All you need to know about self reporting, Bribery Act & Proceeds of Crime - Written by on Monday, April 22, 2013 0:05 - 0 Comments

Civil Recovery Orders – still on the SFO menu.

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There has been plenty of rhetoric about Civil Recovery Orders and the likelihood (or not) of a corporate being able to obtain one now the SFO is under (not so new) management.

David Green, the SFO Director, has said clearly that the SFO is there to prosecute serious cases of fraud.

He withdrew guidance on corporate self-reporting issued by his predecessor.

Speaking recently he explained why.

Namely that the previous guidance “…implied that if a corporate self-reported to the SFO, then the SFO would strain every sinew to resolve the matter by civil settlement and not by prosecution.  Why did that need changing? :  because no prosecutor can ever give such a guarantee in advance: each set of facts is unique.”

Pausing for a moment there.  It is hard to argue this.  Indeed, in the US which is sometimes held up as the role model for what UK enforcement should look like (heaven forbid…) we challenge anyone to obtain a guarantee from the DOJ it won’t prosecute before telling the DOJ what it is about!

Picking back up, David Green went on:

“…We have said that we will apply the full Code Test for Crown Prosecutors to the available evidence.  Assuming there is sufficient evidence, we would prosecute if it was in the public interest to do so.”

There has been a clear tightening of the SFO’s position under the present Director and there’s not much comfort in these words alone for a corporate Board contemplating a Self Report.

But, keep on reading.  Mr Green elaborated:

“BUT in the case of a genuine self-report, where, say, a new board had discovered previous misconduct under previous management, had investigated it and reported it to SFO and put in place measures to avoid repetition, then obviously the fact of self-reporting would weigh heavily in the public interest against prosecution.” [Mr. Green's emphasis - NOT OURS]

The reference to a genuine Self Report is broadly, to providing the SFO with information it would not have found out about, but for the Self Report.  This is designed to addresses concerns voiced by the OECD in early 2012 that the definition of “self-reporting” had been severely strained in order to achieve the highest number of civil settlements.

In the peer review it noted, for example that in the Macmillan case which resulted in a Civil Recovery Order:

“The SFO’s definition of ―self-reporting‖ may be overly generous, however. The corporate defendant in Macmillan was considered to have self-reported, even though the SFO first learned of the case after a referral from the World Bank. The City of London Police also executed search warrants before the company contacted the SFO. Considering a defendant in such circumstances to have self-reported would not further the goal of enhancing the detection of foreign bribery cases. After the on-site visit, the SFO acknowledged this point and agreed to revisit the policy set out in its Approach to Dealing with Overseas Corruption.”

Opinion

It is plain that the SFO’s teeth have sharpened under the management of David Green.  However, the new Director has dropped very strong hints that in the case of a genuine Self Report that Civil Recovery is still, very much, on the menu.

The SFO have revealed they have various cases in development which relate to pre and post Bribery Act.  They have also disclosed that corporate self reporting is alive and well.  How the SFO in fact deals with genuine corporate Self Reporters who play by the rules will likely dictate the future success of Self Reporting, Civil Recovery Orders and Deferred Prosecution Agreements.

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