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BRIBERY ALLEGATIONS IN MORE THAN ONE JURISDICTION: THE IMPORTANCE OF ENSURING A JOINED-UP DEFENCE AP

December 2018 - Crime. Legal Developments by Rahman Ravelli Solicitors.

More articles by this firm.

Aziz Rahman considers the Ericsson bribery investigation and outlines how best to respond if you are investigated by more than one law enforcement agency

The mobile telecoms giant Ericsson has been nearing are solution with the United States authorities over allegations of bribery.

Following a five-year investigation, the Swedish firm is setto reach a formal agreement with the US’ Department of Justice (DOJ) and its Securities and Exchange Commission (SEC).

Ericsson made the formal announcement of the imminent agreement after a period in which the company’s Chief Executive Borje Ekholm said it had “taken quite a lot of actions and done quite a lot of activities". These activities have included dismissing 50 people since it began its own investigations in 2013 into the wrongdoing.

Ericsson has not confirmed reports that suggested the allegations relate to bribery in Asia and Eastern Europe. But it has admitted that the investigation was “wide ranging” and emphasised that the company had since tightened its compliance controls.

Compliance

While Ericsson awaits its fate it will surely have noted that several Scandinavian telecoms companies have struggled with compliance issues in recent years. The most notable was Telia, which was fined almost $1billion in 2017 for bribery in Uzbekistan.

It may be unfair to single out Scandinavia’s telecoms industry as having a problem when it comes to compliance, even if a number of its companies have fallen foul of the authorities. But it may be worth pointing out that every company – regardless of the business sector and geographical area it operates in – faces challenges when it comes to bribery.

The main challenge is to make sure a company is functioning in a legally compliant manner. This can be more demanding than it may first appear. And it is something that Ericsson, Telia and a number of other Scandinavian telecoms companies may now wish they had mastered long before incidents of bribery came to light.

A programme of compliance that is devised carefully and properly enforced will massively reduce the chances of bribery being carried out in a company’s name. That is the case regardless of where a company is based, where it trades and the business sector it operates in. An appropriate compliance programme may not, it must be said, stop every possible case of bribery. But it will give a company the opportunity to identify any wrong doing and then devise the best possible response. And if a company can demonstrate that it did everything reasonably possible to be legally compliant, this will be taken into account by investigators and could result in a more lenient penalty.

As yet, we do not know the size of the penalty awaiting Ericsson. It may be determined by factors such as the extent of an anti-corruption culture in the workplace, the strength of its commitment to being aware of and tackling the bribery risks where it trades, the due diligence carried out on those working on its behalf and the procedures it had for wrongdoing to be reported.

Multi-agency Investigations

Ericsson and others have learned that bribery is high on the authorities’ agenda and that failings in compliance can bring serious problems.But compliance is, as we said, only the first challenge. Failing to meet that properly brings the second challenge: dealing with the authorities that investigate bribery and other forms of business crime. And this can be far from straight forward.

If reports are to be believed, the Ericsson case involves a Swedish company being investigated by two major United States enforcement agencies regarding allegations of activity in Asia and Europe. It is a clear example of the global nature of many companies’ business model. And with such a multinational way of working comes the possibility of being investigated by authorities in a number of countries if wrongdoing is suspected.

A company that is the subject of a multi-agency investigation faces a unique set of issues it needs to manage effectively. It has to take a “joined-up’’ approach to the way it responds to investigators and how it presents itself. Responses must be coordinated in a way that satisfies all investigating agencies and does not lead one or more of them to think they are receiving any less cooperation than another one. For example, if an agency in one country subpoenas documents the company under investigation has to then consider whether these should then be voluntarily disclosed to all the other agencies involved.

While it may not be possible to influence which particular agency takes precedence in a multi-agency investigation, a company that is being scrutinised does need to be represented by a legal team that knows the strengths, weaknesses and preferences of the various authorities involved.

If, for example, a corporate is investigated by both the DOJ and the UK’s Serious Fraud Office (SFO), the corporate’s legal team could weigh up various factors and the characteristics of each organisation in order to obtain the most favourable outcome. Issues such as the greater reach of the DOJ, its willingness to do a deal or the SFO’s use of deferred prosecution agreements – where prosecution is suspended subject to the investigated company meeting certain conditions – could all be considered by the corporate’s legal representatives when considering which agency they could “do business with’’and how they should conduct that business.

Opportunities

It may be the case that the course of an international,multi-agency investigation cannot be directly affected by the subject of the investigation. The agencies themselves are likely to cooperate and may come to an agreement over which of them is to be the lead investigator and bring the prosecution. But an informed, joined-up approach can give a company or individual under investigation the best possible chance to achieve the very best conclusion.

Much will depend on the circumstances of each individual case, as factors such as the type of illegal behaviour and where it has been committed may determine which agency heads an investigation. But the most favourable outcome to a multi-agency investigation can only be obtained by being aware of - and being able to take - the opportunities that present themselves in dealings with the various agencies.

There is arguably most potential for this if a company has conducted its own investigation and then self-reports the wrongdoing it has discovered. By doing this, the company can decide exactly how and when itself-reports and to which agency. Such decisions can give it a chance to set the agenda and deal with the agency it feels it can negotiate with most constructively.

But such an approach requires careful thought and execution,which is why any corporate in such a situation needs to be represented by those with all the relevant expertise and experience.