First Unexplained Wealth Orders Secured
Unexplained Wealth Orders (UWOs) came into force in the UK on 31 January 2018 under the Criminal Finances Act 2017 and have the potential to be a powerful tool for the UK enforcement authorities. If served on an individual (or a company / trust linked to an individual) who is a Politically Exposed Person (PEP) or is suspected of being involved in serious crime in the UK or elsewhere, a UWO requires them to provide information about how they acquired the asset(s) (worth over £50,000) referred to within the order. Pending the response, the authorities may apply for a freezing order over the asset(s) to prevent the individual from dealing with or disposing of it. If the individual fails to provide an explanation within a given timeframe, or provides unsatisfactory evidence, it will raise a presumption that the asset(s) constitutes recoverable property for the purposes of a civil recovery order.
The first UWO was secured by the National Crime Agency (NCA) on 28 February 2018 against UK properties (value circa £22m) believed to belong to a politician from central Asia. The two properties, one in London and one in the south-east of England are also subject to a freezing order.
It remains to be seen whether UWOs will be used to target alleged corruption in London in particular, but the NCA have certainly put down a marker. More recently, UWOs have been suggested as a possible response against Russia in relation to the Salisbury poisoning, targeting those with property in London and with close links to the Kremlin. The UK authorities will, however, have to be careful to ensure that there can be no suggestion that UWOs are being used for political gain.
SFO Charges Barclays PLC Over 2008 Qatar Loan
On 12 February 2018 the SFO charged Barclays Bank PLC with unlawful financial assistance in relation to a loan made to Qatar Holdings LLC in November 2008.
The SFO alleges that Barclays made a loan to Qatar Holdings for $3 billion, with the intention that the money be used to purchase shares in Barclays, helping to prop up the bank's share value at the start of the financial crash. The SFO opened its investigation into the Qatar loan in August 2012 and brought charges against Barclays' holding company in June 2017. At that time the SFO also charged four former Barclays bankers, including the former Chief Executive John Varley, with offences relating to the bank's £11.8 billion emergency fundraising activities in 2008, including the Qatar loan. These were the first criminal charges to be brought against a British bank and its employees for actions taken during the crisis, and have been viewed by some as the most significant charging decisions taken by the SFO.
The new charge is significant because it is being brought against Barclays' operating arm, as opposed to its holding company. This means that if found guilty, the bank could face regulatory penalties from the Financial Conduct Authority and the Prudential Regulation Authority, including withdrawal of its banking licenses. Barclays denies the charge and the trial is likely to be heard in 2019.
First Trial and Conviction for Failing to Prevent Bribery Offence: R v Skansen Interiors Limited
This is the first conviction for an offence under Section 7 of the Bribery Act 2010 (failing to prevent bribery). Skansen Interiors Limited SIL) had contested the charge on the basis that the company had adequate procedures in place to prevent bribery but this was rejected by the jury.
The Crown Prosecution Service (CPS) has been criticised for not having pursued an alternative disposal such as a Deferred Prosecution Agreement. There are a number of reasons why, based on what has been published about the facts of the case, an alternative disposal may have been appropriate. SIL is a small/medium enterprisewith 30 employees and when the bribery was discovered by the incoming CEO a number of steps were taken. An internal investigation was undertaken to establish the extent of any wrongdoing; Bribery Act compliance procedures were implemented; those involved in the misconduct were dismissed; the matter was reported to the City of London Police; and a suspicious activity report was made to the NCA. Despite these positive steps taken by the company and despite the fact that SIL had no assets, they were not invited to enter into a Deferred Prosecution Agreement. The sentence which the company received, an absolute discharge, is a reflection of the severity with which the court viewed this case. Indeed, the Judge questioned why the prosecution was brought against the company when no financial penalty could be imposed due to their financial position.
The CPS maintains that it was in the public interest to prosecute SIL so that a message was sent to others in the industry. The decision to prosecute may, however, have wider implications by discouraging companies from self-reporting in similar circumstances when they do not consider that doing so will result in a better outcome.
On 23 April 2018 one of the company's directors and another man were imprisoned for 12 and 20 months and disqualified from being company directors for six and seven years respectively. Both had pleaded guilty to bribery offences.