Serious Fraud Office: further guidance on self reporting

In a speech to the Annual Anti Bribery & Corruption Forum on 29th October, Ben Morgan, the Joint Head of Bribery and Corruption at the SFO, provided additional guidance as to what the SFO expects from companies “self reporting”, and also provided the strongest hint yet that organisations that did self report would not be prosecuted. 

Mr Morgan made three specific points concerning self-reporting and co-operating with the SFO:

Firstly, Mr Morgan addressed the issue of whether to self report in the first place. The default position remains “come to us before we come to you”. But the speech went further than previously, stating that a company who has done everything but self report – including compensating victims, firing  everyone complicit , checking other business lines to ensure there are no further concerns and enhancing their compliance programme – may still find it too late to be considered for a Deferred Prosecution Agreement. Mr Morgan went on to say that if a company were to self report misconduct not otherwise known by the SFO, it is hard to see how it would be in the public interest to prosecute, rather than seek to resolve the matter through a DPA.

Secondly, the issue of timing was addressed. For the first time, the SFO accepted that companies need enough time and space to have an initial look at an allegation. However, they reiterated that matters should be reported long before the conclusion of a lengthy internal investigation.

Finally, the issue of what might happen if a company chooses to engage with the SFO was considered. Mr Morgan made it clear that the SFO was already working with some law firms in a manner that enabled the effective investigation of corporate and individual suspects, but was also sympathetic to the commercial interests of a business, including the need to take actions unconnected to SFO interests. Mr Morgan provided the following examples of matters that may be discussed upon self reporting:

  • Identifying relevant witnesses and any sequencing of interviews.
  • The disclosure of the factual elements of interviews already conducted, including those conducted under legal professional privilege.
  • Whether to conduct those interviews in such a way as to create claims to privilege, and if doing so,  whether to assert those claims over the factual content.
  • The provision of relevant  documentation in a timely manner, suitable digital format and sensible arrangement.
  • Alerting the SFO to potentially relevant sources of documentation.
  • The appropriate handling of data, to preserve integrity and continuity.

Corporate bodies will certainly welcome the additional guidance from the SFO, in particular the acceptance that time is needed to consider an initial allegation before reporting it, and the recognition that there are concerns following the discovery of an allegation beyond those of interest to the SFO.

However, the issue of whether the SFO considering a matter suitable for a DPA is likely to actually result in a DPA remains unanswered. If the SFO’s main bait is merely the consideration of a matter for a DPA, rather than the likely outcome, it does not seem quite so tempting. The Director of the SFO stated in September that he expects to see two DPA settlements before the end of 2015. If and when the first one emerges, corporate bodies will have a much clearer understanding of the benefits of self reporting and co-operation.

To read more about self reporting to the SFO, see the Practical Law practice note, The Serious Fraud Office: self-reporting and co-operation

To read more about the SFO’s approach to deferred prosecution agreements, see the Practical Law practice note, What factors will the prosecution consider before negotiating a DPA?

To read more about internal investigations and waiver of privilege, see the Practical Law practice notes, Legal professional privilege in internal investigations and Waiving privilege in an internal investigation

Practical Law David Bacon

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