Is Self-Reporting Corporate Fraud A Good Idea?


Self-reporting bribery and corruption is an extremely important and sensitive step for any organisation or individual to take. Putting a toe in the water of disclosure is a difficult decision to make when you can't take your toe back out again. Even if the reported activity results in no significant action from the SFO or any of the referral authorities, the report itself can have a real impact on trading activity and confidence. Any report therefore needs to be made at the end of an enquiry dealing with a range of factors which are

  • (i) not always obvious and
  • (ii) not always highlighted by the SFO.

The disclosure process we discuss here is not quite like a Suspicious Activity Report (SAR). A SAR will often arise where a corporation wishes to place a wall between itself and third party activity. However, the line between a SAR and self-reporting fraud/corruption is not always clear, especially if the activity occurs across different aspects of the business. In certain circumstances, an enquiry might reveal the need for a SAR and self-reporting. This discussion will, therefore concentrate upon circumstances in which a corporation needs to seriously consider a report of fraud/ corruption / bribery within its own organisation.

In general terms, a corporation will want to consider the following - How does one detect, investigate, quantify, particularise, isolate, mitigate and self-report relevant activity? Many corporations simply can't answer that question because this is not a process the board is comfortable with. It's a cultural thing, as much as a compliance thing and that is why good governance has to start at the top. The decision to self-report will come from the top and they should understand their risk management procedures if they are going to stand a chance of making a quality decision.

Assuming that someone has brought cogent evidence of criminal activity to the attention of the relevant party (e.g. MLRO or the board), why would a corporation decide to investigate and report? Why not ignore it or fix it and move on? Commercial reality dictates that the answer depends upon:-

  • When the wrongdoing occurred,
  • Who receives the information?
  • What has happened within the corporation since the relevant events?
  • What the perceived consequences might be if the matter is not investigated and reported.

In other words - is it really that bad, has the wrongdoing gone away since e.g. the appointment of the new board, can we get away with it or regard it as a SARS issue, what will a report do to the share price and will I go to jail (or - can I keep my pension if I have to go to jail)?

Looking at the prosecution side of the equation:-

  • is there enough money and political will to prosecute or impose a fine big enough to hurt us and
  • can we accurately predict the cost-benefit?

The rest of this presentation concentrates on answering those concerns.

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I don't plan to spend much time on the politics but recent years have seen a well-documented shift in the government's attitude to the collection of money in the criminal and civil recovery arena. Better use of the Proceeds of Crime Act 2002 (POCA) is not the whole story but this has been an important piece of legislation, together with the Bribery Act and the guidance documents emanating from SFO / HMRC / FCA etc. stress how each criminal and civil enforcement remedy can be better targeted.

What they are really saying is - we don't necessarily have to prosecute you in order to take your money, so come and talk to us about what you or your predecessors have been up to and we will think about giving you a good deal if your report looks genuine. If you don't, we have more quality options in the toolkit than we ever did and our fighting fund for a prosecution isn't necessarily fixed if we can argue a good case to the treasury.

When Richard Alderman was the director of the SFO, his speeches were very much about engagement and co-operation. However, this was against the background of a very new Bribery Act and before the consultation on Deferred Prosecution Agreements. It was before the FSA became the FCA / PRA. It was before other aspects of the Crime and Courts Act 2013 were revealed and it was in a period of greater budgetary uncertainty. A certain tone was set but a number of important factors had not crystallised in persuading corporations that they should offer themselves up for scrutiny.

Back in August 2010, I said this in a JMW blog:-

The new Economic Crime Agency (ECA), which the Chancellor has announced will investigate and prosecute all corporate crime, should have greater powers, according to the Serious Fraud Office (SFO). Director of the SFO Richard Alderman said, "It would be important to look at the tools the new ECA will need in order to maximise its effectiveness in countering serious economic crime." The SFO is believed to be pressing for an extension of corporate liability in the UK similar to that of the US so that it would apply to most of a company's employees as well as its senior executives. Heavier fines, longer jail sentences, deferred prosecutions and a new enforcement system to counter international white collar crime are among other proposals likely to be put forward. Corporate lawyers will be looking carefully at the proposed legislation to see how it will impact on aspects such as hospitality for clients and if it reflects Lord Justice Thomas' remarks when sentencing in the Innospec bribery case that the penalty options open to him were "wholly inadequate" when fining the company $12.7m.

