With deferred prosecution agreements getting the green light in the U.K. earlier this year, the Serious Fraud Office’s top lawyer offered some advice this month for corporates looking to take advantage of DPAs should they be faced with SFO investigation.
Alun Milford, general counsel of the fraud office since 2012, told the London audience at the Global Investigations Summit on Oct. 15 that the agency’s mission is to investigate and prosecute complex fraud cases, not be a regulator, educator, or adviser. That being said, Milford outlined the process in which corporates would admit wrongdoing and agree to strict terms as well as penalties. Those terms could include a hefty financial penalty, reparations for victims, required reforms to prevent another occurrence of the violation, and submission to regular monitoring. Failure to comply could result in renewed prosecution.
The DPA negotiations can only be initiated by the prosecutor, and will be conducted in private in the event the case ends up going to trial, Milford said. A judge would have to sign off on the principle and terms of an agreement reached.
“An invitation to embark upon DPA negotiations will depend upon a number of factors, but its hallmark will be cooperation and the free supply of relevant information,” Milford said.
For companies that self-report, Milford’s advice was not to tell the SFO something it already knows.
“It is not impressive when lawyers ask to see us about an apparently urgent matter in order to tell us something their client has known about for some time, and which we have just learned about from the media,” Milford said. “It is still less impressive if, at the end of that meeting, our sum of knowledge has not been added to.”
Milford also said the self-report has to be adverse to the company itself and not merely an employee, because DPAs are only available to corporates. In such cases where an employee is the primary target of a self-report, the SFO will conduct its own investigation, Milford said. “If, at the end of that process, we conclude that there is after all criminal liability by the company, then it will be difficult to have viewed the company as cooperative if the report submitted to us was aimed at throwing us off the scent,” Milford said.
Milford also had some stern advice for corporates conducting their own investigations to ensure the inquiry does not appear designed to obstruct a criminal probe. The SFO will want access to all relevant documents and witnesses unearthed, as well as an explanation of how the inquiry was carried out, Milford said.
“Do not expect us not to pursue lines of inquiry around how an internal investigation has been conducted, particularly if it cuts across our investigation and appears designed to do so,” Milford said. “Do not expect the rewards of cooperation if you offer none. Do not tell others that you are cooperating if you are not.”
Another recap of Milford’s guidance appeared on thebriberyact.com last week.
Also this month the SFO’s director, David Green, returned to the Treasury to seek so-called blockbuster funding for particularly resource-intensive cases. One of its most resource-intensive cases is the probe into the manipulation of the London Interbank Offered Rate (LIBOR), which Milford said involves 70 SFO employees.
Green is seeking an extra £26.5 million above the agency’s £35.2 annual budget to help pay for the LIBOR probe and other complex cases, according to a story last week by Reuters. In the last financial year Green made a similar request for £24 million in extra funds.
Green said while the blockbuster funding mechanism is not perfect, it does the job. “The arrangement recognizes that the SFO is demand-led and honors the pledge that on my watch the SFO will never turn down any investigation simply on grounds of cost,” Green said in a speech last week during a regulatory conference sponsored by Pinsent Masons, also sponsors of thebriberyact.com.
Green said it is “an important if not a pivotal time” for the agency, a claim highlighted by the fact that this week saw two major announcements from the SFO. First, the agency announced this week the launching of a criminal probe into the accounting practices at the U.K.’s supermarket retailer Tesco. And also this week, the SFO announced criminal proceedings are being launched against Noel Cryan, a former employee of Tullett Prebon Group Ltd., in connection with the LIBOR case, making him the 13th individual charged so far in the benchmark rigging case. Earlier this month, the SFO saw its first guilty plea entered in the case, with the defendant identified only as a “senior banker.”