General Counsel at the Serious Fraud Office (SFO), Alun Milford, delivered a speech on „Corporate criminal liability and Deferred Prosecution Agreements (“DPAs”)‟ at the Annual Employed Bar Conference 2014.  Mr. Milford‟s address gives rise to key practical points to consider for companies who choose to self- report, some of which are set out below. His main emphasis is to encourage self-reporting companies not to hold back information. An early and complete self-report can help result in a DPA and potentially avoid criminal prosecution.

Self-Reporting and Internal Investigations

No DPA Is Guaranteed

Before the SFO can consider a DPA there must be an acceptance of corporate wrongdoing. Once a company self-reports, the SFO makes its own assessment of the case. If the SFO wishes to proceed with a DPA, it must satisfy a judge sitting in the Crown Court that the terms of the proposed DPA are fair, reasonable, proportionate and in the public interest. The SFO can make a recommendation on the appropriateness of a DPA, but cannot pre-suppose or guarantee a decision ultimately made by the Crown Court.

Information

The SFO expects to be informed about something that it does not already know. New and unsolicited information will attract more credit compared to information that is provided following concerns being raised by the SFO.

If the self-report denies corporate liability but informs the SFO of others‟ criminality, this is considered „assistance‟ – not reporting.  If subsequently an SFO investigation leads to a conclusion of corporate wrongdoing against the reporting entity, the absence of any admissions to that effect in the self-report is material when the SFO is considering whether or not to prosecute.

Internal Investigations

A report prepared by external counsel following an internal investigation can be helpful and provides a basis for an SFO investigation, but that report will not be taken at face value if corporate wrongdoing is denied. The SFO will assess the extent and accuracy of reporting. It could therefore be better to consult the SFO prior to commissioning an internal investigation.

To act without transparency may be viewed as unhelpful. If it emerges during the course of an SFO investigation that evidence trails have been disturbed and witnesses have been tipped off, a DPA is likely to become unworkable.

The collection of data for an internal investigation needs to be prompt, coordinated and simultaneous.  The processing and interrogation of evidence needs to be forensically sound and the methodologies should be recorded, disclosed and supported by witness statements. Any search terms employed (as well as their relevance) will need to be justified to the SFO.

Witnesses

The SFO is duty bound to investigate the accuracy and integrity of all evidence and will therefore want to refer to first accounts of witnesses. The assertion of privilege over first accounts is unhelpful and can be viewed as poor cooperation, irrespective of how this may affect related civil proceedings.

Contacting the SFO early could resolve concerns such as questioning witnesses who may be complicit. Any prejudicial results arising out of delayed contact with the SFO can be adversely viewed.

Independent Judicial Intervention

The presiding Crown Court judge will consider whether or not there are well-founded reasons for a DPA at a private preliminary hearing. The judge is likely to consider the following factors: (i) whether the company‟s version of events will withstand public scrutiny;  (ii) the conduct of both the SFO and the company during the investigative process; and (iii) how the SFO intends to deal with individual wrongdoers (the way in which individuals are dealt with could affect how the company is dealt with). If the judge is satisfied that everything is proper and approves an application for a DPA, there is no secrecy behind the arrangement. The DPA will be announced and all aspects of it promulgated in open court. The court must declare that the DPA is fair, reasonable, proportionate and in the public interest.

Decision to Prosecute Following a Self-Report

Any criminal prosecution will take into account the two stage test set out in the Code for Crown prosecutors1. There must be (i) sufficient evidence for a realistic prospect of conviction; and (ii) the prosecution must be in the public interest.  It may be in a company‟s best interests to provide the SFO with all available information that could be considered relevant to the investigation, however prejudicial. Information could come from other sources, including through whistle-blowers, competitors, the individual bribed, or fed in through the SFO‟s network of intelligence.  Should the SFO acquire information known to the company from elsewhere, weight is likely to shift in favour of prosecution. The SFO is more likely to then investigate both the company and individuals associated with it or its business. Whilst there is no guarantee that a prosecution will not flow following a DPA (or indeed the self-report), there is a powerful public interest argument not to prosecute where the company has come completely clean and shown full cooperation throughout the investigative process.

When making the decision to self-report, very careful thought needs to be given to a wide range of considerations.