U.K. Opens Consultation Period On Deferred Prosecution Agreements, Yet Rejects Non-Prosecution Agreements
Yesterday’s post concerned the United Kingdom and we stay across the pond for today’s post as well. Previous posts (here, here and here) have discussed the movement in the U.K. to adopt deferred prosecution agreements (DPAs).
Recently the U.K. Ministry of Justice announced (here) the opening of a consultation process concerning DPAs. The consultation period is open until August 9th and the MoJ states that its “ambition [in proposing DPAs] is to ensure that a higher proportion of economic crime is identified, investigated and dealt with. DPAs are a tool that seeks to achieve these goals whilst being transparent, clear and consistent.”
In a supplemental consultation paper, Crispin Blunt (Parliamentary Under-Secretary of State) and Edward Garnier QC (H.M. Solictor General) write a foreward that states, among other things, as follows.
“The obstacles [to prosecuting white collar crime] are familiar. Investigations and trials are forbiddingly long, expensive and complicated – particularly where offences occur across multiple jurisdictions. Identifying wrongdoing in hidden, specialist or technical fields often depends on commercial organisations cooperating or whistleblowers coming forward, but organisations have little incentive to self-report. Law enforcement agencies complain that they have a relatively narrow range of tools available to identify and bring corporate offenders to justice. In modern corporations, where responsibility for decision-making is distributed quite widely, it is very difficult to prove criminal liability, which depends on establishing that the ‘directing mind and will’ of an organisation was at fault. The consequence of all of this has been too few organisations held to account for their crimes, and too many victims waiting in vain for restitution.”
“… [W]e need to look again at the range of tools open to prosecutors when dealing with certain types of economic crime. We believe that deferred prosecution agreements (DPA), on which we are consulting in this paper, can make a valuable contribution to efforts to identify and address corporate economic crime. A DPA would sit alongside existing means of tackling crime, criminal prosecution and civil proceedings. Under its terms, a prosecutor would lay but would not immediately proceed with criminal charges against a company pending successful compliance with tough requirements such as financial penalties, restitution for victims, confiscation of the profits of wrongdoing and measures to prevent future offending.”
“DPAs would be a fair and pragmatic approach to tackling a serious problem and would need to be used judiciously. Where the alleged wrongdoing is most serious, or the public interest would otherwise require it, a criminal prosecution would continue to be the most appropriate course of action. As DPAs would be sanctioned by judges, the judiciary would be able to block DPAs which they do not think would serve the interests of justice, for example where prosecution would be the appropriate response. Entering into a DPA will be voluntary both for companies accused of wrongdoing and for prosecutors.”
“DPAs would contribute to a just outcome, enabling prosecutors to secure penalties for and the surrendering of the proceeds of wrongdoing, and providing benefits for victims in a way that is sanctioned by a judge, without the uncertainty, expense, complexity or length of a full criminal trial. They also enable commercial organisations to be held to account – but without unfairly affecting employees, customers, pensioners, suppliers and investors who were not involved in the behaviour that is being penalised. The process will be transparent; as DPAs will be public, the public will always know what wrongdoing has taken place, and the penalty that has been paid.”
“Our ambition is to ensure that a higher proportion of economic crime is identified, investigated and dealt with. DPAs are a tool that seeks to achieve these goals whilst being transparent, clear and consistent. We hope that you will consider our proposals carefully to help ensure that they are sensible, proportionate and will make a genuine difference when they are introduced.”
An entire section of the consultation paper is devoted to the U.S. approach and it states among other things as follows.
“[Non-prosecution agreements] NPAs and DPAs have been successfully adopted in a variety of circumstances. […] The availability of NPAs and DPAs, coupled with the risk of prosecution, incentivizes commercial organizations to cooperate with investigations, reducing the likelihood of a trial and of a criminal conviction. In general, once a commercial organization comes to the attention of authorities in the U.S., it is common for the organization to conduct its own internal investigation, and to submit a report to the prosecutor setting out its conclusions. […] The use of DPAs and NPAs therefore supports an existing culture of self-reporting of serious economic crimes in the U.S. […] Neither NPAs nor DPAs have a statutory basis, relying instead on the United States Attorney’s manual, Principles of Federal Prosecution of Business Organisations, which sets out the circumstances in which they are appropriate and the factors to consider when investigating, charging, and discussing an agreement with respect to corporate crimes. […] There has been increasing scrutiny of the use of NPAs and DPAs as an enforcement tool, with concerns over the lack of transparency around the factors that determine whether the DOJ grants a NPA or DPA, and that they inappropriately excuse criminal behavior. The DOJ has sought to address these criticisms and has continued to use these agreements to conclude a variety of investigations.”
