The Sfo, The Future And Securing A Dpa

Now that the SFO’s future appears assured, Aziz Rahman
considers what this means for those seeking deferred prosecution agreements.

After what appeared to be a far from certain future, the Serious
Fraud Office (SFO) looks to be safe.

Prime Minister Theresa May’s pre-election pledge to abolish
the SFO seems to have been quietly dropped. In fact, its future looks decidedly
rosier now that the Solicitor General has praised both its work and success
rate.

Speaking at the Cambridge Symposium on Economic Crime,
Robert Buckland MP said the SFO was continuing to deal with high profile cases
and praised the deferred prosecution agreement with Rolls-Royce. He also
highlighted the SFO’s 89% conviction rate.

The fact that its work and achievements are being complimented
by the Solicitor General must be seen as an acceptance of its value as an
independent investigator and prosecutor. And, therefore, a sign that the SFO is
going to be here for the foreseeable future.

Forward

But what does that tell us about the SFO’s role in the
future? And what will that role mean for those who are investigated by it?

Going forward, the SFO has many tools at its disposal;
including legislation which has, in recent years, given it far greater scope to
tackle business crime.

Legislation to tackle bribery, money laundering and fraud
have all been introduced to address specific white-collar crime issues. The
Bribery Act specifically has made corporates criminally liable while the
introduction of unexplained wealth orders (UWO’s) is set to further boost the
authorities’ powers regarding civil recovery.

Perhaps the main change that we may notice regarding the SFO
is in its use of deferred prosecution agreements (DPA’s).

DPA’s

A DPA is an agreement reached between a prosecutor and an
organisation which could be prosecuted. It is finalised under the supervision
of a judge. The DPA allows a prosecution to be suspended provided that the
organisation meets certain specified conditions.

The benefit for a corporate is that a DPA gives it a chance
to make full reparation – essentially, put right the wrongs – without the reputational or financial damage
that could result from a conviction.

DPA’s were introduced on 24 February 2014, under the
provisions of Schedule 17 of the Crime and Courts Act 2013. They are available
to the Crown Prosecution Service and the SFO, who can see them as a time and
cost-saving alternative to a lengthy, complex trial.

But a company is only likely to be invited to enter DPA negotiations
if it has assisted the SFO investigation. If the negotiations go ahead, the
company agrees to a number of terms, such as accepting a financial penalty,
paying compensation and, when necessary, co-operating with future prosecutions
of individuals.

So far, there have only been four DPA’s. But that number is
likely to increase. This is because the SFO is now used to having the DPA as an
option. It is also because many long-running investigations will near a
conclusion, some of which the SFO will deem suitable for a DPA.

If DPA’s are to become more commonplace, therefore, a
corporate seeking one needs to know the best way to approach the SFO if they
believe wrongdoing has been committed.

While the circumstances may vary from case to case, a number
of factors will boost a corporate’s chances of obtaining a DPA:

Self-reporting

If a company takes it upon itself to report the wrongdoing that
it has committed (or has been committed in its name), it will enhance the
chances of a DPA being granted. In the second DPA to be granted in the UK – the
case known as XYZ – the judge cited the promptness of the self-reporting as
being in the interests of justice and went as far as to say “Openness must be
rewarded and seen to be worthwhile.’’

What must always be borne in mind, however, is that
self-reporting is something that has to be done carefully and appropriately. It
is a major step and anyone considering it will need advice from those with both
the relevant legal expertise and extensive experience of dealing with the SFO.

Cooperation

A company failing to self-report the wrongdoing may reduce
its chances of obtaining a DPA. But it will not make it impossible. In arguably
the UK’s most high-profile DPA, Rolls-Royce did not report its extensive use of
bribery in far-flung countries. But once the SFO was aware of the bribery, the
firm went to great lengths to cooperate with it; even to the point of bringing
to the authorities’ attention wrongdoing that they were not already aware of.
This cooperation was highlighted by the judge as a factor in the DPA being
granted.

It is vitally important, however, that any offer of
cooperation is not just offered to the SFO when it looks like you are about to
be charged.  The judge in the XYZ case
stated clearly that if those under investigation did not offer openness when
investigations were underway then they can expect little or no reward; meaning
no DPA. The cooperation has to be there from Day One and be genuine and
ongoing. By appointing a solicitor with experience and expertise in dealing
with the SFO, you can be advised on exactly how to cooperate and what it
entails.

Reform

When Standard Bank obtained the UK’s first DPA, it did so
having immediately reported its wrongdoing and taken a strong, proactive
approach to disclosing everything it could. It acted swiftly to put right the
problems. All DPA’s that have been granted so far have been made after the
corporates under investigation removed senior managers who were either
implicated in the wrongdoing or should have been aware of it.

Speaking at the same symposium as the Solicitor General, the
SFO’s General Counsel, Alun Milford, said:

“Deferred prosecution agreements are pragmatic devices aimed
first at incentivising openness leading to the uncovering of financial crimes
and secondly at allowing companies to account to a court for those crimes in a
way that does not also punish its innocent employees, suppliers and the local
community in which it operates.’’

His argument was that companies are best served by
self-reporting and the introduction of fit-for-purpose compliance structures. As the SFO looks towards its future and its
use of DPA’s, that is what the SFO will be seeking from those looking to avoid
prosecution.

The challenge for corporates wanting a DPA from the newly-secure
SFO is to make sure they meet that criteria.

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