‘You never write, you never call…’

A lot has happened since our last ‘quarterly’ Newsletter in…*Ahem* January.

Read on for our round up of our picks from the last six months & find out what’s happening…

No SFO raids in 12 months – what happened?

As Barry reported on BBC Radio 4 Today the Serious Fraud Office (SFO) did not undertake a single raid in 12 months.

These surprising statistics contrast with the SFO’s public threats.  Last October the former Director of the SFO threatened corporations involved in bribery that: “it may be that…the first that the corporation knows about the SFO’s interest is when we arrive early in the morning equipped with search warrants and arrest powers.…It is going to happen.”

TIP

Expect dawn raids from the SFO under the direction of the new SFO Director, David Green CB QC.  While the chances of a dawn raid are low.  So is the likelihood of fire.

We recommend that all businesses have a dawn raid policy and that relevant staff, for example receptionists, know what to do if enforcement agencies come to visit.  If you would like to know more contact barry.vitou@pinsentmasons.com.

The manifesto for the new SFO Director

Speaking last week David Green CB QC said “I am very proud to lead the SFO. I aim to recharge the SFO’s corporate self-respect and to bring it to the top of its game as a major crime fighting agency…”

We have distilled some key themes the new Director has laid out in his ‘manifesto’ for the SFO.

1. Significant strategic targetsmani

2. A surgical approach

3. A focus on top end fraud

4. A tough approach

5. Overseas corruption still a priority with an increased emphasis on Serious Fraud too

6. Pay to play – a focus on confiscation and civil recovery under Money Laundering laws

TIP

The new SFO Director is looking to restore confidence in the SFO. Fast.

Last week the SFO Director said:  “Corporates cannot be seen to be allowed some special kid glove treatment. In any case where there is a reasonable prospect of conviction, and it’s in the public interest to prosecute, the SFO will prosecute, whether individuals or corporates…”

The SFO will be looking for prosecution targets for serious fraud and corruption with increased vigor over coming months.  The SFO intends to pick important targets and use confiscated assets to part fund its operations.

Do not under-estimate it. If you would like information about financial crime systems and controls and/or anti-bribery policies and procedures please email barry.vitou@pinsentmasons.com.

Enforcement continues

Reading the stories about raids and the work being done to restore the credibility of the SFO you might assume that nothing has been happening.  This would be wrong.

4 executives were jailed in a commercial (no government bribery) corruption case in the oil and gas industry in Egypt, Iran, Russia, Singapore and Abu Dhabi.  Sentences ranged from 12 months to 5 years.  This was followed up in March with more prison sentences handed out ranging from 9 months to 3 years in a corruption case in Belfast.  There have been various others charged with corruption offences or who have pleaded guilty to violations of corruption laws this year alone – for example see here, here and here.

Remember too that it is not just the SFO which prosecutes bribery offences.  In March the CPS obtained convictions for a bribery scheme involving a supplier to Sainsbury’s.

TIP

While the media is waiting for a headline case relating to the Bribery Act the SFO continues to obtain convictions and press charges in relation to bribery violations under the preceding laws.  Do not assume the SFO or the CPS have been doing nothing.

Shareholder dividends – on the SFO menu

We predicted that Shareholder Dividends would be in the cross-hairs of the SFO in our January Newsletter.  Later that month Mabey & Johnson shareholder Mabey Engineering (Holdings) Limited agreed to pay back dividends gained as a result of Iraq bridge-building contracts.

In the press release the SFO Director said:  “There are two key messages I would like to highlight.

First, shareholders who receive the proceeds of crime can expect civil action against them to recover the money.

The second, broader point is that shareholders and investors in companies are obliged to satisfy themselves with the business practices of the companies they invest in.  This is very important and we cannot emphasise it enough.  It is particularly so for institutional investors who have the knowledge and expertise to do it…Where issues arise, we will be much less sympathetic to institutional investors whose due diligence has clearly been lax in this respect.”

The announcement sparked a raft of commentary which mis-interpreted the underlying basis of the Court Order.  We unpicked it, explained why due diligence is key and the basis for defending an SFO attack on dividends here.

TIP

Institutional investors and large private shareholders should ensure that they conduct due diligence on their investments. Transparency International has in consultation with leading in house counsel prepared useful guidance on this.  We strongly encourage everyone to read it.

We shall be running a seminar in September on anti-bribery due diligence on M&A and investment transactions.  If you would like to pre-register for this seminar please email barry.vitou@pinsentmasons.com.

Ministry of Justice publishes Deferred Prosecution Agreement consultation

Under the proposals corporates who have violated criminal laws could enter into a Deferred Prosecution Agreement along the lines that in return for complying with a range of conditions the prosecutor would defer a criminal prosecution.  Under the regime at the end of the deferral period, the prosecutor is satisfied the organisation has fulfilled its obligations, there is no prosecution on the charges laid. If, on the other hand, the commercial organisation fails to meet its obligations, further penalties are available and the original criminal proceedings could be revived.

TIP

It is anticipated that the UK will pass legislation to add Deferred Prosecution Agreements to the prosecutors armory.  The move is another brick in the wall of the criminalization of corporate law. On July 5 we are running a seminar on the proposed Deferred Prosecution Agreement regime.  We will be canvassing opinions before submitting our comments on the consultation before it closes.  If you would like to attend this which will begin at 6 pm in our Crown Place offices on July 5, please email barry.vitou@pinsentmasons.com.

LAST CALL Please take our 1 minute survey

Click here (we can’t embed the survey…) to take our one minute survey and answer these three questions.

1. Do you think the Bribery Act has made UK PLC less competitive internationally?

2. Do you think the Bribery Act has made your business less likely to enter new international markets?

3. Has your business lost business as a result of suspected bribery by competitors in the last 12 months?

We’ll report back later this month.

And finally…

To make up for our lack of Newsletter in the Spring we have decided to go monthly!  We’ll be back with another round up and the results of our one minute survey in July.

Until then. Enjoy the summer weather…