The consultation paper section on the U.S. then discusses NPAs and how there is no judicial oversight of these agreements and, even as to DPAs, how little judicial scrutiny and review there is of these agreements.
The consultation paper section on the U.S. then contains a few sentences that should be of great interest to U.S. policy makers. The section states as follows. “In practice the extent of judicial involvement generally appears to be limited in the U.S. model, and despite the effectiveness of the process, is unlikely to be at a level suitable for the U.K.’s constitutional arrangements.” Elsewhere, the section states as follows. “Despite the effectiveness of the U.S. model, the lack of judicial oversight is likely to make it unsuitable for the constitutional arrangements and legal traditions in England and Wales. We have concluded that [NPAs] are not suitable for this jurisdiction due to their markedly lesser degree of transparency, including the absence of judicial oversight.”
Kudos to the U.K. for rejecting NPAs – a resolution vehicle that was used to resolve four corporate FCPA enforcement actions in 2011 and four corporate enforcement actions in 2010.
[For more on the use of NPAs and DPAs to resolve FCPA enforcement actions and how use of these resolution vehicles have contributed to a “facade of enforcement” see here – my scholarship titled “The Facade of FCPA Enforcement”]
Even so, it is clear from the consultation paper that the U.K. proposed model for DPAs is inspired by the U.S. model. Yet from the consultation paper proposal, even though the U.K. proposes to adopt DPAs, it is clear that U.S. style DPAs is not the goal. Among other things, the consultation paper states as follows as to transparency. “Public confidence in the justice system is vital. The public need to have confidence that a prosecutor is not entering into a ‘cosy deal’ with a commercial organisation ‘behind closed doors’. We therefore believe that there should be judicial involvement from an early stage whereby the proposed DPA is considered at a preliminary hearing before it returns for final judicial approval.”
Should the U.K. adopt DPAs they would be used, as the consultation paper makes clear, in a variety of cases, not just Bribery Act cases. The same is true in the U.S. DPAs (and NPAs) are not just used to resolve FCPA enforcement actions, although their most frequent use is in FCPA enforcement actions. (See here from Gibson Dunn – FCPA enforcement actions comprised approximately 40% of DOJ NPAs or DPAs in 2011; here from Gibson Dunn – FCPA enforcement actions comprised approximately 50% of DOJ NPAs or DPAs in 2010).
My concern with U.K. adoption of DPAs in the Bribery Act context is the same as when I originally voiced it in this October 2011 post.
Why does a law with an adequate procedures defense require the third option of a deferred prosecution agreement – the first two options being prosecute vs. not prosecute? If a corporate has adequate procedures, but an isolated act of bribery nevertheless occurs within its organization, the corporate presumably would not face prosecution under the Bribery Act. Seems like a reasonable result. In other words, no need for the third option in such a case. On the other hand, if a corporate does not have adequate procedures (i.e. has no committment to anti-bribery compliance) and an act of bribery occurs within its organization, it presumably would face prosecution under the Bribery Act. Seems like a reasonable result. Does a third option really need to be created for corporates who do not implement adequate procedures?
Even the MoJ consultation paper recognizes that the Bribery Act is different from other U.K. economic crime laws. For instance, the executive summary portion of the paper states as follows. “Options for dealing with offending by commercial organisations are currently limited and the number of outcomes each year, through both criminal and civil proceedings, is relatively low. In part, this is because of difficulties with the law of corporate criminal liability, which does not reflect the 21st commercial organization. It is also because offending in the area of economic crime is becoming increasingly sophisticated. As the size of commercial organizations and the reach of their interests grow, so too do the difficulties of identifying criminal activity and of prosecution at a national level for what can often be wrongdoing across a number of jurisdictions. This calls for increasingly close working with international law enforcement agencies. Although the creation under the Bribery Act 2010 of criminal liability for a commercial organisation that fails to prevent bribery is a notable improvement and although prosecuting agencies are taking more pro-active approaches in identifying and investigating serious economic crime, more needs to be done.” (emphasis added).
