All you need to know about self reporting - Written by on Monday, February 21, 2011 2:42 - 1 Comment

When it comes to corporate crime – in the Whitehall corridors of power: The fight is on.

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The UK government is presently undertaking a wholesale review of Criminal Justice.

There is discussion of where, after the dust has settled, the SFO (or at least the work undertaken by it) will sit.

Revolution not evolution?

Changes may be more radical than a change of address or even management.

Last week we were contacted by sources who told us that the move to Self Reporting, Civil Settlement and the attempt to shift to a more US style of a plea bargaining system in the context of corporate crime was also under attack in what was described to us as no less than a “fight”.

There has been some limited press coverage of the possibility that the SFO’s work may be split with one agency (for example the police) taking responsibility for investigation and another taking responsibility for prosecution.

Throwing the baby out with the bath water?

The US DOJ has reportedly voiced its fears about the splitting of prosecution and investigatory functions on the basis that this could pose a risk to current and future prosecutions.  Other British law officials are reported to have voiced similar concerns.  We share them.

The Roskill Report was the catalyst for the formation of the Serious Fraud Office. It had as its central plank the necessity for the agency investigating complex fraud to have a combined investigative and prosecutorial role.  The purpose was to fix a broken system which was archaic, cumbersome and unreliable and where serious frauds were not capable of being successfully investigated and prosecuted in the UK.

Jessica De Grazia, a former New York prosecutor, conducted a review of the SFO and its work just two and half years ago.  Ms. De Grazia concluded that the combined prosecution and investigatory role of the SFO was key.  After making a slew of recommendations (which the SFO has been busy executing) the SFO’s conviction rate now stands at 90% in spite of a shrinking budget.

We do not understand the sense in turning the clock back and splitting the prosecution and investigatory roles and going back to a set up which was discredited many years ago.

Of equal concern is the suggestion that the move toward Self Reporting, Civil Settlements and plea bargained settlements along US lines is also under threat with the suggestion being that these approaches should be ditched in favour of a return to a more black and white investigation, prosecution and conviction strategy.

It is unclear where the money will come from to resource the investigatory requirements for such a strategy.  A large feature of the Self Reporting/Civil Settlement and plea bargained strategy is the carrrot of more lenient treatment and certainty for corporates if, on balance, they decide to shop themselves to the relevant authorities and investigate their suspected wrongdoing at their (instead of the taxpayers) cost.

We are agnostic about under what name, management and at what address the work of the SFO is undertaken.

However:

1) we see no reason to depart from one of the core principles that Lord Roskill identified 25 years ago, namely that in cases of complex fraud it makes sense to combine the prosecution and investigatory role against a backdrop where the splitting of the roles was demonstrably flawed.

2) we are concerned by the suggestion that the option of Self Reporting, Civil Settlement and move to a more US style plea bargain system should be dropped in the context of corporates.

If it aint broke…

After some years of criticism the SFO (or more importantly the way in which complex fraud is investigated and prosecuted) appears to be getting somewhere following a government inspired review undertaken by a highly competent former US prosecutor whose recommendations (which affirmed the combined prosecution and investigatorial role) have largely been followed with success.

The Self Reporting, Civil Settlement and move to a more US style plea bargain system offers corporates a system of certainty which should be encouraged.

It is hard to argue that truly criminal enterprises shouldn’t be prosecuted.

But, the UK should take a leaf out of the US book when it comes to other cases.  The US learnt from the Arthur Andersen debacle that a prosecution of a large otherwise ethical corporate can have devastating consequences for tens of thousands if not hundreds of thousands of innocent people in circumstances where only a handful are culpable.  As a result today the US takes into account the collateral consequences of its actions while still meting out draconian penalties.

The UK should take a similar line.

We strongly advocate maintaining the combined prosecution and investigation function in the context of serious fraud.  We are also opposed to the junking of Self Reporting, Civil Settlement and dumping of the moves to US style plea bargaining.  While not appropriate in every case these do provide corporates with certainty of outcome and the ability to continue to do business without the loss of significant financial deterrent to violation of relevant laws.

However, we are told that back in Whitehall there are strong factions who do want to turn back the clock.

Worse, we are reliably informed that when it comes to this debate, in contrast to the picture for this piece: the gloves are currently off.

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thebriberyact.com – Why Sprowston Borough Council could be just the beginning if the war is lost…
Feb 21, 2011 14:56

[…] On the same day we wrote about our concerns over reports that Self Reporting, Civil Settlements and … along with the future of the combined prosecution and investigatory role in the context of corruption and serious corporate crime. A role which is today embodied in the SFO. […]

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