2015 – a crucial year for the Serious Fraud Office?
It is a “pivotal time” for the Serious Fraud Office (“SFO”) according to its Director, David Green QC (“Green”).
In an article in The Times (5 February 2015), Green alleged that companies are impeding SFO investigations by using the privilege of communication with lawyers to their benefit. He was referring to both the advice of in-house lawyers during transactions that the SFO are now investigating as well as the privilege that attaches to the work product created by both in-house and external lawyers when they conduct an internal investigation.
Green stated that the SFO “is prepared to challenge head-on the claims of privilege that we believe are ill-founded”. He did not go on to elaborate on when he believes these claims to be ill-founded.
He said that “these companies call in outside lawyers…(who) are the first to interview key witnesses at the coal face, then claim privilege – it is absolutely ludicrous” and added that external lawyers were “effectively ploughing up the crime scene”.
Clearly, he may be sending out a message to particular companies who are currently the subject of an investigation by the SFO, and who are using privilege to protect themselves from handing over certain documents and emails to the SFO. He may see it as a route to put pressure on them to agree to voluntarily provide this type of material.
What does this mean for you?
It is not likely that there will be any change in the way in which companies claim privilege or undertake internal investigations.
This aggressive message from Green to companies and lawyers may have two aims:
- To show the SFO as an aggressive law enforcement agency after recent rumours that it will be absorbed by the National Crime Agency in due course. Green and the SFO need big results this year and Green will not want a post election government to end its existence; and
- A mechanism to force companies, currently under investigation, to agree to voluntarily hand over privileged material and therefore prevent the SFO having to make applications to the court under the “crime exception” which the SFO may lose. It is a sort of tactic to shame a company into submission.
Deferred Prosecution Agreements (“DPAs”)
Following the arrival of DPAs last year, we are likely to see the first one imposed on a company in 2015. DPAs are public, transparent agreements between a prosecutor and a company whereby a prosecution can be deferred if certain conditions are complied with. these include a fine, implementation of compliance programmes and/or a monitor and cooperation in the prosecution of individuals.
DPAs encourage self-reporting and Green has stated that there are three potential DPA cases under “active consideration”.
Encouragement to self-report and the introduction of DPAs means that companies may face tough decisions on whether or not to self-report in bribery or corruption cases, because there is no current legal obligation in the UK for corporates to self-report. It also means companies will more inclined to undertake internal investigations, because they will want to see they have a case to answer, prior to any such report being made. Green may dislike internal investigations, but I doubt many companies will report themselves to the SFO where they have a mere suspicion.