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Ben Morgan at the Annual Anti Bribery & Corruption Forum

29 Hydref, 2015 | Areithiau

Ben Morgan, Joint Head of Bribery and Corruption, speaking at the Annual Anti Bribery & Corruption Forum

Good morning. In this session I’ve been asked to give an update on what the SFO is up to – our priorities; our current work; and our policies.

Our priorities are very simple, and enshrined in statute. Our job – the reason the UK has an SFO – is to investigate and prosecute the top tier of fraud, bribery and corruption.

In the past there has been no shortage of “clanging bells” in some of the media and blogosphere, quick to criticise the SFO. Some of that was fair enough; some no more than lazy recycling. While that’s in any case changed for the better, we’ve been quietly getting on with our priority – investigating and prosecuting that top tier of fraud, bribery and corruption. Let me tell you about our good news: how we’ve been hitting our priorities.

  • We’ve had the first contested convictions of individuals for foreign bribery that the UK has ever secured – last summer senior executives of Innospec received custodial sentences for their part in directing the bribery of Indonesian officials in the leaded fuel industry.
  • We’ve had the first contested convictions of a corporate for foreign bribery that the UK has ever secured – Smith & Ouzman, concerning that company’s security printing business in Africa; bribes again paid to public officials to win that work.
  • Our first conviction of individuals under the Bribery Act. That was the Sustainable Agro Energy case which, more importantly, secured three convictions of people behind a £23million investor fraud.
  • The conviction of Chris Ronnie, the former Chief Executive of JJB Sports, and two of his associates.
  • The conviction of Magnus Petersen in the Weavering Capital Hedge Fund fraud, who received a 13 year custodial sentence for his part in a fraud in which investors lost over half a billion pounds.
  • The conviction of Tom Hayes, a ringmaster in the manipulation of LIBOR, who received a 14 year custodial sentence.

There are a number of other convictions too, but that was a particularly resonant outcome as I’m sure everyone here appreciates. A case that in a former life the SFO declined to investigate, but which under the tenure of David Green QC, and led by my colleague Stuart Alford QC, we have taken on as we felt we must to fulfil our statutory role. The sentencing remarks in that case are significant, and you will no doubt have heard David Green’s own views: “The verdicts make the point that bankers are subject to the same standards of honesty as the rest of us”.

As you know, the LIBOR investigation continues, with the trial of the next tranche of some of the 13 charged individuals taking place in Southwark Crown Court as we speak. There is also another SFO trial taking place in Southwark at the moment, if you were to go down there. Three more begin in January, and the docket for the year ahead after that is well populated with SFO matters.

So we are delivering on our statutory priorities in terms of results, holding to account those who don’t play by the rules. As for our current work, that also shows that, day to day, we are hard at work targeting that top tier of work that we exist to tackle. For those who don’t follow our press releases, the list of live investigations in the public domain demonstrates that amply – GPT, Rolls Royce, GlaxoSmithKline, Alstom, Tesco, Quindell, Foreign Exchange manipulation, and so on. And remember, please, we do not announce all of our investigations. Perhaps some of you here are involved in other significant live cases with us and can add to the list mentally. Beyond that, I don’t intend to say any more about our live cases.

In terms of policy, I think the main thing people are interested in is how to go about engaging with us, and I will come on to that. But the precursor to that is the now familiar question of ‘why engage at all’? The question of whether the SFO is likely to find out about something. It seems to me things are moving on slightly there so I will touch on that first.

I spent 10 years in the private sector as a lawyer, concentrating in large part on Business Ethics and Anti-Corruption work. One thing I am absolutely certain of is that there are many examples of conduct that could be reported that those who know about it are sitting on, playing the odds game, reasoning that the SFO won’t find out. We work extremely hard to develop intelligence leads concerning allegations of corruption, and if it is appropriate to do so, the first thing you might know about our interest is when we secure search warrants and turn up at your personal or business premises at dawn to execute them. We are actively cultivating intelligence sources to understand situations in which that may be appropriate.

But balanced against the hard work we do to cultivate intelligence – and by the way, let me acknowledge with gratitude the quality of support we receive from the NCA when we work on these matters together – but balanced against that hard work is the easy stuff, the times whistleblowers just get in touch and tell us what has happened. We live in an increasingly mobilised society when it comes to speaking up, and that is clearly going to be an avenue of information that just gets more and more fertile. While we have no plans to seek legislation like that in the US that sees whistleblowers rewarded financially, we have excellent links with our US colleagues so are very likely to hear about anything that touches our jurisdiction that emerges from that route too. But my personal view is that the prevailing mood across civil society at the moment is one of transparency, and activism. Individuals bold enough to step up and do the right thing where the corporate or state apparatus above them won’t.

Whether to sit on a corruption issue or to come and talk to us about it has always been a question of playing the odds. And my point is those odds are changing. People are less and less willing to tolerate wrongdoing where they know about it, so we are more and more likely to find out. The reporting of such information is very easy – via the SFO confidential email address on our website and up on the screen, and all someone needs to do, as they have done in the past, is drop us a line, anonymously if they wish, and that’s it, the cat is out of the bag.

