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Another SFO Investigation Success for Siobhain Egan & LNL

SFOWe were instructed to advise and represent an individual who was the subject of a huge SFO investigation following allegations concerning a property SIP investment fraud which is alleged to have taken place in four jurisdictions and involved the loss of £63 million and subsequent money laundering.

Siobhain took detailed instructions and advised the client to give a fully commented interview, and as a result of his answers and detailed representations made on his behalf by Siobhain (after the interview in written correspondence), the SFO revoked his bail (he had been on bail for many months) and he has now been dropped from the investigation.

This emphasises the importance of instructing genuinely experienced fraud lawyers, who know their way around an interview situation. Interviews are the most important part of the whole criminal investigation process and it is vital that the arrestee/interviewee has a team that understand how the investigative authorities work and how they react.

We have been defending SFO investigations and prosecutions since the SFO was first set up and have a very successful track record.

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Civil Recovery Orders Back On the Table for the SFO – by Siobhain Egan

It seemed from last autumn’s comments made by David Green QC, the Director of the SFO, that he was bringing back the prosecuting authority to its prosecutorial roots. However, he has recently stated, “… 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 of course makes complete sense, particularly with the advent of Deferred Prosecution Agreements (DPAs) looming. Additionally, there was a fair amount of grumbling and confusion in the City legal press after he made his initial statement last year, and many were wondering whether it would be in any company’s interest to self-report if the SFO were only looking to prosecute.

The SFO have had plenty of successful civil recovery proceedings issued in the High Court over recent years, e.g. Balfour Beatty PLC, Amec PLC, M.W. Kellogg Limited, Macmillan Publishers Ltd, and Mabey & Johnson. It is not difficult for them to be so successful; pt.5 Proceeds of Crime Act 2002, gives the prosecuting body enormous and draconian powers to focus purely upon the property in question. The standard of proof is the lower standard, and they do not need to prove unlawful conduct.

So for a company, self-reporting and the timing of the report are crucial. In reality, to receive the full benefit, the report should be one that the SFO would not have learned of through any other source other than the company. It should be within weeks of the criminal offending coming to light. There has to be full disclosure of the offending behaviour (it’s vital that the company comes with ‘clean hands’) and with proof that such behaviour would not occur again (e.g. better compliance systems, supervision etc).

It is a huge decision to make, and the collateral damage for any company would be enormous, e.g. the effect upon shareholders (see Mabey & Johnson), reputational management, and other contracts/suppliers etc, and so the decision has to be made very carefully. Look to see if the action/event really amounts to a reportable offence.

Which brings us neatly to the current possibility that the government may re-visit aspects of the Bribery Act 2011 e.g. facilitation payments which cause SMEs (and the necessary expensive compliance systems) such concern.

We can advise and represent any individual or company in the High Court facing civil recovery (we successfully resisted such proceedings against an individual recently). We can negotiate with the authorities with a view to reaching a good settlement, if necessary.

We can also help to advise companies who are considering self-reporting to the authorities (based on our 30 years of experience successfully dealing with the authorities) to ensure that all aspects are covered.

We also advise companies regarding compliance systems at reasonable costs.

Contact Jeffrey Lewis or Siobhain Egan, if you are facing any of these issues.

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SFO: Perhaps the Phoenix Will Rise from the Ashes, After All?

A quick analysis of the SFO’s recent activities shows that the SFO director David Green does mean business and has secured additional funding in order to do so.

Finally, the SFO have lost patience with ENRC and all that has gone on with that company regarding an investigation into African bribery and corruption. This is a good example of a potential civil settlement going badly wrong and it looks likely that a criminal inquiry will now get underway since the SFO have served a s.2A notice.

The SFO also want to draw a line under the Rolls Royce corruption allegations originating in Indonesia, and are apparently considering a Civil Recovery Order. Presumably, this case would have been an ideal candidate for a Deferred Prosecution Agreement, however these will not come into effect until February 2014. They also seem to have BUMI and the alleged missing £48 million within their sights, and finally perhaps some movement on the Libor criminal inquiry. The SFO are currently advertising for a lawyer to assist with their endeavours in this regard.

It seems that the SFO have secured additional funding after having had their budget slashed in the Government’s recent austerity drive. They have increased income to a new high of £6.6 million in 2011/12 as a result of asset seizures, secured £3.5 million for the Libor criminal inquiry from the Treasury, and also ‘blockbuster’ funding for any investigation deemed to cost more than £1.5 million.

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Are SFO Bribery Act Policies Likely to Change?

Siobhain Egan has written a blog article regarding possible changes to SFO’s bribery and corruption guidance/policy. Read the article here.

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New SFO Guidance on Bribery Act 2010 – by Siobhain Egan

The SFO’s new Director now appears to be taking a slightly different approach to that of his predecessor when focusing upon the controversial issues of self-reporting, hospitality, and facilitation payments.

Self-reporting still remains of crucial importance (and therefore the need for companies to have comprehensive up-to-date compliance systems in place), however the SFO appear to be moving slightly away from the Deferred Prosecution Agreement/civil settlement so favoured by Richard Alderman and the present government. The latter has just finished consulting upon DPAs.

The SFO have stated that, “The revised policies make it clear that there will be no presumption in favour of civil settlements in any circumstances.” One wonders how much of this is ‘grandstanding’.

We know that the SFO are working under a much-reduced budget, in fact only £2 million has been allocated to bribery and corruption, so there does not appear to be much in the pot to fund large, long-running, in-depth investigations and prosecutions. That is, unless they pursue companies using the Proceeds of Crime Act 2002, which has a reverse burden of proof or civil asset recovery. Essentially companies and individuals would have to prove that the payments in question were legitimate.

Facilitation payments have always been a ‘bone of contention’ between the US and UK prosecuting authorities. The SFO now say that they will prosecute if there are, for example, large/repeated payments but they are no more definitive than that.

Very little is said about hospitality, other than that they recognise that hospitality is part of business culture but that bribes can be dressed up as hospitality.

So what does this mean for companies? As stated earlier, ensure that you have ‘gold plated’ compliance systems in place and, if you are facing a SFO prosecution, it is likely to lead to a POCA investigation and you should ensure that you instruct specialist forensic accountants and solicitors when preparing your defence.

Contact Jeffrey Lewis or Siobhain Egan

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