On 30th September, David Corker spoke about recent developments in financial crime at the Financial Services Investigations and Enforcement conference in London. Among the current trends identified by David was the ongoing disconnect in the way in which UK regulators and prosecutors seek to sanction corporate and individual criminality. The existence of this disconnect has become particularly stark as a result of the ongoing investigations by the FCA and SFO into alleged manipulation of the London Interbank Offered Rate (“LIBOR”) and Euro Interbank Offered Rate (EURIBOR).
The FCA has taken the lead with its investigations having already resulted in announcements of significant fines on financial institutions. To date Barclays Bank, UBS, RBS and ICAP have been fined £59.5m, £160m, £87.5m and £18m respectively for misconduct relating to LIBOR and EURIBOR. It is widely anticipated that a further fine of Rabobank will be announced by the FCA in the coming weeks.
The SFO has followed in the wake of the FCA probes with its investigation into the criminal conduct of individuals employed by those institutions whose alleged misconduct led to the above fines being levied. Three people have been charged by the SFO between June and July this year with offences of conspiracy to defraud in connection with the manipulation of LIBOR.
There has been no suggestion by the Director of the SFO, David Green QC, that any of the financial institutions implicated in this scandal might themselves be in jeopardy of prosecution. Indeed, if any such criminal proceedings were a possibility, the FCA would not have sanctioned anyone. The SFO’s apparent lack of interest in making a bank accountable is despite the fact that the FCA’s investigations concluded that manipulation of LIBOR was endemic and involved senior management at high levels.
This therefore goes to demonstrate the continuing reluctance on the part of UK prosecution agencies to prosecute corporate offenders. Prosecutions do not provide the authorities with the same certainty of outcome as that afforded by regulatory investigations leading to an agreed settlement. Whilst the legal difficulties in prosecuting a company should not be under-estimated, criminal prosecutions and convictions serve an important deterrence function and reflect the full range of criminality involved which will lead to increased public confidence in the criminal justice system.