News & what's on - Written by on Tuesday, May 15, 2012 14:27 - 3 Comments

Opinion: How to show the SFO really means business – very publicly, don’t prosecute

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The new Director of the SFO has vowed that the SFO is here to stay and that he is going to refocus the SFO on targeting, investigating and prosecuting serious fraud.

As we have said on numerous previous occasions the SFO must deliver on both its threats (to go after bad actors) and promises (to treat those who trip up after good faith efforts to comply) reasonably and fairly.

The reality is that with a limited (and shrinking) budget the SFO’s ability to mount a full blown adversarial investigation along the lines of those once seen is severely restricted.

How then for the new Director of the SFO to demonstrate a quick win?

Opinion

We have said, and it is a trite fact, that the SFO need to be seen to conduct an investigation (and ultimately a follow on prosecution) under the Bribery Act.

However, counter-intuitively if the SFO wants to show that it really means business it should very publicly opt not to prosecute a corporation.

A great recent example of this in the US is the recent Morgan Stanley declination.

On 25th April the DOJ’s Assistant Attorney General Lanny A. Breuer announced that a former managing director for Morgan Stanley’s real estate business in China pleaded guilty for his role in a conspiracy to evade the company’s internal accounting controls. Nothing new there.

However, the same statement continued:

“Morgan Stanley maintained a system of internal controls meant to ensure accountability for its assets and to prevent employees from offering, promising or paying anything of value to foreign government officials.  Morgan Stanley’s internal policies, which were updated regularly to reflect regulatory developments and specific risks, prohibited bribery and addressed corruption risks associated with the giving of gifts, business entertainment, travel, lodging, meals, charitable contributions and employment.  Morgan Stanley frequently trained its employees on its internal policies, the FCPA and other anti-corruption laws.  Between 2002 and 2008, Morgan Stanley trained various groups of Asia-based personnel on anti-corruption policies 54 times.  During the same period, Morgan Stanley trained Peterson on the FCPA seven times and reminded him to comply with the FCPA at least 35 times.  Morgan Stanley’s compliance personnel regularly monitored transactions, randomly audited particular employees, transactions and business units, and tested to identify illicit payments.  Moreover, Morgan Stanley conducted extensive due diligence on all new business partners and imposed stringent controls on payments made to business partners.”

In other words, the Morgan Stanley compliance program just got the DOJ Diploma with flying colours.

We have said before that there must be a carrot and stick approach to Bribery Act enforcement.

What better way for the SFO to show it means business than to openly credit a business for a robust compliance program and opt not to prosecute.

This would have the advantage of instilling confidence and trust in the business community and deliver on promises made.

The stick can come later.

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PROMASYS Press release
May 16, 2012 1:18

thnks for the info

Coffee Talk Shop… » High Tide: From Shrugging At Wal-Mart To Calling For FATCA Delays
May 16, 2012 13:23

[…] FCPA Blog continues its series on Brazil and updates on a filing in a key case. Thebriberyact.com advises on how the SFO will show it means business. Tom Fox explains compliance risk through the J.P. […]

High Tide: From Shrugging At Wal-Mart To Calling For FATCA Delays | Rishwat – Campaign against Corruption in India
May 16, 2012 16:34

[…] FCPA Blog continues its series on Brazil and updates on a filing in a key case. Thebriberyact.com advises on how the SFO will show it means business. Tom Fox explains compliance risk through the J.P. […]

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