Not all of those concerns are reflected in the regime now faced by entities considering a self-report but the picture is much clear than it was when Alderman was in control of the SFO. In the final analysis, many developments in criminal justice are led by the mathematics and it is estimated that the cost of fraud in the U.K. is £73 billion per annum. The SFO last year recovered around £50 million of ill-gotten assets from twenty cases, comprising seventeen prosecutions and three civil settlements. The current annual budget of the Serious Fraud Office (“SFO”) is £38.7 million, with an average case costing £669,000 and lasting between four and six years. By comparison, in the U.S. where Deferred Prosecution Agreements are well established, around US$9 billion was recovered in 2012 through the use of 35 DPAs and Non-Prosecution Agreements (“NPAs”) alone. David Green, the present director of the SFO is very conscious of the pressure placed upon him by Ministers to make the SFO pay its way and it is significant that he has appointed former US MOJ staff at the SFO.


The DPA is a presentation in itself, but it needs to be mentioned in the context of self-reporting because it has just received Royal Assent as part of the Crime and Courts Act 2013 (Schedule 17). Deferred Prosecution Agreements are likely to come into force during the course of 2014 and they are defined as agreements between a designated prosecutor (which includes the Director of the Serious Fraud Office (“SFO”) and the Director of Public Prosecutions, but not presently the FCA) and a (i) body corporate, (ii) a partnership, or (iii) an unincorporated association. The prosecutor agrees to refrain from bringing criminal proceedings pending successful compliance of the entity with certain conditions. This can include the payment of fines, compliance requirements, restitution/compensation and disgorgement of profits amongst others. DPAs are only going to be available in respect of certain offences; primarily economic crimes such as fraud, bribery, large theft cases and money laundering related offences.

In short, will more entities be inclined to self-report when DPA's become available? The answer is probably yes - IF,

  • The 'Joint Code for Prosecutors' (to be issued later this year) is sufficiently clear so that the entity can make a fully informed choice.
  • The fines and other conditions make sense when compared to the likely outcome of conviction.
  • A DPA makes sense when compared to the adverse publicity and commercial instability caused by conviction.
  • Whether a DPA will still expose the entity to litigation by a third party.

The 'Joint Code' is, therefore, going to be an important document but we already know that it will have to relate to the existing Prosecutors Code. Ultimately, the court will decide whether a UK DPA is appropriate, based upon whether it is “in the interests of justice” and that its terms are “fair, reasonable and proportionate”. The provisions for the negotiation and approval of DPAs are detailed and it is significant that judicial involvement will be at a much earlier stage in a UK DPA when compared to the very late involvement of judges in US DPAs. Ironically, many entities may prefer a more US style approach and those who have a choice to self-report in the UK or US will have a difficult to decision to make. Holding all initial UK DPA hearings in private will assist with that decision, although any final declaration is required to be made in open court, supported by reasons.

-  The relevant extract from the Act is as follows:-

Deferred Prosecution Agreements - Joint Code

6(1) The Director of Public Prosecutions and the Director of the Serious Fraud Office must jointly issue a Code for prosecutors giving guidance on—

(a)  The general principles to be applied in determining whether a DPA is likely to be appropriate in a given case, and

(b)  The disclosure of information by a prosecutor to P in the course of negotiations for a DPA and after a DPA has been agreed.

(2) The Code may also give guidance on any other relevant matter, including—

(a)  The use of information obtained by a prosecutor in the course of negotiations for a DPA;

(b)  Variation of a DPA;

(c) Termination of a DPA and steps that may be taken by a prosecutor following termination;

(d)  Steps that may be taken by a prosecutor when the prosecutor suspects a breach of a DPA.

(3) The Code must be set out in the report made by the Director of Public Prosecutions to the Attorney General under section 9 of the Prosecution of Offences Act 1985 for the year in which the Code is issued.

(4)The Code may from time to time be altered or replaced by agreement between—

(a)  The Director of Public Prosecutions,

(b)  The Director of the Serious Fraud Office, and

(c) Any prosecutor who is for the time being designated by an order made under paragraph 3.

(5)  If the Code is altered or replaced, the new Code must be set out in the report made by the Director of Public Prosecutions to the Attorney General under section 9 of the Prosecution of Offences Act 1985 for the year in which the Code is altered or replaced.

(6)  A prosecutor must take account of the Code in exercising functions under this Schedule.

