Out-Law News | 24 Mar 2017 | 9:56 am | 3 min. read
The UK government must ensure sufficient funding and independence for the SFO, while improving inter-agency cooperation and strengthening engagement with its Crown Dependencies and Overseas Territories, according to a new report by the Organisation for Economic Cooperation and Development (OECD) (106-page / 1.9MB PDF).
The report is part of an OECD working group's efforts to monitor the implementation of the body's 1997 Convention on Combating Bribery of Foreign Public Officials in International Business Transactions by the various signatory states. The UK government must submit a written report to the working group within two years, setting out its response to the OECD's recommendations.
"Among its numerous observations and recommendations, the report makes plain the importance of the SFO in investigating and prosecuting bribery and its relative pre-eminence in this area among UK law enforcement agencies," said anti-corruption expert Barry Vitou of Pinsent Masons, the law firm behind Out-Law.com. "The recently-announced government review must take these findings seriously in any conclusions and recommendations it makes."
The SFO investigates and prosecutes the most serious cases of fraud, corruption and corporate crime, and is listed in the OECD report as "in practice the leading agency in terms of number of foreign bribery cases and expertise in this field". However, since 2014, some responsibilities in relation to foreign bribery cases have shifted to other agencies, particularly the National Crime Agency (NCA).
During its evidence-gathering sessions while compiling the report, the OECD heard concerns about a lack of funding for the SFO and "ongoing uncertainty" over the agency's future. In December, UK home secretary Amber Rudd announced that the Cabinet Office would review UK enforcement of economic crime, including "looking at the effectiveness of our organisational framework, and the capabilities, resources and powers available to the organisations that tackle economic crime".
"This statement reignited concerns among the private sector lawyers, civil society and the press that the SFO may be folded in the NCA," the OECD said in its report.
"The lead examiners note that, in spite of the many law enforcement agencies with potential responsibility for foreign bribery enforcement in the UK, the SFO is in practice the leading agency ... They further consider that the integrated approach, or so-called 'Roskill model', which brings together prosecutors, investigators and other specialists, constitutes a positive achievement which has proven very effective in bringing foreign bribery cases forward. For these reasons, the lead examiners recommend that the UK maintain the SFO's role in criminal foreign bribery-related investigations and prosecutions as a priority," it said.
Achievements highlighted by the OECD in its report included co-ordination among England and Wales enforcement authorities under a 'Clearing House' model and increased enforcement activity by both the SFO and Financial Conduct Authority (FCA). It also noted that half of concluded criminal and civil settlements in the UK for foreign bribery are the result of corporate self-reports, and highlighted the SFO's focus on promoting whistleblowing and increased interrogation of the 380,000 suspicious activity reports received by the NCA in 2014/15.
The OECD was also positive about the multidisciplinary approach to bribery enforcement in Scotland, and the establishment of the Scottish Crime Campus to bring together law enforcement officials from different agencies. It noted that Scotland does not yet allow the use of deferred prosecution agreements (DPAs) by companies, and expressed concerns about the use of civil settlements. It recommended that Scotland adopt a scheme comparable to the DPAs available in England and Wales, particularly given the increasing number of Scottish businesses operating internationally in sensitive sectors such as mining, oil and gas.
However, corporate crime lawyer Tom Stocker, of Pinsent Masons said that the OECD's concerns about Scotland's civil settlement regime were "misplaced".
"The settlement regime incentivises companies to clean out the skeletons and, importantly, to remediate," he said. "The reality is that Scotland's civil settlement regime has resulted in several companies self-reporting bribery to the Scottish authorities that may otherwise have gone undetected. That is to be welcomed, as it promotes ethical business conduct."
"There have been five concluded corporate settlements in relation to private sector bribery in the UK and overseas, and there is an on-going criminal investigation into bribery of foreign public officials by a Scottish-headquartered recruitment agency. Considering the size of Scotland's business community, that is a comparably high number of concluded cases to the level of self-reports in England and Wales," he said.
Prosecutors in England and Wales have had the power to put DPAs in place with corporate offenders since February 2014. These are designed to encourage businesses to self-report wrongdoing in the hope of more lenient treatment, including the possibility of avoiding a criminal investigation and potential prosecution if strict conditions set by a judge are met.
In January, Rolls Royce agreed to pay approximately £671 million in fines to avoid being prosecuted by the SFO, the US Department of Justice and authorities in Brazil for corrupt practices spanning a 24-year period from 1989. The £500m UK fine dwarfed previous fines imposed by the SFO under a DPA, putting it on an even footing with the largest corruption cases in the US.