Bribery Act & Proceeds of Crime - Written by Barry & Richard on Wednesday, March 30, 2016 5:19 - 1 Comment
The chronology of an SFO investigation – by Alun Milford GC of the SFO
Yesterday Alun Milford the General Counsel of the SFO gave a speech to audience of compliance professionals in Prague at the European Compliance and Ethics Institute.
We have broken down the speech into what we consider to be its interesting components and will post over the next few days extracts with our comments.
In this extract Mr. Milford lays out the typical chronology for an SFO investigation. This is not ‘news’ but it is a useful and correct summary of the process from the horses mouth and for that reason alone we think worth flagging.
What the SFO was set up to do and its take on criteria
He said: ”…[The SFO was] set up simply to investigate and to prosecute cases involving serious or complex fraud, bribery and money laundering. We are a law enforcement agency, not a regulator, and we define our relationship with industry accordingly…
… the criteria [the SFO] take into account when deciding which cases we should accept for investigation [include]: the impact of the case on UK financial plc in general and the City of London in particular; the scale of losses, actual or potential; the extent of the gain, actual or potential; whether we were dealing with a new kind of fraud or whether there was some other public interest reason for taking the case on. The point is best illustrated by some of the cases he has actually taken on: LIBOR fixing, the investigation into Barclay’s capital raising, allegations of corruption in the conduct of business by GSK and Rolls Royce amongst others, allegations of fraud in the conduct of business by G4S and Serco. There are more, but you get the point.
That simply accounts for the start of the process.” [Our emphasis.]
It is often said that the SFO take on criteria is a matter which exceeds £1 million. Aside from the point that as in all numbers and statistics whether or not this threshold is tripped depends on which financial metric you are measuring, for example, is it the size of the bribe (or fraud) or the benefit derived or the total value obtained etc. all of which can generate wildly differing numbers – ultimately the SFO take on criteria are many and varied and much more sophisticated than a simple financial metric.
Mr. Milford went on to say:
SFO targets corporates and individuals
“Whilst we cannot, and would never want to, guarantee convictions, we are able to investigate and then to prosecute to conviction genuinely difficult top end financial crime cases.
As a law enforcement body, our remit focuses us entirely on this kind of crime and we ensure it is not beyond law enforcement’s reach.
We are not, as some have suggested, focussed simply on corporates. We will follow the evidence to wherever it takes us. As the Smith and Ousman and Cyril Sweett cases show, if it takes us to corporates, we can prosecute them successfully if they choose not to co-operate. And as the Standard Bank case shows, we can work with co-operative companies to achieve a DPA that wins judicial approval.” [our emphasis]
It would be incorrect to say that the SFO is only focussed on corporates. While in the US the Yates memo was written to counter a criticism that the US has targeted corporates but has not pursued corresponding individuals the position in the UK has historically been the opposite.
Namely it would be more accurate to say that historically the SFO has targeted individuals and has not pursued corporates. However, it is unfair to criticise the SFO for this given the underlying reason for this UK anomaly is broadly speaking the evidential difficulty in proving that the directing mind of a corporate is aware of and mixed up in the wrong doing. While the position has now eased in the context of proving a Section 7. Failure to Prevent Bribery offence, broadly speaking the evidential problem remains in connection with the other economic crime offences.
How cases are brought to the attention of the SFO
Mr Milford went on to say: …“There are a number of ways in which cases against a company might come into the SFO. We might learn of the allegation from a whistle-blower or a disgruntled business rival. The route into the company might be through the exposure of the recipient of a bribe or an agent through whom the bribe was paid, or more generally from the intelligence network we plug into. Sometimes, of course, the company tells us of the allegation itself, and then seeks to work constructively with us as Standard Bank did. We welcome that.”…
SFO internal process on becoming aware of a potential case
On what happens when a potential case comes to the attention of the SFO Mr Milford had this to say:
“Regardless of how a case comes into us, it will be looked at first by our intelligence unit. Its members will assess whether the case seems to be something that meets our take-on criteria, and will undertake some preliminary enquiries. If then the Director agrees to open a criminal investigation, responsibility for it passes to a case controller on one of our casework Divisions, who will have day to day responsibility for the case. He or she will lead the multi-disciplinary team investigating it. The team will pursue all reasonable lines of enquiry, gathering in and reviewing potentially relevant documents from the company and elsewhere. It will interview witnesses and suspects. At the end of that process, we will make a charging decision.”
The charging decision – to charge or not to charge, that is the question…
On making a decision about whether to prosecute a suspect (and referencing corporate suspects) Mr. Milford said:
“How does that impact on corporate suspects? In principle, in the same way as we deal with anyone else. Companies are legal entities with rights and responsibilities, and we deal with them fairly, in accordance with published policy guidance. That starts with the Code for Crown Prosecutors and the famous two stage test for a prosecution.
First, is there sufficient evidence for a realistic prospect of conviction?
Secondly, if so – and only if so – is a prosecution required in the public interest? Guidance on the public interest is found in the Code and in separate specific guidance on corporate prosecutions and on the Bribery Act, both issued jointly by the Director of the Serious Fraud Office and the Director of Public Prosecutions. It is also to be found in the Code for Deferred Prosecution Agreements.
So it is towards the end of the investigation that we will decide how to deal with a corporate.
If we judge that there is insufficient evidence against it, then that is the end of the matter so far as the corporate is concerned. Equally, if we consider we have sufficient evidence for a realistic prospect of conviction and the public interest warrants the corporate’s prosecution, we will prosecute. But if we think the public interest might not require a prosecution then we will consider a DPA.”…
We’ll deal with the DPA extract from the speech in a separate post.