The level of judicial involvement in the UK DPA is also a response to the OECD's criticism of the UK's over-reliance on civil recovery remedies “which require less judicial oversight and are less transparent than criminal plea agreements". This follows on from what was said about self-reporting and plea arrangements by Lord Justice Thomas in the R v Innospec Ltd case. Consequently, the number of DPAs in coming years will depend upon how comfortable entities become with the arrangements and how pro-active the judiciary will be in ensuring transparency.


When David Green took the helm at the SFO on 23rd April 2012, the tone changed a little. He issued new guidance on matters such as hospitality and facilitation payments, the attitude to enforcement hardened and he set out ten fundamental changes at the SFO.

1.  Restated the role and purpose of the SFO

2.  Refocused the SFO's take-on criteria

3.  Re-organised and restructured the SFO

4.  An entirely new senior management team

5.  Reviewed the caseload we inherited and commenced new investigations and pre-investigation projects

6.  Issued new guidance, chiefly on self-reporting and facilitation payments

7.  Negotiated a return to "blockbuster" funding in discussion with the Treasury

8.  Inspection by HMCPSI and encourage a follow-up inspection

9.  Expanded our intelligence capability and will continue that effort

10.  Now occupy new premises, culturally different from Elm Street

The following is from David Green's speech to the Fraud Lawyers Association in March 2013:-

1. Restating the role and purpose of the SFO

The SFO is an investigator and prosecutor of serious complex fraud, bribery and corruption. Such restatement is simple, yet necessary, because the SFO's role had become blurred giving rise to the perception that it did not have the stomach for prosecution and preferred risk-free civil settlements. We are not a regulator: accepting, of course, that our prosecutions can and do have an effect on behaviour. Civil settlement is still alive and well, in the right circumstances but we are not there to offer deals and a special easy path for white collar criminals.


2. Refocusing the SFO's take-on criteria

The SFO is there to undertake the very top slice of fraud and bribery. These are cases which undermine UK commercial/financial plc. in general and the City of London in particular. Sums involved - actual or potential - will usually be high. Harm - actual or potential - will be significant. We will also take on cases which have a very substantial public interest element, and new species of fraud. This refocusing was necessary because there was a perception that the SFO had "dumbed down" to reduce risk and shorten the time an investigation took.


3. Restructuring the SFO

The path of the Tchenguiz investigation and JR was a very loud wake-up call for the SFO. It represented a significant failure in the quality of our decision making and output. In response, we have restructured the organisation, building in layers of quality assurance and objective examination, testing and assessment.

Case teams work within 4 casework divisions:

  • 2 fraud, 2 bribery - each headed by an SCS;
  • Advice and challenge comes from General Counsel, from His Honour Geoffrey Rivlin QC as Special Adviser and from me, as Director;
  • We also have a specialist POC Division, a Chief Investigator who is also in charge of our new and developing intelligence capability, and a Head of Profession for Accountancy.


An entirely new Senior Management Team

This comprises the Heads of Division, General Counsel, Adviser, Director, a Chief Finance Officer and Head of HR. These, together with the NEDs, comprise the single Board which runs the SFO and agrees its strategic priorities. We are about to recruit 2 new NEDs.


5. Review of our inherited caseload and commencement of new projects and investigations reflecting refocused take-on criteria

We do not necessarily make public statements at the start of all our investigations, but we have announced the following:


(i) Weavering:

Investigation into the collapse of £300m hedge fund - previously dropped - now charged and awaits trial.

[Judge Alistair McCreath has set a provisional date for the criminal trial of Magnus Peterson, the founder of Weavering Capital, for October 2014 and a provisional date for an abuse of process hearing for November 8. He said the office was likely to face "quite serious criticism" in the trial. The SFO in 2011 suspended its 2-1/2 year investigation into Weavering before a civil case awarded $450 million in damages against Peterson and three other directors. The Office later reopened the investigation under new SFO director David Green. An SFO spokeswoman said she could no longer confirm the exact details surrounding the 2011 decision to drop Weavering, as its website had been updated since it re-opened the case. Investors lost hundreds of millions of dollars when Weavering collapsed in the wake of the credit crisis in 2009. The SFO arrested two fraud suspects in May 2009, but later said it lacked the evidence to secure a conviction. The decision to re-investigate Weavering marked a major U-turn under Green, who last April joined a demoralized and under-funded agency that narrowly avoided being rolled into a new FBI-style body by Home (Interior) Secretary Theresa May in 2011. Peterson has maintained his innocence throughout. "It's been years," he told Reuters as he left the court. "It's been a shambles."]


(ii) Libor:

(by far largest and most complex SFO investigation) - into the alleged manipulation of London Interbank Offered Rate (arrests made and investigation continues apace).

