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Cambridge Symposium 2017

4 Medi, 2017 | Areithiau

David Green CB QC, Director, at the Cambridge Symposium on Economic Crime 2017, Jesus College, Cambridge.

This is my 6th and final report to the Symposium as Director on the work of the SFO over the past year.

Firstly, let me address the theme of the symposium, which asks after the responsibility and capability of our economic crime-fighting institutions.

The SFO polices a discrete part of the waterfront. As an agency which both investigates and prosecutes, we are part of the pursue strand, and contribute to prevention through deterrence. Our role is to take on the most serious and complex cases of fraud and commercial bribery, which are best dealt with on the Roskill model.

An SFO case is not easily defined by reference to value, context or location, but you know it when you see it: Libor, Rolls-Royce, Tesco, Barclays, GSK, Airbus, BAT, Unaoil, Petrofac, and SIPPs and foreign investment fraud, by way of example.

What those investigations have in common is reflected in the reference in our take-on criteria to cases where the apparent criminality “undermines UK Plc commercial or financial interests in general or the City of London in particular”.

These investigations have common characteristics: complexity – factual, technical and legal; volume of data (Rolls-Royce involved 30 million documents); well-resourced suspects, corporate or human; cooperation or otherwise from those suspects; and an international, sometimes global scale.

That describes the area of responsibility occupied by the SFO. The theme further asks if we are up to the task. I hope that the rest of what I have to say will help you decide that.

By way of results over the past year, of most significance are the Deferred Prosecution Agreements (DPAs), in particular that with Rolls-Royce.

DPAs totalled some £640 million in financial penalties and costs. The jurisprudence has grown and the “offer” available to a company which cooperates and is open with us is now patent.

It is clear even for a company like Rolls-Royce, where bribery had occurred in seven jurisdictions in three of its business streams touching three decades. Although Rolls-Royce did not in fact self-report to the SFO, once approached by us the level of cooperation (described by Sir Brian Leveson as “full, unambiguous and proactive”) was remarkable, and he found that it properly put the company in the same position as if it had self-reported.

Both the SFO and later, in approving the SFO approach, the court, were also prepared to “step back” towards the end of the penalty calculation, and ensure that the end result reflected totality and was proportionate, in this case justifying a 50% discount. Even so, the penalty was equivalent to a years’ profits for Rolls-Royce.

Finally, the Rolls-Royce DPA was coordinated with linked enforcement actions in Brazil and the USA, showing that the SFO will use its good offices to achieve that coordinated settlement where such is possible.

DPAs have been a real success, enabling cooperative companies to account for conduct to a court in a transparent way without sustaining a criminal conviction, or the collateral damage (including disbarment), that may well follow. The company is able to draw a line under the past and radically to overhaul compliance and removing the board on whose watch the conduct took place.

Once a DPA is completed, the investigator/prosecutor can then move or concentrate resource on human suspects and on new investigations. It should never be thought that a DPA with a company somehow lets culpable former senior management off the hook: far from it.

On the more traditional fraud side, four defendants were convicted in Total Asset Finance, a £160m financing fraud.

Two Barclays traders were acquitted on a retrial following the conviction of four of their colleagues last summer. As is obvious, different juries have taken different views on Libor. Our job remains to present the strongest case on the available evidence on a scandal which undermined the global reputation of our banking sector.

Richard Kingston was convicted of destroying evidence relevant to an SFO investigation.

Guilty pleas have been entered in a number of other cases but are currently subject to reporting restrictions.

Overall, our conviction rate over the financial year 2016-17 was 89.5% by defendant and 100% by case.

Since last September, new investigations have been opened into 14 cases, 12 involving bribery and two fraud. Whilst we do not announce all our investigations for operational reasons, new cases include: Airbus, Ethical Forestry Limited, Rio Tinto, and Petrofac, Kellogg Brown & Root and ABB Ltd as spin offs from Unaoil.

43 defendants (both individuals and corporates) are currently charged and awaiting trial. These include four individuals and a corporate in the Barclays/ Qatar capital raising matter; three individuals in Tesco; the defendants in the Euribor strand of Libor; David Ames of the Harlequin Group; and five individuals in Solar Energy Savings Ltd.

With well-resourced suspects and our drive to obtain material using our Section 2 powers, our investigations spawn satellite litigation which we have to be ready to contest.

We successfully resisted judicial reviews in Unaoil and ENRC; we kept a £4m property freezing order in place in Saleh.

Most significantly, we successfully challenged claims of Legal Professional Privilege made by ENRC over certain categories of material generated in the course of their internal investigation. This reflects our determination to challenge such claims on the rare occasions where we consider them to be unjustified. We wait to see whether permission to appeal is given in that case.

