Damage Limitation

Rahman Ravelli | View firm profile

right the wrongs and minimising the damage when your company is accused of
business crime.

When any
company is accused of business crime, it faces major decisions.

It must
decide what legal support, if any, to offer to those who are accused of the
wrongdoing. But most importantly, the company has to do what it can to ensure
its continued existence. Whether the company is now being run by a new regime
or by those untainted by the allegations, those in charge must look forward and
plan ahead.


The Serious
Fraud Office’s (SFO) announcement that it is investigating alleged “fraud,
bribery and corruption’’ in Airbus’ use of overseas agents is the latest in a
series of big name investigations in recent years. Airbus is unlikely to be the
last major corporation investigated and, like some before it, it may wish it
had devoted more time to compliance to prevent such problems.

But the
immediate problem it faces is managing the problem. Observers believe the
Airbus investigation could take four years or more. No company can stand still
for four years: those in charge have to develop a strategy to deal with the
legal problems in a way that allows it to keep functioning and even expanding.


Having represented
individuals and corporates in high-profile corruption allegations over the years,
we believe that some crucial decisions have to be taken by organisations at the
centre of such allegations.

Many investigations
are international. Any company accused of business crime may need legal
representation from a firm that has experience of negotiating with many
countries’ agencies and police forces, a network of international contacts and
the resources and expertise to prepare a defence case that goes beyond borders
and jurisdictions.

Closer to
home, anyone running a company that is facing corruption allegations – or
suspects corruption is being carried out in its name – must be able to make a
reasoned, accurate assessment of the possible problems it is facing. Only then
can a company know whether it has legal issues that it should self report and be
able to assess the possibility of securing a deferred prosecution agreement
(DPA). Again, these are issues where legal advice is valuable.

assessment will also, if conducted thoroughly, pin point the people whose
ignorance of – or blatant disregard for – the law have led to the situation the
company finds itself in.


The SFO has recently secured its second Deferred
Prosecution Agreement (DPA). Introduced in the Crime and Courts Act 2013, DPA’s
allow a prosecution to be suspended for a defined period provided the organisation
meets certain conditions.

The Code of Practice for DPA’s, issued by the
Director of Public Prosecutions and the SFO Director David Green, emphasises
that they are a discretionary alternative to prosecution. It requires the
authorities to consider whether a DPA is in the public interest, taking into
account factors such as how serious the offence is, the value of the gains or
losses and the risk of harm to others or market stability.


According to the Code, the authorities can also
consider whether a civil recovery order is appropriate under the Proceeds of
Crime Act 2002. But when it comes to making such decisions, the authorities
will take a number of factors into account:

* Does the company have a history of wrongdoing?

* Is the alleged wrongdoing an established part
of the company’s business practice?

* Does the company have an effective compliance
programme in place to prevent or at least identify wrongdoing?

* Has the company already been subject to
warnings or penalties? And did it comply with them?

* How much time had lapsed between the
wrongdoing taking place and it being reported? And was it reported fully and

Such questions will be at the heart of the
authorities’ decision regarding whether to enter into a DPA. But they can also
be seen as a useful check list for anyone looking to put right the wrongs that led
to a company’s legal difficulties.


With the right legal advice, a company can be proactive,
cooperative with investigators and seen to be taking remedial action; whether
it be compensating those affected, disciplining or dismissing those who are to
blame or doing whatever it can to make the company, as the Code says,
“effectively a different entity from that which committed the offences’’.

Such activities can include introducing a
tougher policy on hospitality, creating procedures for due diligence, revising
management systems and identifying – and acting on – areas where there is the
greatest corruption risk.

These activities are no guarantee that a DPA
will be offered by the SFO or any other authority. The Code of Practice makes
it clear that criminal proceedings can be brought at any time during
discussions regarding a DPA if those under investigation are found to have
supplied inaccurate or misleading information – and any information that has
been supplied during DPA discussions can be used in a prosecution.

But by using the DPA Code of Practice as a
yardstick and taking appropriate legal advice, companies that have found
themselves in legal difficulties can navigate a path that helps put them back
on the right track with minimal damage.

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