[The arrests were in December 2012 - a trader from UBS and two interdealer brokers. So far, they have not been charged. It confirms that the SFO is moving out from the starting point at Barclays and is trying to deal with the outrage at the Barclays $450 million civil settlement. However, it is also significant that UBS is in settlement negotiations with the UK Financial Services Authority (now the FCA / PRA), US counterparts and the Swiss regulator. This will result in partial leniency in the level of fine but it is still thought that it will be bigger than the Barclays settlement. What does that tell us about self-reporting? It is an example of how complex the engagement can become. Different authorities in different jurisdictions need to deal with the same entity regarding different aspects of the same evidence to achieve a different outcome]


(iii) Barclays/Qatar:

Investigation into the circumstances surrounding Barclay's £8bn recapitalisation in 2008 with Qatari investment.

[In 2008, Barclays did not want to become the subject of rigorous restrictions on its strategy and executives’ pay. It declined the offer to participate in the UK Government's October 2008 recapitalisation, stating that it would raise the money privately. It sent out two cash calls to Qatar. Although Citibank did the same thing, their cash calls were disclosed and authorised. Meanwhile, the UK government injected nearly $35 billion into RBS, HBOS and Lloyds TSB. In the months between the bank announcing its first and second cash call in June and October 2008 respectively, Lehman Brothers collapsed, in one of the world’s biggest bankruptcies. That precipitated the government taking stakes in the Royal Bank of Scotland and Lloyds TSB. Barclays now hope for understanding from the SFO in relation to a deal they struck in 2008.]


(iv) HP/Autonomy: investigation into allegations surrounding HP's purchase of Autonomy.

[HP alleged that Autonomy had boosted its figures to give a false picture of what it was worth. Autonomy accused HP of mismanagement. HP's chairman and its longest serving directors stood down in April this year after last year's write down of $8.8 billion relating to HP's $11 billion purchase of Autonomy in 2012. The reports suggest that the SFO's intentions with this case are not yet clear and it may become a regulatory matter but it certainly indicates that the SFO is willing to dedicate resources when the direction is not entirely clear]


(v) GPT/SANG: investigation into dealings by a GPT subsidiary with Saudi National Guard.

[Ian Foxley, a former lieutenant colonel in the British Military blew the whistle on what was supposed to be a £2 billion UK/Saudi deal to upgrade communications systems in the Saudi National Guard. The UK government outsourced the work to a subsidiary of EADS. Foxley took the case to the SFO. The SFO enquiry will be closely watched after the last major investigation into corruption in UK-Saudi arms deals was shut in 2006 for reasons of “national security” after Tony Blair personally intervened in the case.

Investigations inherited from Green's predecessor include:-


(vi) Harlequin: investigation into allegations of fraud around financing of holiday resort construction.

[Harlequin Property, a UK-based overseas property sales agent, is not regulated by the FCA. Around 3,000 Britons have invested a total of over £200 million on the promise of 6,000 luxury villas in St Lucia, St Vincent, Barbados and the Dominican Republic. So far, only a small number have been built. Harlequin says they have been duped by contractors. It is significant that the FSA issued an alert to financial advisors about investing in Harlequin and Essex police have asked for contact details for the IFAs who recommended Harlequin in the first place. Consequently, secondary action by another regulator/investigator in the course of an enquiry run by another authority is something one has to consider in the self-reporting process. On 16th May 2013, the directors were issued with a High Court order freezing their personal assets up to £1.1m. The order was made ex parte but the directors will be heard on 28 May. At least until this date the directors must not remove from England or Wales any of their assets up to the value of £1.1m, including by the sale of their Essex home. They must not dispose of or diminish the value of any assets they hold outside the UK up to the same value. They must inform solicitors for the complainants of all their assets worldwide, whether in their own name or not, and whether solely or jointly owned, giving the value and location of the assets. They are restricted to what they can spend to £600 a week on ordinary living expenses, and a "reasonable amount" on legal expenses. But before spending anything the directors must tell the complainants' solicitors where that money is coming from. The court order will cease to have effect if the directors provide security by paying the court the sum of £1.1m. Harlequin Property averted a previous and separate freezing order against its assets in March when it agreed a confidential but "substantial" out of court settlement with some investors. Harlequin Management Services (South East) - the sales arm of Harlequin Property - filed a notice of intention to appoint administrators at the High Court of Justice last month, as part of a "restructuring" of the business. However, it is understood that the Public Interest Unit of the Insolvency Service is also looking into the administration, which usually follows complaints made by members of the public about the way a company is trading. Harlequin has consistently denied any wrongdoing, and has blamed negative publicity for the company's problems.]


