Enforcing the UK Bribery Act – The UK Serious Fraud Office’s Perspective
17 Tachwedd, 2014 | Areithiau
Stuart Alford QC, Joint Head of Fraud, at the Anti-Corruption in Oil & Gas Conference 2014.
Let me start with the basics: what is the Serious Fraud Office and what is it not:
The SFO is unique amongst the UK’s criminal law enforcement agencies, in that it both investigates and prosecutes its cases. This feature has not arisen by accident or happenstance, it is central to the purpose for which the office was established and it has a meaningful effect upon the way it does its work.
The model by which the SFO works was recommended in a report in 1986, following a committee enquiry chaired by Lord Roskill. His recommendation was that serious and complex fraud (and now bribery and corruption as well) should be investigated and prosecuted by a multi-disciplinary office: combining forensic investigators, accountants, lawyers, computer specialists, counsel working together from the start of a case, right through investigation and prosecution. This model is intended to ensure that the core skills of forensic analysis and legal strategy are deployed together, in unison, throughout the life cycle of a case.
This was the model which Lord Roskill advocated in 1986 and the SFO believes it remains the right model for today.
The SFO currently has 5 operational divisions made up of case teams structured around this model: three handling Fraud and two handling Bribery & Corruption cases. In addition to those 5 case work divisions, there are also specialist divisions handling intelligence, international assistance and proceeds of crime or asset forfeiture.
The SFO is the country’s lead agency on Bribery & Corruption, and it works alongside the National Crime Agency, as well as individual police forces (in particular the City of London police).
The SFO is independent of government; in the same way that the Director of Public Prosecutions and the Crown Prosecution Service is independent. Both the DPP, heading the CPS and the Director of the Serious Fraud Office are superintended, but not directed, by the Attorney General. This is an important distinction to maintain. The type of cases which the SFO takes on often involve nationally, internationally and strategically important companies. One only has to look at the current list of cases which the SFO has under investigation to see what I mean by that: Rolls-Royce; GlaxoSmithKline; Tesco; Barclays Bank; G4S and Serco. This is the kind of work the SFO was set up to do, and being able to demonstrate that it is work undertaken independent of government is extremely important for the basic rule of law and for the integrity of the politicians and lawyers who may become involved in the issues.
The reason for taking you through the detail of this background is to emphasise one very important fact. The SFO is an investigator and a prosecutor. It is not an educator or an advisor. It does not and cannot provide a blueprint for avoiding prosecution; any more than your local police force would be willing to give you advice on how to avoid being arrested for a crime in your local area.
All that said, the 2010 Bribery Act was a very important piece of legislation; when it came into force in July 2011, it represented a major commitment to ethical corporate culture. The legal framework in the Act, by which conduct is judged, was new, however, and it did not have the benefit of long-standing court authorities by which to interpret the provisions of the Act.
As with other areas of criminal law and procedure, the Director of Public Prosecutions and the Director of the Serious Fraud Office have provided Guidance on the Act and on the principles by which those two offices will make decisions on when and whether to prosecute. This Guidance was reissued in October 2012, following the appointment of the then new Director of the SFO, David Green CB QC.
I don’t intend to rehearse that Guidance to you now – it is freely available on the internet, including on the SFO website, and you can read and enjoy it in the comfort of your own home or office.
When considering that Guidance, you will also want to have regard to the other set of principles which guides the prosecutors’ decision-making: that is the Code for Crown Prosecutors. This Code is followed by SFO prosecutors in exactly the same way that it is followed by CPS prosecutors (who deal with the bulk of criminal cases in this country). If you want to understand how an SFO prosecutor evaluates the decision as to whether or not to prosecute a case, this Code is where you will find it.
