Out-Law Analysis 2 min. read
08 Aug 2019, 9:33 am
There will be circumstances in which full adherence to the guidance and the SFO's expectations is not realistic but, if that arises, it should be an informed decision. In light of the guidance, companies should urgently review their existing protocols and practices for conducting internal and disciplinary investigations into matters which have a financial crime element to ensure there are no inadvertent breaches of the guidance.
The guidance (5-page / 1.2MB PDF) is directed at companies which are at risk of having committed a corporate criminal offence that may be investigated by the SFO; namely fraud, bribery and the failure to prevent the facilitation of overseas tax evasion. It is important and significant because it codifies and clarifies the SFO's expectations of what is required of cooperative companies.
Companies should urgently review their existing protocols and practices for conducting internal and disciplinary investigations into matters which have a financial crime element to ensure there are no inadvertent breaches of the guidance.
Most companies which are subject to an SFO investigation will wish to state publicly that they are cooperating with the SFO. Cooperation with the SFO is a pre-requisite should a company wish to put itself in a position to secure a deferred prosecution agreement (DPA) where appropriate; while cooperation with the SFO is also a mitigating factor for the purposes of sentencing should criminal charges and a conviction result.
The SFO considers cooperation to be going "above and beyond what the law requires". This includes identifying suspected wrongdoing and criminal conduct together with the people responsible; reporting this to the SFO within a reasonable time of the suspicions coming to light; and preserving available evidence and providing it promptly in an evidentially sound format.
The standards expected in relation to the preservation of evidence are onerous. The SFO expects all electronic, hard copy and accounting evidence to be preserved - including passwords, recovery keys and old systems. An audit trail for the acquisition and handling of all electronic and documentary evidence must also be maintained, with a relevant person prepared to provide a witness statement.
Companies are advised not to interview witnesses or suspects as part of their own internal investigations, or to take disciplinary action, without first consulting the SFO. If interviews take place, they must be handled carefully in order to avoid tainting the recollection of a potential witness - for example, by sharing with them another person's account or showing the witness documents that they have not previously seen.
Cooperating companies must promptly provide a schedule of documents withheld on the basis of legal privilege, and an explanation for asserting privilege. The company will be expected to provide certification from an independent lawyer than the material in question is privileged.
The guidance also deals with witness accounts collated by the company in the course of internal investigations, presumably prior to reaching the conclusion that there was a potential corporate offence that should be notified to the SFO. Companies are expected to provide any such witness accounts to the SFO as a mark of cooperation. If the company does not provide these witness accounts, perhaps because they are privileged, they will not be considered cooperative, and so will not gain the benefit of a factor that is taken into account in determining whether a DPA is in the public interest.
Tom Stocker is a corporate crime and internal investigations expert at Pinsent Masons, the law firm behind Out-Law.
26 Sep 2018