(vii) JJB Sports: investigation concerns alleged disclosure failures as JJB was seeking to raise funds from the market. Charged and awaiting trial.

[This was a referral to the SFO from the OFT after JJB fell out with rival Sports Direct, controlled by Newcastle United owner Mike Ashley. It revolves around deals done in 2008. The investigation into JJB itself was dropped by the SFO (and the share price rose as a result) but the SFO said it was continuing to pursue a number of individuals, but unconnected to the inquiry in potentially anti-competitive behaviour. The Chief Executive Chris Ronnie was charged last year with failing to disclose interests, money laundering and furnishing false information. David Ball, a supplier, is charged with furnishing false information. It is listed for PCMH at the end of June 2013 and is an example of interaction between regulator and prosecutor]

The other cases -

The SFO has 65 cases on the books, of which 23 are criminal investigations; 14 are post charge, either awaiting trial or in trial. 13 are post trial; confiscation or awaiting appeal. 15 are under development in the SFO intelligence section. The 15 under development include projects which predate and those which post-date the Bribery Act 2010.


6. New guidance on: Self-Reporting and Facilitation Payments

I withdrew guidance on corporate self-reporting issued by my predecessor. Why? Because it implied that if a corporate self-reported to the SFO, then the SFO would strain every sinew to resolve the matter by civil settlement and not by prosecution. Why did that need changing? : because no prosecutor can ever give such a guarantee in advance: each set of facts is unique.

So what is the result? We have said that we will apply the full Code Test for Crown Prosecutors to the available evidence. Assuming there is sufficient evidence, we would prosecute if it was in the public interest to do so.

BUT in the case of a genuine self-report, where, say, a new board had discovered previous misconduct under previous management, had investigated it and reported it to SFO and put in place measures to avoid repetition, then obviously the fact of self-reporting would weigh heavily in the public interest against prosecution.

This  approach  also  addresses  concerns  voiced  by  the  OECD  in  early  2012  that  the  definition  of  "self-reporting" had been severely strained in order to achieve the highest number of civil settlements.

Similarly, we withdrew the guidance on facilitation payments. The position is now common sense: such payments are and always have been illegal and we will apply the full code test to the evidence and all the circumstances in deciding whether to prosecute. Again, this addresses OECD concerns over loose definitions in previous policy, which promised no prosecution if the company was "moving towards a zero tolerance policy" on facilitation payments - whatever that meant.

So: our position is back to what it should be, reflecting existing published guidance on the Bribery Act and on Corporate Prosecutions agreed with the DPP and without any gloss added unilaterally by the SFO. And genuine corporate self-reporting is still very much alive and well.

[Contrast this with calls in Russia for amnesty in relation to economic crime. Business ombudsman, Boris Titov, has proposed that the State Duma declare an amnesty for businessmen convicted of economic crimes for Entrepreneurs' Day on May 26. According to Titov, the amnesty would guarantee "a stable and growing economy." At present, 110,924 individuals are serving time for economic crimes, according to members of the ombudsman's advisory council. They estimate that 53 categories of economic crime would fall under the amnesty. The most controversial would be crimes under articles 159 (fraud), 160 (embezzlement), and 165 (causing damage to property by deception or abuse of trust) of the Criminal Code. Titov explained to the publication Kommersant that amnesty is the way "to turn over the page of history that was written in the wild 90s." According to Titov, that was when "the rules of the game were spelled out not in law, but in notions."]


7. Funding

We have an agreement with HMT that where any case costs over a certain percentage of our budget in any one year, we can have access to the reserve for a sum covering that cost, ring fenced for that case. Libor is the first example. There will be others.

Otherwise, if and when I feel that our core funding is insufficient to cover our general caseload, I will raise it with the Attorney General who has made clear he would then raise the matter with the Treasury.

The basic principle is that, on my watch, the SFO will never refuse to take on a case simply on grounds of cost. To do so would be deeply damaging to public confidence and provide a perverse incentive to criminals to commit high value complex fraud.

So what I have is a "core" SFO capable of handling its core caseload with a surge capacity when that is needed to address exceptionally large, complex cases. For example, our Libor team is doubling in size from 30 to 60.