This leads me to the question of our policies around engaging with us which is the main thing I wanted to talk about this morning, and really what we’re talking about is how to resolve a problem with us, if that is the decision you make. There are three points for the time I have left.

  1. Your first decision is do you tell us, or do you wait for us to come to you? Let me make one thing very clear; if we come to you, you can assume we have one thing on our mind, and that is looking for evidence to establish whether we should prosecute. I was speaking with someone from the Defence community recently who said, “yes, but surely if the company has done everything else you might want – compensated those who deserve it, fired everyone involved, checked other business lines to ensure the same problem doesn’t exist there, enhanced their compliance programme, etc., then if the only thing they haven’t done is come and tell you, surely they are still in line for leniency – it is not too late to get a DPA rather than a trial, for example”. Now I don’t want to deal in absolutes here, and I am cautious of generalising, but actually I think my default reaction to that would be no, sorry, we came to you; you should have come to us if you wanted options. My own view is that a judge would find it hard to look at that situation and conclude that a DPA rather than a prosecution was in the interests of justice. Or put the other way around, if a company comes to us and alerts us to conduct about which we otherwise didn’t know, it is hard to see how it would be in the public interest to prosecute as opposed to seek to resolve the matter through a DPA. Each case will turn on its facts, but if you want a DPA coming to us before we come to you is a very good start.
  2. So let’s say you’ve decided to try to control your risk, and come and speak to us. The next question is “when?”. At what point in the cycle of your analysis of what has happened do you report? Again, it is impossible to generalise, but the short answer is probably ‘a lot sooner than you think’. I am told there has been quite a lot of commentary on this in the legal blogs recently – people saying “the SFO is telling you not to investigate, just put yourself in their hands, and you should reject that outright”. This is wrong, so let me explain, again, what we expect. We expect early engagement. We don’t want to hear from you every five minutes, and we accept you need enough time and space to have an initial look at an allegation that comes to your attention. But nor do we want the first time we hear from you to be at the end of a major internal investigation, months if not years after the conduct in question has surfaced, and in particular after multiple witnesses have been interviewed and re-interviewed extensively. There is a balance between those two extremes that you will have to judge for yourselves, but the nearer the beginning of your own investigative work you speak to us, the happier we will be.
  3. The next question once you have decided to speak to us, and chosen your moment to do so, is what happens next. This is where the issue of cooperation really kicks in. We want you to engage with us on how investigation of what has happened takes place, and to respond to our interests in doing so. We are already building a track record with some law firms of how to do this together, in a constructive way that enables us to investigate fairly in respect of all corporate and individual suspects who may be involved, but also that where appropriate is sympathetic to the commercial context of your business, and your need to progress your understanding of what has happened and act on it for reasons unconnected to us. I hope those who are engaged with us at the moment in this way would agree that while we put the integrity of our investigation first, we can be trusted to work with a genuinely cooperative company in a professional, mutually respectful manner. We have people who understand your world and speak your language.

 

Last point then, some examples of the kind of things we might want to discuss with you in terms of framing an investigation when you come and talk to us. These include:

 

  • Identifying relevant witnesses;
  • Agreeing the sequencing of interviewing them with us; (we may want to speak to certain people first and we’d like to discuss that with you).
  • Another example is disclosure to us of the factual elements of interviews you’ve already conducted. You had achoice about whether to conduct those interviews in such a way as to create claims to privilege, but also having done so, a choice whether to assert those claims over the factual content. The way you deal with both of these decisions is something we will consider carefully in the context of your cooperation.
  • Provision of relevant contemporary documentation is another example; in a timely manner, in a suitable digital format and arranged sensibly.
  • Alerting us to potentially relevant sources of documentation. If we are obviously interested in a particular issue and serve you with a formal or informal request for documents relating to it, if there is a search term or repository of information that you know about but we don’t – tell us. This is a really good example of pro-active cooperation, doing that bit more than just meeting your legal obligation to respond to a section 2 notice, for example. That is the difference between cooperating with us, in the way we want, and being investigated by us in the traditional way.
  • Another example is if you are interviewing someone, either before you’ve spoken to us or after, ask the right questions. I’ve seen transcripts of interviews conducted by law firms that are almost laughable in the way they build up to an issue, set up an obvious and crucial next question, but don’t ask it. If you purport to investigate, you need to do so in a properly inquisitional way.
  • And finally for now, the handling of data – an entire speech in itself really, but just think about how you do it, bearing in mind the kind of issues we will obviously have to understand – integrity of images, location of data, continuity of evidence, format in which it is supplied etc. These are all things where you have options in what you do, and the ability to make our work simpler. 

I don’t mean to use this speech to give chapter and verse on cooperation, so I will just say one more thing. Really, ask yourself “does what we are about to do make the SFO’s job easier, or harder?”, but remember, we will be asking the same question. We know you have choices, and the way you make them says a lot more to us about the extent to which you are really cooperating than any number of lawyers’ letters you send telling us you are. As I have said many times before, you don’t have to cooperate, but if you say you want to – back it up, really do it; don’t say one thing, but really work to a different agenda. We see straight through that and it doesn’t work. Pick your horse, and ride it.