It is not uncommon for the office to be asked ‘why have there been no Bribery Act prosecutions; is this Act really being taken seriously?’ There may be many answers to that, but for today there are three points I would make:
1. there have been Bribery Act prosecutions: the first SFO prosecution is at court, in front of a jury at Southwark Crown Court as I speak. It is the ‘Sustainable AgroEnergy ‘Bio Fuel’ case and it includes charges under the 2010 Bribery Act, as part of a wider fraud case;
2. the Bribery Act is not retrospective. Therefore, for conduct to be criminal under the Act it has to have been undertaken after 1 July 2011. Often conduct of this type takes some time to surface; and, once it does, it takes time to investigate. SFO cases must, by definition, be serious or complex and they very often include international parties and conduct. While the SFO is always striving to investigate criminal conduct in as timely a way as possible, these types of cases will take some time to move through the process of investigation and on to prosecution;
3. the Bribery Act represented a very significant shift in setting the standards for the more ethical corporate culture I referred to a moment ago. When one looks at legislation of this kind, both here and abroad, one can see that a flow of prosecutions can take time to develop. We only have to look at the 1977 Foreign Corrupt Practices Act in the USA, to see that it took many years for that work to build up a head of steam, and not really until the turn of the century did we start to see the level of prosecutions that we do now.
When one reflects on these points, I believe that the record in respect of the Bribery Act is not nearly as troubling as some people make out. This is a piece of legislation which is taken very seriously, and you will start to see an increase in the number of prosecutions: both from the SFO and other agencies.
In addition to Bribery Act coming into force in 2011, the other significant legislative development of the past few years was the introduction of the Deferred Prosecution Agreement, in February this year.
The conference programme speaks of “Introducing DPAs to the UK…” The implication being, I think, that this is an import from the US system, where DPAs have been a feature of their criminal justice process since the early 1990s.
In fact, the two systems have some very important differences. Perhaps the most obvious being that the UK system requires judicial oversight and approval. The significance of this can be seen throughout the process. If in any given case a DPA is going to work, it requires both the prosecution and the defence to be in agreement over its terms and its justification. For an adversarial system like ours, that is a major shift in approach. If the prosecution and the defence are not in agreement over the terms of the DPA, a judge to whom this is presented will be in no position to give approval and finality to it. Although we have not yet seen how the judiciary will approach the process of approval of a DPA, I certainly don’t believe it will be a ‘rubber-stamp’. Judges will want to properly scrutinise both the evidence which justifies the prosecution and the circumstances which justify the deferment.
Earlier I referred to the Guidance issued jointly by the DPP and the Director of the SFO on the Bribery Act. They have teamed up again to publish a Deferred Prosecution Agreements Code of Practice, in February this year. Again, I don’t intend to take you through that document now; it is available for you to read at your leisure. There is considerable detail within the Code, covering the process from the early decisions on whether a DPA is appropriate, right through the court process, and on into matters such as variation, breach and discontinuance. There are two points I think are worth drawing out and underlining here:
1. at the heart of deciding if a DPA is the right route to take in a corporate case, the SFO will be considering the extent of the cooperation provided to it. This is clear from the Code and the Director has given numerous speeches on this point, saying that, for him, the right case for a DPA will depend on three things: “cooperation, cooperation and cooperation”. What that cooperation looks like will differ from case to case, but it may well include proactive, self-reporting; speedy access to potential witnesses (prior to them being interviewed within an internal investigation); broad, less restrictive consideration of material for privilege. We recognise that privilege, when applied appropriately, is an important and fundamental protection. However, we do see occasions (perhaps too many), when privilege is asserted too readily or wrongly; asserted over the underlying factual material or a witness’s first account. We certainly wouldn’t hold against a party any decision to properly claim privilege; but what better way to demonstrate ‘cooperation’ than by an open and frank view of privilege claims;
2. the second point I think I should emphasise, acts as a balance to the first. If the idea of all that cooperation feels uncomfortable, remember two things: first, any decision the SFO makes about the criminality in a case must be compliant with the Code for Crown Prosecutors. In other words, the threshold by which criminal conduct is tested, is no different in a DPA case as it is in any criminal prosecution. Although that decision may be made earlier than in a regular prosecution, it still applies the same ‘evidential test’; second, any agreement reached between the parties must be scrutinised and endorsed by a judge. As I have said, I believe judges will take their responsibilities in this regard very seriously indeed.
The DPA is not a short-cut to corporate prosecutions. They will not be appropriate in every case and the SFO remains, first and foremost, a prosecution agency. However, there will clearly be some cases where a DPA provides a useful additional tool in the prosecutors’ tool-kit.