On 21 July the Serious Fraud Office issued guidance on the approach it takes
to overseas corruption, and the manner in which companies that self-report
issues may be dealt with.
Part of the genesis for the guidance was the groundbreaking settlement with
Balfour Beatty concluded in October 2008.This saw the SFO use civil recovery
powers as an alternative to criminal prosecution.
The guidance contains many features from the case, and confirms that the SFO
wants to take a more US-style approach to enforcement to avoid protracted, and
Central to the guidance is the need to satisfy the SFO that the company can
demonstrate a number of fundamentals: that it is committed to moving to a better
corporate culture; that it will work with the SFO in any criminal investigation;
that it will be prepared to discuss all forms of resolution including action
against individuals and external monitoring; that any resolution will satisfy
the public interest; and that the company will work with foreign agencies if a
global settlement if needed.
The guidance makes plain, however, that even if these issues are present, if
existing board members have participated in corrupt activity then it is likely
criminal prosecution will follow regardless.
Businesses will need to evaluate whether the incentives offered by the SFO
merit self-reporting a matter that might otherwise not come to light. While
nobody was prosecuted in connection with Balfour Beatty, US-style deferred
prosecutions often involve the company avoiding conviction, but at the expense
of company officers. Would that be acceptable to a UK company or fatal to
Offset against that is the fact that criminal prosecution can have a
catastrophic impact on the way a company is perceived, even if it is ultimately
Historically US corporates have been eager to take up the apparent leniency
offered by the Department of Justice. But there is increasing evidence this is
no longer the case due to the cost of compliance monitoring.
The SFO’s attempt to emulate the US may have come too late. In that event,
its continued inability to successfully prosecute complex corporate crime may
lead to very difficult days ahead.
Jeremy Summers is a partner in the business and regulatory investigations
department at Russell Jones & Walker
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