Likewise, elsewhere the consultation paper states as follows. “[The U.K.] law of corporate criminal liability poses some problems. Under the current law, in order to obtain a conviction a prosecutor must show that the ‘directing mind and will’ of the commercial organisation had the necessary fault element or ‘mens rea’ for the offence. However, this is often difficult to prove, especially in increasingly large and more sophisticated modern commercial organisations. While the new offence in connection with the failure of a commercial organisation to prevent bribery under section 7 of the Bribery Act 2010 will help, more needs to be done, especially in relation to other types of economic offending.” (emphasis added).
In short, the consultation paper recognizes that the Bribery Act is cut from a different cloth compared to other U.K. economic crime laws, but it fails to see how this key distinction ought to disfavor, not favor, use of DPAs to resolve Bribery Act cases.
For more on this recent U.K. development, see here from Debevoise & Plimpton (discussion included within its FCPA Update), here from Skadden, here from Bryan Cave, and here from DLA Piper.
The U.K. OECD Phase 3 Report
The OECD recently released its “Phase 3 Report on Implementing the OECD Anti-Bribery Convention in the United Kingdom” (see here for the report). As stated by the OECD (here) “the purpose of Phase 3 is to maintain an up-to-date assessment of the structures put in place by Parties to the OECD Anti-Bribery Convention to enforce the laws and rules implementing the Convention and the 2009 Recommendations.”
This post provides a brief overview of certain issues in the report.
In the report, the U.K. was generally commended for the increase in enforcement of its foreign bribery laws in recent years. In addition, the report notes that, as of January 31, 2012, the SFO indicated “it had 11 active bribery / corruption cases and a further 18 cases under consideration.”
The U.K. received high marks “for publishing guidance to commercial organizations which led to the entry into force of the Bribery Act”(see here for the guidance). With the U.S. eagerly anticipating DOJ guidance as to the FCPA and with some viewing the upcoming guidance as a panacea for many of the issues in this new era of FCPA enforcement, it is noteworthy to observe that the U.K. report states that guidance does not have the force of law, is not binding on prosecutors or courts, and that judges consulted during the OECD visit stated that the guidance was not issued by Parliament and is thus of comparable authority to an academic text.
In the report, the U.K. also received high marks for its “recent significant increase in foreign bribery enforcement actions” and was urged to “sustain these efforts.” However, the report notes that the lead examiners were “concerned over certain aspects of the U.K.’s foreign bribery enforcement framework.”
For instance, the report is critical as to the transparency of enforcement. The report states “in some cases it is unclear how the amount of the penalties agreed between the SFO and the defendant was arrived at” both in terms of criminal actions and civil recovery orders under the Proceeds of Crime Act 2002.
As to the latter, the report states as follows. “Unlike a criminal plea agreement, there is no court hearing. A judge does not assess the factual basis of the order, or determine the amount that the defendant should pay.” The report further states that “the disadvantage of reduced judicial scrutiny is that there is even less transparency with consent civil recovery orders than cases resolved through criminal plea agreements.” The report notes that in response, the SFO said that “it is unable to disclose more information in some cases because the settlement agreement includes confidentiality clauses.” According to the report, “the SFO further argued that civil settlements ‘are by their very nature private disputes between the parties and the information disclosed by one side to the other is confidential.'” As to this argument, the report notes as follows. “However this overlooks the fact that the conduct underlying these consent civil recovery orders is foreign bribery and related misconduct. These are therefore not private disputes but criminal matters about which the public has an interest and a right to be fully informed.” In short, the report states as follows. “The lead examiners are extremely concerned that many key details about the SFO’s civil settlements of foreign bribery cases remain private. […] The settlement process is opaque, lacks accountability, and thus fails to instill public and judicial confidence.”
Another notable aspect of the OECD Phase 3 report is in reference to the SFO’s recent demonstrated committment, particularly leading up to the Bribery Act going live in July 2011, of active engagement with the business community on risk management and prevention. The report references prior SFO statements that its “emphasis is on helping corporations to develop [a modern corporate] culture and to use enforcement actions only where this is necessary and proportionate.” The report further noted that in the U.K.’s questionnaire responses that the priority for small and medium sized enterprises is not enforcement, but raising awareness of what is needed to build an anti-corruption corporate culture.” As to this approach, the report states that “the SFO’s policy on giving advice to rather than prosecuting companies is consistent with prioritizing corruption prevention over enforcement.” The report further states as follows. “The lead examiners consider that preventing corruption and promoting an anti-corruption corporate culture are equally important as criminal investigations and prosecutions.”