8. Inspection by HMCPSI

HMCPSI carried out an inspection of the SFO in May 2012. Its report was published November 2012. It made 8 recommendations, every one of which I had raised beforehand with the inspectors as matters of concern to me. The recommendations covered:

Intelligence function, case acceptance processes, systematic allocation of resources to cases on adoption, standardised case management processes, training, updating guidance and transparent processes for Civil Recovery Orders.

All these suggestions are either completed or underway. Compliance with the recommendations will be the subject of a standard follow-up inspection at a time to be agreed between the Attorney General and


I have also indicated my support for giving HMCPSI a statutory right to inspect SFO as soon as possible.


9. Enhanced intelligence capability

We have taken steps to

  • open contacts with intelligence agencies at home and abroad
  • enable intelligence to be gathered on fraud in real time
  • Build an intelligence database.


New premises

We have moved from Elm Street to new offices in Cockspur Street, 30 yards from Trafalgar Square. That is significant because it brings us physically nearer the centre of things and reinforces a culture wherein senior management is more visible to staff and not hiding behind sandbags on the top floor, as in Elm Street. Communication is much easier and is improving.

That is a brief canter over the significant changes at the SFO over the past 11 months. I do not pretend that all our problems are solved. They are not. But we are firmly set on an upward trajectory.

I now want to set out what I see as the most significant challenges facing us and say a word about how we are addressing them.


Significant Challenges - In no particular order:

(1) Drawing a line under the past

The need to do this needs no further explanation. The process has been akin to an archaeological excavation, digging down until one's trowel scrapes the buried foundations. We act on the principle that sunlight is the best disinfectant, and that the process is a necessary part (but only a part) of moving forward. We aim to be as transparent as we possibly can in all that we do.


(2) Some consequences which will flow from our refocusing of the SFO's role

We have refocused the SFO's aim at the top tier of complex fraud and international bribery. Progressing such investigations and prosecutions requires total concentration on quality of output and decision making and performance. It may be that time from case adoption to trial will extend in some of the most complex investigations. It may be that more cases will require blockbuster funding. The right resources - people and funding - will be applied to our cases. By way of example, Libor was funded by Treasury to the tune of £3.5m in 2012-13. In 2013-14 it will receive more than that. As I said, we are doubling the Libor team from 30 to 60. In return (and sorry I can't say more) there will be very significant progress in that investigation over the next quarter.

I am absolutely clear that the answer to the laudable desire to reduce time spent in investigation is not to take the less complex, easier cases. They are better done on the traditional police/CPS model. For the SFO, the imperative is to apply the right resource to the right case.


(3) Recruitment

We have to maximise performance. We also have to attract a flow of high quality staff. That is never easy in public service, simply because good people can earn more - sometimes much more - in the private sector.

We can offer experience doing some of the most challenging work in the criminal lexicon. Service at the SFO, particularly in senior positions, can be a valuable addition to a CV. As is commonplace in USA it is entirely possible to move between public and private sectors and vice versa.

Established firms in law and accountancy can benefit by seconding people to the SFO. It gives the secondee valuable insight and experience. When the secondee returns to their firm, their experience can also enhance any pitch being made to a white collar client for their custom.

We have secondees now from Taylor Wessing, Norton Rose and Baker Mackenzie. We will soon take more on from other firms, and later this year will take secondees from the New Zealand SFO in Auckland and hopefully from the DoJ in Washington.

And I spoke earlier about the SFO having the money to fund a surge capacity: "blockbuster funding". My preferred model is to have a core of high quality staff whose reach and depth can be expanded with other particular expertise as and when required.


(4) Media treatment of SFO

This is and has always been a challenge for the SFO. Interestingly, on a visit to the DoJ in Washington last year I heard people from their Criminal Division describing very similar coverage that they receive in the US media.

Don't get me wrong. There is significant, understandable public interest in the SFO. Its cases are all high profile and high risk. The handling of the Tchenguiz investigation fell well short of what was required. The public need assurance that these cases are properly dealt with and that white collar criminals are brought to justice. The SFO should be scrutinised and held to account. The previous SFO regime spent blood and treasure with cosy off-record chats, judicious leaks and a media consultant, trying to improve its media coverage. A fat lot of good that did them.

I am not complaining: I seek only a professional engagement with the media, accurate reporting (warts and all), an end to the wilful bending of every scrap of news to fit a tired and outdated agenda about the SFO, and the weaving of stories that simply don't exist in reality. Suspects and defendants will use media to deliver their messages in hope of influencing SFO and public opinion. Coverage can be hackneyed. Any inspection is a "review".

