We have reported previously that the UK’s Serious Fraud Office (SFO) has confirmed its commitment to prosecuting bribery and corruption and that although there is yet to be a “big case” under the UK Bribery Act 2010, the SFO are busy investigating companies it suspects may have broken the law. As we approach the end of 2014, it is interesting to reflect on what we can expect over the coming year.
Following a statement made by the UK Home Secretary Theresa May, there has been talk about the responsibilities of the SFO being transferred to the National Crime Agency (NCA), established in October 2013 to target the criminals and groups posing the biggest risks to the UK. This would mean that all white-collar crime was under the same control, removing the split where the budget of the NCA is controlled by the Home Office controls but the budget of the SFO is controlled by the attorney-general’s office. The chairman of the SFO, David Green CB QC’s opinion is that this is “just not sensible”, given the upheaval and uncertainty that this would bring, with no guarantee of better results, and that there is a need for the regulator of top end bribery to remain independent from the government and have these types of offences as its top priority.
There has been some concern that the lack of enforcement under the Bribery Act by the SFO could be due to the fact that the SFO’s budget was cut from £52million in 2008 to £32million in 2014. The SFO have dealt with this by using blockbuster or ring-fenced funding to ensure its most expensive investigations can continue. This allows the SFO to apply for additional funds for a specific investigation if it is likely that the investigation will cost more than 10 per cent of its annual budget. The SFO recently applied for 75% blockbuster funding for 2015, amounting to £26.5 million, so that it can continue probes into key cases including the allegations that Rolls Royce have engaged in corruption overseas. David Green CB QC says that “this arrangement recognises that the SFO is demand-led and honours the pledge that on my watch the SFO will never turn down any investigation simply on grounds of cost”. Some commentators have taken the view that the SFO having to ask for more money to continue its current investigations may mean that it is going to be difficult for the SFO to take on new work and that Ministers should reconsider the amount of funding provided to the SFO.
There appears to be cross party support for the SFO’s proposals for a similar offence to Section 7 of the Bribery Act (the corporate offence of failing to prevent bribery by associated persons) to be introduced to make it an offence for organisations to fail to prevent “acts of financial crime” by associated persons, including fraud and money laundering, for which it would be a defence to have adequate procedures in place to prevent such crime. Such a provision would make it easier for the SFO to take action against companies, rather than just the individuals committing these crimes, for their failure to prevent such crimes, as it would remove the requirements under the current law for the SFO to prove that the “directing mind and will” of the organisation was involved in the crime, a high test to meet. Such a provision would require all companies to review and probably enhance the financial crime controls they already have in place, including those implemented to meet the requirements of Section 7 of the Bribery Act. As part of this, David Green CB QC intends to add Section 7 as a mandatory exclusion under public procurement rules, so that companies convicted of failing to prevent financial crime (including bribery) would automatically be prohibited from public procurement, something he hopes will encourage organisations to take steps to implement adequate procedures.
David Green CB QC has said that the SFO is “handling the most demanding caseload [the SFO] has ever shouldered”. We have reported on a number of these ongoing cases previously and have also reported on the introduction of deferred prosecution agreements (DPAs). The SFO have yet to enter into a DPA but it is suspected that they may be used as part of the investigations into overseas corruption by GlaxoSmithKline and Rolls Royce. It will be interesting to see whether the use of DPAs encourages more companies to self-report bribery and corruption to the SFO, something that the SFO encourage but make clear that it will not lead to immunity from prosecution and will only be a “relevant consideration” for the SFO when deciding whether to prosecute.
The years ahead looks set to be an interesting one.