The U.K. Phase 3 report has much in common with the October 2010 U.S. Phase 3 report (see here for the prior post). In both reports, the countries are loudly praised for the high level of enforcement (as in the case of the U.S.) or the increase in enforcement (as in the case of the U.K.). Yet both reports also quietly criticize and question many of the policies which yield the high level or increased level of enforcement and a common thread in both reports is the general lack of transparency, judicial scrutiny, and accountability in many enforcement approaches.
Here’s To You Mr. Alderman
I remember the day well. In July 2010, an e-mail appears in my inbox from the U.K. Serious Fraud Office in which I am told that Richard Alderman (Director of the SFO), a reader of FCPA Professor, would like to have a discussion with me about anti-corruption issues. FCPA Professor was then 1 year old and learning of readers the caliber of Mr. Alderman … well, let’s just say that was awesome. Since then, I’ve had the pleasure to visit the SFO’s offices in London and continue the dialogue with Alderman, including through his contributions to this website.
In “A Conversation with Richard Alderman” (here), Alderman responded to approximately thirty detailed questions I submitted covering a broad range of topics and he: (i) compares and contrasts the SFO’s role with the DOJ’s role in enforcing the Foreign Corrupt Practices Act, including the more active and independent role U.K. courts have in reviewing SFO charging decisions; (ii) talks about voluntary disclosure, and the role of non-prosecution and deferred prosecution agreements; (iii) discusses reputational harm, debarment, and reparations; and (iv) talks specifically about the Bribery Act.
In this follow-up after BAE’s settlement, Alderman responsed to six pointed questions I submitted concerning the BAE case and his responses address the following topics. (i) how the U.K. law on double jeopardy significantly affected the SFO’s investigation of BAE and how the “current system [in the U.K.] for dealing with parallel criminal investigations conducted in a number of different countries does not work effectively and needs change;” (ii) whether the U.K. government was faithful to its OECD obligations in its handling of the BAE matter; (iii) criticism of the SFO-BAE plea agreement by the U.K. sentencing judge; and (iv) “shortcomings” in the U.K. system and how Alderman would like a system that “is far more transparent […] that commands public confidence, together with a much stronger role for the judiciary.”
In this guest post, Mr. Alderman discusses engagement with companies and compliance effects in the aftermath of the Bribery Act.
Active engagement was a hallmark of Alderman’s tenure at the SFO – and his willingness to engage with me on topics we occassionaly sparred has been one of the highlights of my young academic career.
So on this, your last day at the SFO, here’s to you Mr. Alderman.
What’s next for Alderman? He told me in a recent e-mail (published with his permission) the following – all the more reason for me to tip my hat to him.
“When I leave here at the end of this week I shall not be going through the revolving door into some well paid job in a legal firm. Nor will I be taking on anything that will bring me into any contact with the SFO. My successor needs to get on with the job himself. What I shall be looking for instead are opportunities to work on anti-corruption initiatives that make a real difference in other countries. This will not be by way of a job or a consultancy. There are very many interesting people in this area that I admire very much and who do so much to fight corruption and the damage it causes. I shall obtain real satisfaction if I can find ways of helping them as I move on.”
Worth Reading
Transparency International – UK (“TI-UK”) recently published “Deterring and Punishing Corporate Bribery” (here) and it is worth reading. A meaty 93 pages, the document is full of useful information, from U.K. charging issues, corporate criminal liability principles under U.K. law, a list of SFO and FSA bribery or related enforcement actions and much more.
As noted in the foreword, the “paper seeks to identify the problems faced by prosecutors and companies in trying to settle cases of overseas bribery against the background of the current legal system and practice, and to make some recommendations to improve transparency, recognising that bribery is a serious criminal offence and there is a strong public interest in seeing offenders prosecuted.”
Several of the recommendations in the report I agree with such as the following.
- “all settlements should be subject to judicial scrutiny independent from the prosecutor’s office” [that clearly does not happen in the U.S. given frequent use of non-prosecution and deferred prosecution agreements]
- “victim countries should receive restitution and prosecutors should work with development agencies … to manage this process” [although figuring out just how to do this is the difficult issue]
- “prosecutors should properly label bribery offenses and not select alternative charges in order to avoid mandatory debarment, which is a logical and fair outcome in certain cases as it provides a very strong deterrent to corporate offending” [this frequently happens in the U.S., for instance, Siemens, Daimler, BAE – none of these companies were charged with FCPA anti-bribery violations because of potential debarment concerns]
The recommendation from the TI-UK report that I disagree with (and I am grateful for the citations and mentions in the report) is the following. “[The U.K.] government should consider the introduction of DPAs or some similar sentencing procedure after a thorough assessment of the alternatives. DPAs have proved to be a useful procedure to settle FCPA cases in the USA but the process has also been criticized with little judicial oversight.” Elsewhere, the report states as follows. “The reason that this [high level of U.S. enforcement of the FCPA] is possible with relatively few resources is that in the US most FCPA cases are settled through either [DPAs or NPAs] both of which avoid the preparation of casework for a trial by jury.”