Any set back (however slight) is a body blow. Any report covering historic events is reported as if it is describing the current position.


(5)  We will continue to address the difficulties faced in prosecuting top tier fraud in practical ways.

  • We will strive to produce tightly-focused cases and indictments in court, rather than trying to cover every scrap of excavated criminality.
  • We prize strong judicial management.
  • We strive to use technology to make our prosecutions more accessible and readily understandable to juries.
  • I am anxious to start sensible debate on whether the test for Corporate criminal liability is set at the right level.

As you know, in English law it depends on the identification principle. A corporation is only liable for criminal conduct if the controlling mind (i.e. the top personnel) of the company can be shown to have been complicit in the criminality. This is very hard to prove: rarely does the email chain go above a certain level.

A more sensible and just approach might be that embodied in S7 of the Bribery Act 2010. This creates the offence of a commercial organisation "failing to prevent" bribery by its employees, with a statutory "adequate procedures" defence. Extending this approach, a Corporate, or certain types of Corporate (such as banks and companies listed on stock exchange) could be liable for failing to prevent certain types of criminal offence by their employees subject to a statutory defence.

Such an approach would merely add a criminal sanction to existing obligations; it would assist in the reform of poor corporate culture which contributed to the crash; it would underpin the recovery by encouraging clean and stable markets; it would increase investor confidence, assist in more rapid prosecutions and dovetail well with deferred prosecution agreements.


(6) We also need to articulate the reasons why companies should enter DPAs.

That case is:

  • DPA's will only be used in the right circumstances and only in relation to: Corporations
  • Self-reporting is the right thing to do
  • We are greatly enhancing our intelligence capacity. If corporations do not self-report when they have discovered past misconduct, we may well find out anyway and call them in.
  • DPA's enable a corporation to draw a line under past misconduct and to move on.
  • A DPA enables a company to conduct an investigation and assess the scale of the problem for themselves.

(7)  The Tchenguiz litigation.

Obviously, I can't comment on this - other than to say that we are addressing this challenge head on, assisted by Slaughter & May.


(8) Lastly, we will continue, whenever asked, to make the case (and it's a very strong case) for an independent, separate and distinct SFO.

  • The Roskill model works
  • An investigation with the complexity of Libor could not be done under the traditional police/separate prosecutor model.
  • The prosecution of top end serious fraud would not receive the necessary ring-fenced prioritisation if it were handled by a group within the CPS.
  • The City and those who advise large corporates want a strong SFO
  • The SFO is strongly supported by influential NGO's such as Transparency International.
  • The SFO is a strong international brand

Like any government department, we have to prove our worth. What the SFO needs is results. It has enjoyed a number in 2012 and this year. It will achieve more.



Depending upon the nature and scope of the relevant activity, those stages can include:-

  • Internal investigation (including surveillance and interview)
  • Forensic evidence gathering (computers, telecommunications, accountancy)
  • Due diligence (accountancy, governance and internal procedures)
  • Risk assessment (identifying areas of exposure to bribery and corruption)
  • Development of 'adequate measures' (to prevent bribery and corruption)
  • Report on the consequences, benefits and risks of self-reporting
  • Advice on exposure in related areas (employment, solvency, media, civil etc.)

Where a decision is made to self-report:-

  • Development of the SFO report
  • Liaising with the SFO (especially regarding scope of disclosure requests)
  • Attending and advising in SFO interviews (voluntary or under caution)
  • Advising and assisting with further internal and external enquiries
  • Advising on consequences and proposed sanctions
  • Implementation of remedial measures, undertakings and sanctions
  • Advice in related restraint, confiscation or civil asset recovery proceedings 

Where a decision to prosecute is made:-

  • Representation at the lower and higher courts
  • Where acquittal follows - advice on restitution, compensation and costs.
  • Where admission / conviction follows - advice in ancillary proceedings
    • Advice and representation on appeal


We now know that according to David Green, whether or not the SFO will prosecute a corporate body in a given case will be governed by the Full Code Test in the Code for Crown Prosecutors, the joint prosecution Guidance on Corporate Prosecutions and, where relevant, the Joint Prosecution Guidance of the Director of the SFO and the Director of Public Prosecutions on the Bribery Act 2010.

