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International

It all ‘depends’… Advocate or negotiate under broad new sentencing guidelines or pay the consequences.

New rules for sentencing corporates for Fraud, Bribery and Money Laundering are billed as being the 'Definitive Guide' and lay out a five step process.  Yet closer examination of the guidelines may make cynics wonder if they are any guide at all when it comes to the final number. Five steps to sticking a finger in the air? Step one The court must consider compensation. Step two The court must consider confiscation under the English money laundering laws.  Confiscation must be dealt with before, and taken into account, any other fine or financial order (excluding compensation). Step three The court must consider first, culpability and second, harm. Culpability is split into three levels, high, medium and lesser. Each of these mostly follow the pattern you would expect.  Wilful obstruction of detection - for example destroying evidence, misleading investigators and encouraging employees to give false accounts all place corporates into the high culpability camp. Corruption of local or national government officials or ministers ...

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Sectors

F is for Fail. Three strikes &…firm with ABC controls gets slammed by FCA and fined.

Last week the Financial Conduct Authority fined Besso an insurance firm for poor anti-bribery systems and controls. It had some and had even paid solicitors to advise it on them. The FCA view.  Not good enough. In a withering Final Notice issued the FCA said: "The anti-bribery and corruption systems and controls that it had were expected to be commensurate with that relatively low level of risk.  However, Besso failed to meet even that standard. . But. Besso did have controls. Besso paid a law firm to advise it and provide suggestions for policies and procedures and Besso’s program evolved and improved over time. What went wrong? Besso is a medium-sized broker in the wholesale insurance market, whose business did not the FCA found, overall, pose a high bribery and corruption risk. In its notice the FCA catalogued the warnings given to Besso. Its failure to heed those warnings ultimately led to the fine for a system and control failure. Strike One ...

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News & what’s on

NEWSFLASH: Common sense prevails again! Prosecutors give credit for compliance programs in Norway too.

Starting with the Vikings, Norway has a long history of seeking out new emerging markets. With emerging markets comes risk. Today Barry spoke at the Oslo Compliance Forum organized by Wiersholm, Norway’s largest law firm which itself has a history of advising and representing clients on anti-corruption compliance and investigations.  I spoke at length to Jan Fougner, Marit Berger Rosland and Georg Engebretsen - they know what they're talking about and have been involved in some big cases - so if you have a problem in Norway, call them.  I would in a heartbeat. I digress. The focus – third party risk. Other speakers included representatives from Wiersholm, Okokrim, Telenor and Statoil giving a soup to nuts overview of the importance of compliance. Referencing the FCPA guide and even the UK’s own guidance on Adequate Procedures came a plea for similar guidance from the Norwegian government for Norwegian business. I have sympathy with this request, but for my money, ...

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Bribery Act & Proceeds of Crime

Cooperation. Cooperation. Cooperation. The name of the game if you want a DPA from next week.

“Cooperation, Cooperation, Cooperation” is the SFO’s message to corporates looking to enter into new US-style plea bargains available from next week From Monday next week the Americanisation of corporate crime in England continues. Businesses (but not individuals) will be able to enter into Deferred Prosecution Agreements (DPAs) with the UK taking a leaf out of the US book as it moves to plea bargains for corporates. Historically plea bargains have been prohibited and frowned upon in the UK. This judicial perspective was set against a backdrop of: if you can't do the time then don't do the crime. On paper this looks good.  But in practice the public interest in prosecuting corporates is often less black and white. The use of Deferred Prosecution Agreements in the US took off after the Arthur Andersen collapse following its indictment (and subsequent conviction).   Later and less widely known the Andersen conviction was overturned on appeal.  But it was too late.  The ...

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Your Questions: Answered

A purchaser worries about liabilities after buying a business with limited information up front

Dear Barry & Richard, Will my company and my Board of Directors likely be prosecuted if they buy another company which has problems after doing limited due diligence? My company is considering buying a business.  Unfortunately, we are unable to do much due diligence in advance of the sale as we will have to buy in an auction.  The seller, has various interested potential purchasers, and has set up a data room.  There is limited opportunity to ask more questions and anyway the deal must be done in a couple of weeks.  We don't have much time to do any meaningful due diligence. Barry & Richard answer What you describe is a common problem.  We are frequently asked to help businesses in similar circumstances to your own.  As you say there is a limit to the due diligence that you can do in cases like this. Under the old Director of the SFO there was ...

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