How is a resolution vehicle that avoids the preparation of casework for a trial by jury a good thing? Requiring an enforcement agency to meet its burden of proof in an adversarial proceeding before independent observers who consider mitigating facts and weigh viable defenses is central to the rule of law and how law best advances. Allowing enforcement agencies a third option (the first two options being prosecute vs. not prosecute) facilitates both the under-prosecution of egregious instances of corporate conduct as well as the over-prosecution of corporate conduct and contributes to a facade of enforcement.
Moreover, as I noted in this previous post, why does the U.K. need alternative resolution vehicles when the U.K. Bribery Act has an adequate procedures defense. If a corporate has adequate procedures, but an isolated act of bribery nevertheless occurs within its organization, the corporate presumably would not face prosecution under the Bribery Act. Seems like a reasonable result. In other words, no need for the third option in such a case. On the other hand, if a corporate does not have adequate procedures (i.e. has no committment to anti-bribery compliance) and an act of bribery occurs within its organization, it presumably would face prosecution under the Bribery Act. Seems like a reasonable result. Does a third option really need to be created for corporates who do not implement adequate procedures? Also relevant to the analysis and further suggesting that alternative resolution vehicles are not needed in the U.K. is the notion that (Section 7 of the Bribery Act aside) corporate criminal liability in the U.K. requires evidence that a so-called controlling mind of the corporate was involved in the improper conduct.
The UK Bribery Act: Engagement With Companies And Compliance Effects
Today’s post is from Richard Alderman (Director of the U.K. Serious Fraud Office).
*****
The UK Bribery Act: Engagement With Companies And Compliance Effects
By Richard Alderman (Director, SFO)
In the months since the UK Bribery Act came into force on July 1st 2011, there is one question that I have probably been asked more than any other: what are we actually doing under the Act at the SFO?
In part, people are asking me this because of recent comments by some observers, suggesting that the SFO will be under intense pressure to go out and secure convictions very quickly under the new legislation – and that this means we’ll be out there hunting for easy targets.
That is a fairly easy claim to deal with. Easy targets are easy to find. We could go out and find half a dozen cases very quickly that we could probably investigate and prosecute through the criminal justice system, possibly by Christmas.
The SFO’s approach: Finding the Difficult Cases
But is this really what most people want to see? In my view, many people would regard the SFO as taking a rather lazy and unreflective approach if we pursued easy ‘quick wins’ rather than the really difficult and more serious cases. Also, I know which type of cases our staff would prefer to investigate – and it is definitely the more challenging ones.
So, what are we doing? The plain answer is that we’re actively looking for cases to take up – but these cases are the difficult ones. For example, we have been examining the activities of a number of foreign companies with a UK business presence who are involved in bribery in other countries.
We have found a number of these. But what we are looking for in particular is evidence that they have undermined ethical UK businesses. If they have not, then although there may be a technical Bribery Act offence, it is not the type of case where I would want to use our scarce resources, or take up the valuable time of UK courts and juries.
So we have seen instances of bribery involving foreign companies where we have decided not to take them forward for a full investigation, because we cannot see that a UK company lost out. Other authorities might choose to take action, but it is not a priority for the SFO.
However, there are other cases where we have found potential damage to UK companies and their employees. It is still early days – but I can confirm that we are looking at some cases to see whether or not to start using our compulsory powers.
I am under no illusions about the difficulty of these cases. Getting the evidence and getting people before a UK jury will be incredibly difficult. Investigations will be complex, and we will need to make full use of international co-operation and the SFO’s own powers. But make no mistake, these cases are a high priority for us.
Compliance Effects
Aside from questions about our approach to actions under the Bribery Act, a further area of interest is in our view of its compliance effects on companies. Experience shows that laws – and especially new laws – have an enforcement effect as well as a compliance effect, and that the latter of these is often larger.
