The Director of the UK’s Serious Fraud Office (“SFO”) David Green addressed attendees in London last week at The Integrity Forum, an initiative of Exiger, sending a clear message to corporations to comply fully with their duties to self-report.
Mr. Green suggested that a company should self-report the moment it becomes clear that there is a problem. In discussing when companies should notify the SFO, he said:
“[A company should notify the SFO] certainly not after a full-on corporate investigation by its legal advisers has ploughed up the crime scene and perhaps minimised the problem in a very expensive and glossy report. Generally, we would want access to the unvarnished first hand factual accounts of witnesses. That enables us to evaluate witnesses’ credibility and to fulfil our duties of disclosure to the defence.”
Mr. Green then identified the key attributes of a cooperating company for attendees thinking about approaching the SFO:
“Firstly, a company that comes to us at an early stage, once a problem has been identified. Secondly, they discuss the future conduct of the internal investigation with us. They share first accounts of witnesses; they maintain the integrity of digital and documentary record. They would also assist with the identification and prosecution of individuals.”
Addressing concerns that international companies facing multiple criminal investigations across jurisdictions would prefer some form of global resolution, Mr. Green said that while the SFO could not guarantee the results, it was “willing to use our good offices to make that happen and have done so very successfully.”
Mr Green explained that corruption enforcement accounts for 60% of the SFO’s workload, with his department currently handling around 25 active investigations. He stated that, under present legislation, prosecuting a company for financial crime is difficult:
“The difficulty lies in the identification principle, meaning we have to identify the controlling mind of a company in the form of senior individuals and prove their complicity in the relevant criminality.”
He added that there was one exception found in Section Seven of the UK Bribery Act (the failure to prevent bribery offence.) Parliament is now considering increasing this ‘failure to prevent’ offense by extending it to the areas of tax evasion and fraud.
Mr. Green highlighted his support for this extension into broader areas of financial crime. He argued for consistency, stating that this change would alleviate the need for a prosecutor to adhere to the identification principle in some offenses and not others. He concluded by explaining the key differences between the UK Deferred Prosecution Agreement (DPA) and its adaptation from the U.S. model:
“Ours [DPA Model], of course, is statute based and the process is subject to judicial process throughout… We intentionally started quite small; we have had only two so far, but there are DPAs in the pipeline of an altogether different magnitude and you’ll see them, I think, in the first few months of next year.”
The Integrity Forum is an ongoing series of breakfast events on a wide range of integrity-themed projects. Stay tuned for more.