If on the evidence there is a realistic prospect of conviction, the SFO will prosecute if it is in the public interest to do so. The fact that a corporate body has reported itself will be a relevant consideration to the extent set out in the Guidance on Corporate Prosecutions. That Guidance explains that, for a self-report to be taken into consideration as a public interest factor tending against prosecution, it must form part of a "genuinely proactive approach adopted by the corporate management team when the offending is brought to their notice". Self-reporting is no guarantee that a prosecution will not follow. Each case will turn on its own facts.

In appropriate cases the SFO may use its powers under proceeds of crime legislation as an alternative (or in addition) to prosecution; see the Attorney General's guidance to prosecuting bodies on their asset recovery powers under the Proceeds of Crime Act 2002. If the SFO uses its powers under proceeds of crime legislation, it will publish its reasons, the details of the illegal conduct and the details of the disposal.

In cases where the SFO does not prosecute a self-reporting corporate body, the SFO reserves the right (i) to prosecute it for any unreported violations of the law; and (ii) lawfully to provide information on the reported violation to other bodies (such as foreign police forces).

The SFO's restatement of policy on corporate self reporting explains that, in determining whether or not to prosecute, the fact that a corporate body has reported itself will be a relevant consideration to the extent set out in the Guidance on Corporate Prosecutions.

Prosecutors will also be mindful that a failure to report the wrongdoing within a reasonable time of the offending coming to light is a public interest factor in favour of a prosecution. It should be borne in mind that the SFO may have information about wrongdoing from sources other than the corporate body's own self-report. The timing of any self-report is therefore very important. A failure to report properly and fully the true extent of the wrongdoing a further public interest factor in favour of a prosecution.


The following is an outline of the process to be adopted by corporate bodies and/or their advisers when self-reporting to the Serious Fraud Office.

Initial contact, and all subsequent communication must be made through the SFO's Intelligence Unit ( The Intelligence Unit is the only business area within the SFO authorised to handle self-reports.

Hard copy reports setting out the nature and scope of any internal investigation must be provided to the SFO's Intelligence Unit as part of the self-reporting process.

All supporting evidence including, but not limited to emails, banking evidence, and witness accounts, must be provided to the SFO's Intelligence Unit as part of the self-reporting process.

Further supporting evidence may be provided during the course of any on-going internal investigation.


Apart from the information provided above, the SFO will not advise companies or their advisers on the format required for self-reports. Nor will the SFO give any advice on the likely outcome of a self-report until the completion of that process.


The SFO is the lead prosecution agency in England Wales and N.Ireland for investigating and prosecuting cases of domestic and overseas corruption. The main areas of interest are:-

  • Bribery - giving or receiving something of value to influence a transaction.
  • Illegal gratuity - giving or receiving something of value after a transaction is completed in acknowledgement of some influence over the transaction.
  • Extortion - demanding a sum of money (or goods) with a threat of harm (physical or business) if not met.
  • Conflict of interest - where an employee has an economic or personal interest in a transaction
  • Kickback - a portion of the value of the contract demanded as a bribe by an official for securing the contract.
  • Corporate espionage - theft of trade secrets, theft of intellectual property, or copyright piracy.
  • Commission / Fee - used by a UK company or individual to obtain the services of an agent / agency for assistance in securing a commercial contract.


Direct contact can be made with the SFO by anyone wishing to report bribery, corruption or any serious fraud within the relevant organisation. However, the SFO will not provide legal advice on matters which could be very important in determining outcome. The consequences of self-reporting are not always obvious. Issues to consider might include:-

  • Level of exposure to third party civil actions
  • Scope of disclosure and consequences of failure to identify all relevant activity
  • Level of financial penalty and how this might be limited
  • Costs and consequences of prosecution
  • Employment rights
  • Corporate solvency
  • Exposure to the risk of restraint orders
  • Satellite prosecution by other agencies
  • To whom should you report? UK or US?


A small number of cases self-reported in the Alderman era and the number will increase under David Green for many of the reasons discussed above. An ability to accurately predict the outcome of a self-report and calculate the cost of alternatives is going to be critical in formulating advice given to corporate clients. The SFO want to create a situation wherein the default position is - report. The indication is that the most successful reports will concern old (but relevant and serious) activity detected in good faith by a new board. The least successful will be reports made at the door of inevitable prosecution in relation to activity sanctioned or ignored by the present board. The vast majority of cases will fall between those two positions and advisers will not be able to press a button to obtain the answer. However, being robust and realistic with the SFO is going to be important, especially if the corporate client is being monitored and influenced by its shareholders, clients and not least - its insurers.


For more information please contact Evan Wright, a Partner in Business Crime and Regulation at JMW Solicitors LLP at

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