In the specific context of the Bribery Act itself, a particular question that arises is whether the Bribery Act without an adequate procedures defence would have had the same compliance effects as the Act with adequate procedures. In other words, is it the Bribery Act itself – or the adequate procedures defence specifically – that has resulted in its compliance effects?
It is still early days for the Bribery Act – and it is difficult to answer these questions in detail without hard research into what companies are doing internally in response. However, looking at what US corporations are telling us, they have realised that being compliant under the FCPA does not automatically mean that they are Bribery Act compliant.
This is a message that professional services firms have been trying to hammer home with their clients whether in the UK, US or elsewhere for some time now. I believe it is getting through and that corporations are going on to take action in response. The likelihood is that those Boards that are more committed to good corporate governance will take notice, but if companies wish to ignore it then that is ultimately their choice. They should not be surprised though if the SFO takes a close interest in them. They should also not be surprised if they find that other corporations become less willing to do business with them. I believe they will suffer commercially if they do not have an anti-corruption culture.
In this context, we take differing views of compliance by SMEs and large corporates. We are aware that SMEs – unlike their larger counterparts – often lack the time, resources and readily-available, expensive professional advice needed to move quickly into compliance. So we are taking a more consultative approach to compliance by SMEs, and accept that they may take longer to get there.
The Act’s Impact on our Engagement with Companies
This leads neatly into a further theme that is especially relevant to our approach to the Bribery Act, but also touches on our work under other pieces of legislation: our commitment to engaging with companies. In general, we are finding that engagement is a more effective tool with bribery and corruption under the Bribery Act than it has been in the past with fraud.
On reason for this is that, for a successful prosecution under the UK’s previous bribery and corruption legislation, we had to prove that there was a ‘controlling mind’ at Board level behind the activities. Under the new Act, the key question is whether the Board has put effective structures in place to prevent bribery from taking place. If a company has not done this, and has significant operations in the UK, we can prosecute it for bribery and corruption by any of its employees anywhere in the world.
This is a big change. One effect is that prosecution of fraud is now out of line with bribery and corruption, since to prosecute a company for fraud we still need to prove that people at a senior level knew the fraudulent activity was taking place. Another effect is that acquirers who take over a business, and then discover that suspected bribery and corruption has been (and probably still is) taking place in it, are more likely to come forward, self-report and engage with us.
They are encouraged to do this by an awareness that we will take a pragmatic approach, quite possibly by letting them conduct their own internal investigation and then report the findings to us so we can take a balanced view on further action. They know that their demonstration of goodwill in initially disclosing their suspicions to us will be taken into account.
Our Broader Approach to Intelligence and Proactive Engagement
More broadly, we constantly monitor and review intelligence and other information relating to the activities of corporations within our jurisdiction. This comes to us in all sorts of ways – including suspicious activity reports to the UK’s Serious Organised Crime Agency (SOCA) and increasingly from whistle-blowers contacting our new SFO Confidential hotline. We also receive a lot of information from our international partners, from individuals across the world and indeed from picking up press reports.
With every piece of information, we need to assess whether there is something here that justifies SFO action. It’s a vital decision, and so we have a rigorous internal process for it, including making a number of enquiries to test the information before deciding formally whether to launch an investigation. We need to be as sure as possible that there is something there that justifies us in taking on the case.
When we do decide to do something, our approach can take a number of different forms. In some cases we contact the corporation involved, and say we believe they have a problem and would they like to come and see us. Most – but not all – do come in for that discussion, where we encourage them to agree to undertake an internal investigation and present the findings to us in due course. This makes obvious sense for the corporation, and several have agreed to this.
The Downside of Non-Cooperation
Of course, some corporations may not be interested in a discussion with the SFO – in which case we can carry on doing what we need to do. However, this does mean the corporation has passed up its opportunity for the maximum degree of mitigation and flexibility on our part. I regard this as a short-sighted and misguided approach, but of course that’s a matter for them.
In other cases we think that approaching the corporate is not appropriate – perhaps because of the size and systemic nature of the alleged corruption, the involvement of very senior people, or the potential for evidence to be destroyed. In that sort of case we may well decide to proceed quietly with our investigation. So the first that the corporate will know of our interest is likely to be when we arrive at its door with search warrants – the worst possible outcome for any business.
This is why we encourage companies to be rigorous in looking at allegations they receive internally about instances of corruption. Senior management should be asking hard questions about these – and should have a robust risk assessment process in place to provide as much reassurance as possible. If companies do not police themselves in this way, then the possibility that the SFO will need to take action is all the greater.