Changes to the SFO’s internal governance recommended by HMCPSI in 2016 have been fully implemented: we now have a strategic board, and a Chief Operating Officer is in place.

We have also seen the emerging recognition that a solid spell at the SFO is a valuable addition to a CV for a lawyer, an accountant, an investigator or an IT expert with an appreciation of the importance of white collar crime and an eye to the future.

Internationally, the OECD Working Group on Bribery completed its Phase 4 evaluation of the UK’s implementation of the Convention on Combating Bribery of Foreign Public Officials in March this year. The report noted that the Roskill model is (and I quote)

“particularly valuable to the investigation and prosecution of complex economic and financial crime such as foreign bribery. Furthermore, the high priority given to foreign bribery cases and the pragmatic approach taken by the SFO with respect to many aspects of foreign bribery investigations and prosecutions has contributed to the significant increase in enforcement in the UK. This includes the development of an intelligence unit within the SFO, the effective approach taken regarding foreign bribery cases involving multiple jurisdictions, including reliance on Joint Investigation Teams, and the use of DPAs…..Finally, the SFO sets a good standard by publishing clear and comprehensive information about concluded cases”

Obviously, the SFO was delighted to receive such powerful independent endorsement of our work on foreign commercial bribery.

And what sort of value for money does the SFO provide to the British taxpayer?

Over the period April 2014 to date, the SFO has cost the taxpayer £216m.

Over the same period, we have generated £676m in DPA receipts and costs.

That is a net contribution of £460m to the Treasury over four years, equivalent to approximately £1m per member of SFO staff.

Looking ahead

In May, the Conservative manifesto proposed that the SFO be “incorporated” into the NCA. That term is capable of a range of meanings, from closer coordination through to break up of the Roskill model and outright merger.

We noted the reactions of commentators, City lawyers, the bar, academics, the OECD, interested journalists, and voices in public life to the proposal. We also noted subsequent events.

Fully recognising that the shape of law enforcement is always a matter for ministers, we await any proposals and the underlying evidence justifying them, and are aware that such decisions are in hand.

Externally, we fully support efforts to ensure greater coordination between the main players in economic crime law enforcement, the National Crime Agency, the City of London Police and HM Revenue and Customs, including the expansion of a central intelligence capability to help map the threat and an improved mechanism to ensure cases are correctly assigned, and that there are no “orphaned” cases.

As things stand, looking back over my time as DSFO, I am unaware of any case that the SFO should have taken on and did not, or did take on and should not have done.

The SFO is fully prepared to play our part, with our partners, in the implementation of any sound proposals leading to a better understanding of the threat and how it is better addressed by the various agencies facing it.

Whilst priorities will be for others to decide, I have no doubt that the investigation and prosecution of commercial bribery, corporate fraud and misconduct should and will remain a priority for UK law enforcement.

I say this because post Brexit, inward investment and economic prosperity will (as now) need the certainty of the rule of law, a level playing field, and properly functioning markets. Good corporate conduct is surely to be fostered and encouraged. Corruption and bribery abroad distorts markets, feeds injustice and benefits corrupt public officials at the expense of the poorest. Our Bribery Act, regarded as a gold standard internationally, is there to be enforced.

Ironically, I am just returned from an OECD-sponsored visit to Argentina, which involved meetings with Senators and Deputies, businessmen and academics to discuss Argentina’s need for Bribery Act-type legislation to bring her into line with the OECD Convention on Combating Bribery of Foreign Public Officials, of which she is a signatory.

And of course, if we take our foot off the pedal in relation to corporate crime and commercial bribery, others will fill the void. The Department of Justice in Washington is not shy about enforcing the Foreign Corrupt Practices Act against foreign companies. If we don’t, they will. Of the top 10 financial penalties exacted under the FCPA since 2008, seven were against non-American companies: French, German, British, Dutch and Israeli.

It is surely right that the UK should lead enforcement in relation to UK companies or companies with strong connections here. That demonstrates our commitment to the level playing field and ensures that hefty financial penalties go to UK public coffers rather than elsewhere.

We also await with interest the result of the Ministry of Justice’s call for evidence on the question of corporate criminal liability, particularly the possibility of creating a new offence of a company failing to prevent acts of economic crime by persons associated with it, on the Section 7 model.

As I said, this is my last address to the symposium as DSFO.

The SFO is confident, in good shape, attracting excellent staff, and well able to deal with the kind of case for which it was intended.

Thank you for your kind attention.