On 6 August 2019, the SFO published "corporate co-operation guidance" contained within its Operational Handbook. The guidance sets out the matters that the SFO may take into account when assessing the extent of co-operation from business entities when considering charging decisions and/or a deferred prosecution agreement.
The guidance will be welcomed by companies and practitioners, but it does raise a number of questions in relation to internal investigations.
What does co-operation mean?
The guidance makes it clear that simply complying with legal requirements will not be sufficient to demonstrate co-operation. It states:
"Co-operation means providing assistance to the SFO that goes above and beyond what the law requires. It includes: identifying suspected wrongdoing and criminal conduct together with the people responsible, regardless of their seniority or position in the organisation; reporting this to the SFO within a reasonable time of the suspicions coming to light; and preserving available evidence and providing it promptly in an evidentially sound format."
It goes on to say that:
"genuine co-operation is inconsistent with: protecting individuals or unjustifiably blaming others; putting subjects on notice and creating a danger of tampering with evidence or testimony; silence about selected issues; and tactical delay or information overload."
In contrast to the position previously adopted by the SFO which criticised companies that sought to undertake internal investigations, on the basis that it risked (amongst other things) destroying the evidence needed to put wrongdoers behind bars, the new guidance clearly envisages internal investigations being undertaken by companies. It suggests, however, that co-operation in this context will include:
- identifying relevant witnesses;
- disclosing witness accounts and the documents shown to them;
- making witnesses available for interview when requested; and
- providing copies of any reports produced following an internal investigation, including the source documents.
Legal professional privilege
It is accepted that organisations may not wish to waive privilege and disclose legal advice, but the guidance says that the "SFO nonetheless has obligations to prospective individual defendants with respect to disclosable material" and stresses that the existence of a valid privilege claim must be "properly established".
The guidance also states:
"During an investigation if an organisation claims privilege, it will be expected to provide confirmation by independent counsel that the material in question is privileged."
Preserving and providing material
Although the SFO guidance is not mandatory and it makes it clear that decisions in each case will turn upon the particular facts and circumstances of each case, the expectations of the SFO in terms of preserving and providing material, including digital evidence and devices, hard copy or physical evidence, financial records, industry and background information and interactions with individuals, is set out in some detail in the guidance and if companies wish to self-report and seek to co-operate with the SFO, they will need to have paid due regard to what the SFO considers to be full and proper co-operation.
The SFO guidance provides helpful assistance to companies who are considering whether to self-report suspected wrongdoing. There are, however, a number of unanswered questions arising from the guidance where further clarity would be of assistance. In particular, in relation to internal investigations, corporates will very often lack a full understanding of the extent of any wrongdoing until they have undertaken a full and proper analysis of the facts and spoken to relevant individuals. In this regard, the suggestion, in the guidance, that in order to "avoid prejudice to an investigation, a company should consult, in a timely way with the SFO before interviewing potential witnesses or suspects, taking personnel HR actions or taking other overt steps" is unrealistic in circumstances where the precise extent of any conduct may not have been established and where urgent steps may need to be taken from a personnel/HR/risk perspective to protect the business and/or third parties from ongoing harm or to provide compensation. It is to be hoped that this area will be further clarified by the SFO.