In Part II of their series of posts, “Identifying and Resolving Fraud and Corruption Cases in the US and the UK”, McGuireWoods Guest Bloggers Robert Plotkin and Kurt Wolfe focused on the issue of self reporting.  Incentives to self-report are a major part of effective anti-corruption enforcement in the US and, as Robert and Kurt identify, the Guidance issued by the Ministry of Justice attempts to lay the groundwork for a similar culture of self reporting in the UK.  But, absent the same freedom to engage in plea bargaining that its US counterpart, the Department of Justice, enjoys, does the Serious Fraud Office have the tools to incentivise self reporting sufficiently?

An article in the Financial Times earlier this month reported that the Director of the SFO, Richard Alderman, had confirmed that only ten companies had self-reported so far under the Bribery Act 2010.  One of the issues, particularly in light of continued criticism from senior English judges of attempts by prosecuting bodies to reach plea bargaining achievement is that there is little incentive to self report.  Richard Alderman is quoted as saying that:

“There’s not much incentive and I think that’s very unfortunate.”

Naturally, the SFO is disappointed.  As Alderman puts it: 

“I was expecting more and I’m sure we will get more...people are still unsure about the rules of this and they are conscious of the fact that judges are troubled by these issues.”

The uncertainty results in part to recent cases where judges have been critical of attempts by prosecution bodies to propose sentences to the Court, such as R v Dougall.   Dougall was initially required to serve a prison sentence despite the Serious Fraud Office having sought to have his sentence suspended due to Dougall’s assistance with their investigation and prosecutions. 

On appeal, Dougall’s sentence was suspended, but Lord Judge, the Lord Chief Justice, made it clear that the SFO had no power to negotiate plea bargains and that the Court would make its own assessment of the appropriate sentence in each case.  The potential for uncertainty is highlighted by the following remarks by Lord Judge CJ:

“... in our jurisdiction there is no principle of any legitimate expectation to be enjoyed by the first person to co-operate with an investigating authority, that he (or she) will be the beneficiary of the most favourable sentencing outcome. Such conduct will, of course, normally provide substantial mitigation. But like all features of mitigation it has to be seen in the overall context of the case, the Defendant's criminality and the level of his culpability, the circumstances in which he came to co-operate and the extent of his co-operation. The answer to the question, “who first co-operated?” does not answer the separate question of the appropriate level of sentence discount for that Defendant ...

... If it is appropriate for a sentence to be suspended, then that is appropriate: if it is not appropriate, then it is not. The implication of the submission is that unless this Appellant's sentence is suspended, cooperation from the criminal Defendants in the SOCPA [Serious Organised Crime and Police Act 2005] process will diminish virtually to extinction. It therefore follows that in a case where after making all due allowance for a guilty plea, and full co-operation by the Defendant in accordance with a SOCPA agreement a sentence of 12 months' imprisonment is appropriate, the sentence must be suspended. We disagree. No sentence follows more or less automatically. The suspended sentence should only be imposed where there are particular features of the Appellant's involvement in the crime, including the matters of mitigation, which justify it. That is fact specific.”

In light of these remarks, it is unsurprising that self reporting levels to date have been low. 

Ultimately, the decision to self report is likely to be a pragmatic one involving weighing up the likely consequences of self reporting against those of not doing so.  If little reliance can be placed on any agreement reached with the SFO regarding the likely level of penalty to be imposed, then the decision to self report becomes a much harder one.  Much will turn on the decision of an individual judge at a hearing sometime in the future; a level of uncertainty that will no doubt trouble most who consider self reporting.

If the UK is to have a climate of self reporting that functions as effectively as that is the US, then the SFO will need to be given tools equivalent to those of the DOJ so that it can respond appropriately to whistleblowing and self reporting.  Undoubtedly this will mean that traditional British attitudes to areas like plea bargaining would need to be reviewed, but this may be necessary if UK regulators are expected to step up to the plate and tackle corruption as aggressively as their US counterparts.