As cooperation between U.S. and U.K. enforcement authorities investigating and prosecuting financial and business crimes becomes commonplace, companies should be prepared to field simultaneous inquiries or interactions with law enforcement authorities in each country.
An alphabet soup of law and regulatory agencies in both the United States and the United Kingdom occupy the field of business regulation and investigations, but the U.S. Department of Justice’s Fraud Section and the U.K.’s Serious Fraud Office have, perhaps, the longest and most notable history of cross-border cooperation. Both agencies are broadly charged with investigating and prosecuting financial crimes, bribery, and other corporate malfeasance.
This cooperation and coordination is set to expand dramatically in the coming years, as the Department of Justice recently announced a new position whereby a Department of Justice attorney will be sent to the United Kingdom for two years, first to work with the U.K. Financial Conduct Authority (FCA), the conduct regulator for U.K. financial services firms and financial markets, followed by a year working with the SFO. The lawyer will then be expected to spend a third year back at the Department of Justice “to investigate and prosecute transnational economic crimes in the United States and to provide additional training to other Fraud Section prosecutors on the best practices and experiences learned from the FCA and SFO.”
This embedding of the Department of Justice lawyer in the SFO and FCA will not only improve communication and cooperation channels between the agencies during the lawyer’s term at the agencies, but permit the agencies to forge additional bonds between personnel that can be leveraged in investigations for years to come. It remains to be seen whether this program will be followed by a program of SFO or FCA lawyers joining the Department of Justice (or turn into a regular rotation of Department lawyers to the SFO and FCA) but it is apparent that close and regular cooperation between U.S. and U.K. authorities will continue in the near- to medium- term.
The Department of Justice and SFO have many similarities in their approach to investigating and prosecuting corporate crime, but they also have significant differences. These differences can pose potential traps for the unwary and even result in the view within the agencies that a corporate actor is seeking to play one agency off the others. In 2015, for example, SFO General Counsel Alun Milford complained that counsel for corporate actors were routinely attempting to play the SFO off against the Department of Justice. Whether such conflicts are intentional or not, understanding the critical differences between the agencies’ approach to investigating corporate crime is critical for any company that finds itself an object of interest.
Below is far from an exhaustive list of considerations when facing a joint inquiry, but is rather intended to provide an initial outline of critical considerations.
An alphabet soup of law and regulatory agencies in both the United States and the United Kingdom occupy the field of business regulation and investigations, but the U.S. Department of Justice’s Fraud Section and the U.K.’s Serious Fraud Office have, perhaps, the longest and most notable history of cross-border cooperation.
Internal investigations and self-disclosure: There is perhaps no greater difference between the Department of Justice and the SFO than their approach to companies conducting their own internal investigations into potential wrongdoing and disclosing such wrongdoing to the agencies. While the details of internal investigation efforts may depend on the status of any inquiry from the agencies (e.g., whether the company is making a voluntary disclosure or responding to a formal legal request for information) the SFO and Department of Justice have fundamentally different approaches to corporate internal investigations that must be considered and weighed in jointly dealing with the agencies.
Traditionally, the Department of Justice expects companies to conduct thorough internal investigations of suspected wrongdoing and, to the extent the company is seeking credit for cooperation or self-disclosure, report these findings to the agency. While the Department of Justice expects companies to promptly disclose wrongdoing, historically, the agency is tolerant of the fact that a corporate actor must complete at least a modicum of an internal review before making a disclosure.
By contrast, the SFO is of the view that it is “unrealistic to expect a corporate to pick up the phone to the SFO at the very moment they first become aware of potential wrongdoing” but it does insist that corporate actors should “engage early” once they are of the view that the allegations “are not fanciful but are real and substantive.” While one can argue about the semantic differences between the SFO and Department of Justice’s approach, the perception within the defense bar remains that the SFO expects disclosures earlier than the Department of Justice and well before substantive internal investigations are launched.
This dichotomy can partly be explained by the agencies’ schism with regard to corporate internal investigations. The Department of Justice has long expected corporate actors (typically acting through independent outside counsel) to conduct thorough internal investigations involving the forensic collection of data and interviews of involved persons and, where a corporate is cooperating with the agency, to make some presentation of the investigation’s findings and conclusions to the Department of Justice. This expectation has only heightened since the Department of Justice’s release of the Yates Memo, which ties corporate cooperation credit, in part, to a company’s willingness to assist with the collection and disclosure of evidence against individual wrongdoers.
By contrast, the SFO publicly stated that “investigation is our job” and that the agency is concerned that internal investigations “trampl[e] over the crime scene” in a way that is unhelpful to the SFO’s investigation. The agency seems particularly concerned that internal corporate investigations are not able to adequately secure relevant evidence and may have the effect of “tipping off” culpable actors.
Attorney-client privilege: The differing approaches to internal investigations and the timing of self-disclosures carry over into the realm of whether a corporate actor must (or should) waive applicable attorney-client protections in cooperating with and making disclosures to the Department of Justice and SFO. After nearly two decades of wrestling between the Department of Justice and defense bar, the Department of Justice ultimately settled on its current view that cooperation credit for corporate actors cannot be predicated upon waiver of the attorney-client privilege and, indeed, the Department of Justice may not request a waiver of the privilege in all but the most extraordinary circumstances. Moreover, in the United States, the privilege is widely viewed to extend to underlying attorney notes or memoranda of interviews conducted in the course of an internal investigation.
The SFO takes a different view. While the Department of Justice is generally prohibited from even requesting a waiver of the privilege, the SFO is not similarly constrained. Moreover, while the agency has plainly stated that it does not expect corporate actors to waive “legal rights and protections … well-founded in fact and law,” it is further of the view that a corporate actor providing the “factual narrative that underpins a self-report does not” result in a privilege waiver. Rather, the SFO is of the view that it wants “to know what happened and what the witnesses say happened.” As a result, corporate actors before the SFO may find themselves facing requests to waive privilege or otherwise disclose materials that are not considered privileged by the SFO but would be privileged in the United States, potentially resulting in a waiver of the privilege in the United States if the materials are disclosed.
Planning: When a corporate actor finds itself before both the Department of Justice and SFO, clear and open communication will be the key to any future success. U.K. and U.S. corporate counsel should communicate with each other early and often to ensure a coordinated approach to engagement with the agencies. Moreover, while the upcoming Department of Justice posting to the FCA and SFO may open new avenues of communication between the agencies, corporate actors cannot assume that information given to one agency will automatically be shared with the other. Disclosures and other critical communications should be made simultaneously whenever possible.
Ultimately, it may not be possible to fully resolve all the differing approaches between the Department of Justice and SFO to corporate investigations. However, corporations can weigh issues such as jurisdictional nexus, locus of the harm, location of witnesses, and potential resolutions that may ultimately favor following one agency's standard practice over another. For a corporate actor involved in joint Department of Justice /SFO investigations, balancing these competing approaches can present a logistical challenge, but one that can be managed with thoughtful, early planning.
Matthew Reinhard is a member in the law firm Miller & Chevalier. He focuses his practice on white-collar crime, internal investigations, and complex civil litigation.