SFO & The Bribery Act: Sector Sweeps, Facilitation Payments & London Listed Companies

by Thomas Fox
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Ed. Note-today we post an article which was up on the site, thebriberyact.com. It discusses some recent remarks by SFO Director David Green. We are thankful to our colleagues Barry Vitou and Richard Kovalevsky QC for allowing us to post it. As always, the guys continue to ‘Shine a Light’.

News reaches us of a private small round table session put together by Transparency International and attended by some from the US FCPA white collar community (we understand Mark Mendelsohn attended) and our very own David Green CB QC, Director of the Serious Fraud Office.

Here’s the skinny based on our source.

The headline message promulgated by David Green will be not be news to those who have been following Mr. Green’s hard hitting public pronouncements in the UK (or reading this website) though as ever, it’s always important to be able to read between the lines.

The clue’s in the name

Mr. Green emphasized that the SFO is reverting to type and will focus on prosecution of Serious Fraud.

The advisory and guidance role of the SFO, something Mr. Green’s predecessor branched out into, was shuttered on the (not so) new Director’s arrival at the SFO over a year ago.  We understand that this was something that some hapless souls learnt the hard way when they stumbled into the SFO looking for some help!

Nevertheless, while we understand the rationale we think it’s a shame the SFO is no longer extending the olive branch of advice and guidance.

It seemed to us that there was something to be gained from a channel of communication between corporations and the SFO outside of the usual dynamic of prosecutor and prosecuted.  The DoJ engage in something along these lines with their Opinion Release procedure (which to be fair the SFO has never offered).  However, we digress…

Facilitation payment Guidance tossed in the garbage

Mr. Green also publicized his junking of the facilitation payment guidance and the presumption against prosecution for Self Reporting companies.

It’s fair to say that many have, in our view, misconstrued this to mean that Civil Recovery Orders are off the table and that we are now back to ‘cat and mouse’ and the binary decision of whether to prosecute or not.  This is silly, in particular when one of the first things Mr. Green did on arrival at the SFO was to approve a civil recovery order in respect of Oxford University Press.

Listen carefully.  Mr Green says that a true Self Report (namely a corporate telling the SFO something that it does not already know or would not find out about, but for the Self Report) will weigh very heavily in the balance when weighing the public interest about whether or not to prosecute.

In our view Civil Recovery Orders (which Oxford University Press should demonstrate anyway) are not dead and buried – though that does not fit the narrative of those whose marketing relies on scaring potential customers.

As we recently reported the publication of the guidance around Civil Recovery Orders was not for nothing.  Cue, Civil Recovery Orders still very firmly on the menu – but only in the right circumstances.

In a hurry but not going to rush

At the US meeting Mr. Green signaled a desire to bring headline cases and as soon as possible.  The truth is that this is not just a desire but a political reality.  Mr. Green is on a 4 year contract at the SFO and is already a quarter of the way through his tenure.

An extra credit line from Whitehall of nearly £4 million last year to deal with LIBOR (and no doubt the same again this year) means that, like it or not (and regardless of what might be said publicly), the political paymasters will be looking for some crowd pleasing banker bashing headline prosecutions in short order.

This will be easier said than done in a legal system where, unlike the US, there is (thank goodness at least for the forseeable future) NO concept of Respondent Superior.

Sweeps

In other news we understand Mr. Green conveyed that he is attracted to sector sweeps with customs duties (in other words what many would understand to be facilitation payments) a possible area of attention.

Frankly sector sweeps MUST be the way to go in any sensible SFO strategy.  Otherwise known as ‘pulling the thread’ the chances are that a corruption investigation will open new lines of enquiry.  As to the issue of facilitation payments, they are a thorny topic but under UK law they are illegal.

London listed? Mind your backs…

Finally we understand David Green explained, broadly speaking, that companies listed in London in his view fall under the regulatory purview of the Serious Fraud Office.  Given the importance of the London markets to the UK economy this is hardly a surprise.

While, some may express consternation by this given the Ministry of Justice guidance (which said that broadly speaking a London listing on its own would not be enough to trigger the jurisdiction of the Bribery Act) we know that privately it has ALWAYS been the SFO view that there WILL almost ALWAYS be additional connections with the UK which give it jurisdiction.  Ultimately this will be a question for the courts if and when it is tested.

The proof of the pudding

Of course the proof of the pudding will be in the eating.  Something David Green QC is only too well aware of.  Expect Mr. Green to act.

The SFO story has now moved on.  Today the real question in the wake of the numerous recently kicked off investigations is:

Has the SFO bitten off more than it can chew?

The answer remains the same, the proof of the pudding will be in the eating.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Thomas Fox, Compliance Evangelist | Attorney Advertising

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