the private sector.
  3. It means that we will use technology better.
  4. And it means that we must work out how to leave stronger mechanisms in place in the wake of cases so that the corruption cannot grow back.

If there is only one thing that you take away from this conference, take this away: Prosecutors, regulators and law enforcement around the world are working more closely together than we ever have before. Right now, sitting in our office in London is a DOJ Prosecutor who is assigned to work with us for the year. He is learning our British ways, and he is teaching our prosecutors DOJ’s ways. This is no theoretical hands-across-the-ocean. It is old-fashioned face-to-face working side by side. I promise it has already brought benefits for both agencies, and it I am 100% certain it will bring more.

This is the future. Prosecutors from different jurisdictions are learning how we do our work under different systems of law, and we are sharing best practices. We are participating formally in Joint Investigation Teams, and informally as colleagues trying to see justice done. We are participating in global settlements – the Rolls Royce disposition being one example. Secondments will continue – including two prosecutors from the AG’s Office in Singapore who will join us at the SFO next month.

There will be bumps along the way, of course. Government, after all, is government. We do things differently, and sometimes local statutes pose challenges – from privacy laws to blocking statutes to investigative powers in one jurisdiction that create problems in others. But I guarantee, those of you in the private sector, that we in the public sector are dedicated to getting it right. We are going to learn each others’ ways. We are going to learn each others’ laws. We are going to learn best practices and use tools effectively pioneered elsewhere. For example, we in the UK have heard loud and clear from our colleagues in the United States how valuable cooperators can be in cracking white collar cases. We have different practices and different rules in Britain, and cooperators have, to date, been more widely used in narcotics or gang cases. Suffice to say, we are intently exploring this area in the white collar world.

And in our legal system we have powerful tools that are unavailable in the US: For example, there is no statute of limitations for bribery and fraud under the law of England and Wales – perhaps providing corporations stronger incentives (1) to get their internal controls right to avoid problems and (2) to cooperate more robustly if things nonetheless go wrong. You can readily imagine how it might weigh in a prosecutor’s mind that a corporation sat for years on wrongdoing in the hopes that the risk of consequences would just slowly fade away. There are other significant legal differences between countries as well. For example, under our (unwritten) constitution, in England and Wales the jury can properly draw an adverse inference from defense silence.”

Regarding corporate cooperation, Osofsky stated:

“So, working together as law enforcement across international boundaries is one area where we focus and corporate cooperation is another. As prosecutors, we each charge and try cases only in our own courts in our own countries. But the types of crimes we are concerned with here cross many borders. If you have violated the UK Bribery Act, the SFO expects, as a starting point, full cooperation with us.

I am often asked what prosecutors mean by full cooperation. At its simplest, it’s not so hard: Tell me something I don’t know. Help the prosecutor find the truth. Don’t obstruct, or mislead, or delay. Don’t hold things back.

Here’s what cooperation is not: it is not simply responding to requests that you are obligated to respond to. It is certainly not burying bad news or protecting certain executives. It is not slow-rolling us. It is not playing one prosecutor off another.

Cooperation is making the path to a case easier. For the prosecutor that means making the path to admissible evidence easier. This is not rocket science. It is documents. It is financial records. It is witnesses.

Make them available – promptly.

Point us to the evidence that is most important – both inculpatory and exculpatory. In other words, give us the “hot” documents. Don’t just bury us in a document dump.

Make the evidence available in a way that comports with our laws.

Make it available in a way useful to us so that we can do our job – which we will do. We will not, of course, simply take your word for it. We will use what you give us as a starting point, not an end point. We will test, we will probe.

Do not do things that create proof issues for us or create procedural barriers.

The above is very much in line with what U.S. law enforcement says all the time. But shouldn’t cooperation be a two-way street? If a business organization makes documents available “promptly,” points prosecutors to the “hot” documents and the most important evidence, etc. isn’t it fair to expect law enforcement to wrap up FCPA/Bribery Act inquiries promptly? At least in the U.S., FCPA scrutiny lasts on average 4.5 years. (See here).

Regarding the SFO’s use of technology, Osofsky stated:

“The world has truly changed since 1977 when Apple was first incorporated and the internet was only a twinkle in Tim Berners-Lee’s eye.   Today we take for granted what only decades ago would be viewed as miracles. What was science fiction when I was a child is now basic and boring technology that is in the hands of every teenager – no, every pre-teen – in America and Britain.

One of the implications of this is that the entire investigative process has changed since I began this work decades ago. Over the years, the issue has shifted from not enough information to too much. In the expanding world of data, this now means finding evidential needles in huge digital haystacks.

At the SFO we are looking at technology that will help us with this:

  • Technology that helps us get to the hugely varied ways that criminals now converse.
  • Technology that leads us more quickly to both inculpatory and exculpatory documents.
  • Technology that helps us meet the discovery obligations we have in criminal trials in the UK, rules more burdensome than those in the US.

It is a place we are investing, as are other prosecutors around the world. We are in a digital arms race with criminals, and we cannot afford to lose.”

Regarding corporate integrity, Osofsky stated:

“The many cases we have all seen over the years show how easy – and common – it is for corporations to create incentives for their employees to try to “solve” problems and increase profits through corruption. This is sometimes to get new contracts, and other times to avoid government regulations that they find inconvenient or expensive.

On the front lines of the anticorruption efforts in these corporations are compliance officers. I was the Money Laundering Reporting Officer at GSI when the Proceeds of Crime Act came into force. Over the past 15 years, the world has seen an increasing professionalization of the compliance function. And in that same period, it has become an open secret in the compliance brother- and sisterhood, that compliance officers sometimes find themselves under enormous and undue and improper pressure from the business function.

Favourable dispositions will not be available to corporations unless and until their compliance systems work. And, by “work” I mean not just at the moment of the disposition, but in a way that good practices are embedded into the corporate structure so that they cannot simply be undone when no longer convenient. This would not be in the public interest, and something we would be hard-pressed to recommend to the judge who must approve a Deferred Prosecution Agreement – which judges must do under our law.

Conversely, it is only good sense to understand that it is imprudent, to say the least, for managers to bully or overbear the will of compliance or audit officers who are tasked with trying to keep their companies on the right side of bright lines. Sadly, we know that there are managers who think they can do this with impunity. This will be a lesson hard learned, for the managers and for their employers.

Corporate rehabilitation requires a strong, ongoing compliance function. Window dressing will not suffice. Expect us to ask tough questions on this subject, as we are not in the habit—nor will we ever be—of recommending DPAs for recidivists.”

For the record, even FCPA recidivists in the U.S. receive DPAs or NPAs from the DOJ (see here and here).

In conclusion, Osofsky stated:

“I intend to use all the powers at my disposal as our country’s lead prosecutor of serious, complex fraud and corruption. My approach will be international, cooperative across all jurisdictions, sectors and perspectives and, importantly for my adopted jurisdiction, proactive throughout the life of our cases—meaning from intel to inception to investigation to trial and resolution to recovering the proceeds of crime. My goal is to make sure the UK is a high risk place for the world’s most sophisticated criminals to operate.”

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