U.K. Serious Fraud Office Director David Green recently delivered this speech titled “Ethical Business Conduct: An Enforcement Perspective” at an event sponsored by PwC.
It is an odd speech.
Contrary to the “active engagement” position of his predecessor Richard Alderman, Green stated as follows.
“The role of the SFO is to investigate and to prosecute the topmost tier of serious and complex fraud and bribery. As part of that process, we are engaging and will continue to engage in a straight-forward way, by a process which is now underpinned by statute and a Code of Practice, with companies which self-report misconduct to us. We totally get the importance of generating trust and, in the right circumstances, legitimate expectation based on a track record of our dealings with companies who self-report. But the SFO is not a regulator, an educator, an advisor, a confessor, or an apologist. I am not funded for any of those activities. The SFO is a law enforcement agency dealing with top end, well-heeled, well-lawyered crime. We enforce the law in our specialist field. It follows that I am not here to preach. The SFO does not do lectures on ethics. We do not issue guidance on how not to rob banks. I would not dream of telling you how I think you should behave. It is for business and senior managers to decide appropriate standards of ethics and integrity in their commercial activities. They have access to the best expertise and advice available from the law and accountancy sectors of the Bribery Act industry. That advice would doubtless take account of the legitimate profit motive, and the interests of employees, shareholders, investors and pensioners. So I cannot help you on ethics. But the SFO will continue to engage with companies who want to do the right thing, and we are very interested in building trust.”
However, after stating that he would not “preach,” that “the SFO does not do lectures on ethics,” and that he “would not dream of telling you how I think you should behave,” Mr. Green proceeds to do the things he said he would not do.
For instance, “why should a company self-report suspected criminal misconduct to the SFO.”
In the words of Green, because “there is a moral and reputational imperative to self-report: it is the right thing to do and demonstrates that the corporate is serious about behaving ethically.”
Mr. Green’s speech was not entirely an air ball.
He did state as follows regarding the difference between U.K. style deferred prosecution agreements and U.S. deferred prosecution agreements.
“The US model for DPAs has no statutory foundation; it has developed through practice. The downsides are that some judges feel they are used as rubber stamps for deals agreed between prosecutor and corporate and that the public may perceive a DPA as a “sweet-heart deal” which lacks transparency.
The British model for DPAs is adapted to the British context.
It is a creature of statute, explained by a published Code of Conduct.It is available only in relation to corporates, not individuals.
It is designed to take account of the frustration expressed by very senior judges in the Innospec and BAE hearings that they had been presented with fait accompli as to penalty agreed between prosecution and defence. [See prior posts here and here]
The whole process, from preliminary hearing to application for approval to pronouncement of approval, takes place under judicial supervision.
The judge has to be persuaded that the DPA is in the interests of justice, reasonable, fair and proportionate.
The final hearing (the pronouncement of approval of the DPA, with reasons) will almost always be in open court.
It is by invitation only.
It is not a panacea.
Prosecution remains an option and the prosecution of individuals remains likely.As experience is built up by all parties, this will generate consistency and therefore predictability around the likelihood of achieving a DPA.”
Even so, it remains troubling that Mr. Green defends the new DPA model by calling it “cheaper” and “quicker.” As noted in this prior post, ease and efficiency are not concepts normally associated with the rule of law and justice.
What is the DOJ’s primary role when it comes to the Foreign Corrupt Practices Act? As highlighted in this previous post, in Lamb v. Phillip Morris Inc., 915 F.2d 1024 (6th Cir. 1990) the court, after reviewing the FCPA’s legislative history, concluded that the “legislative action clearly evinces a preference for compliance in lieu of prosecution …”.