The Serious Fraud Office (SFO) last Friday published its first specific guidance on DPAs (the Guidance). Lisa Osofsky, Director of the Serious Fraud Office, said that ‘publishing this guidance will provide further transparency on what we expect from companies looking to co-operate with us’.
Inevitably, the new Guidance remains high-level with little detail on the areas that cause companies the most anxieties, such as the timing of self-reports, the role of the internal investigation and the knotty issue of whether the waiver of privilege over first accounts and investigation findings is essential to render cooperation sufficient to achieve a DPA. Much is unchanged from the DPA Code of Practice published in 2014, but it largely follows the statements made by the Director and others over the last few years. The new Guidance must be read in parallel with the 2019 SFO Guidance on Corporate Cooperation.
A number of points are emphasised and reiterated in the Guidance, but it leaves open some key issues, particularly around self-reporting:
- Waiver of privilege as a marker of cooperation: The Guidance confirms the stance long taken by the SFO (and set out in the Corporate Cooperation Guidance) that waiving legal professional privilege over material is an ‘indicator’ of co-operation attracting credit towards a DPA (although reiterates that a company can neither be compelled to waive privilege, nor penalised for not waiving privilege). The extent of the loss of credit for refusing to waive privilege remains a question to be determined on a case-by-case basis.
- Redaction of the Statement of Facts where appropriate: The Guidance notes that it may be appropriate to publish a redacted or anonymised statement of facts to protect individuals. This recognises the serious problems encountered in the DPA with Tesco Plc, in which individuals (including our client) were named as ‘wrongdoers’ in the Statement of Facts, but were subsequently acquitted.
- Parallel investigations: The section on parallel multi-jurisdictional investigations reflects a rise in increasingly coordinated cross-border investigations and enforcement. It encourages companies to be mindful of the need to avoid double sanctioning in their own interests. This is illustrated by the joint settlement reached with Airbus with the UK, the US and France, as well as recent global financial crime settlements.
- An expectation that companies will report to the SFO “within a reasonable time of the suspicions coming to light”. The question as to what constitutes a ‘reasonable time’ remains unanswered and without further assistance as to the possible triggers for such a report. Given that the SFO states in the Corporate Cooperation Guidance that it expects companies to ‘consult…with the SFO before interviewing potential witnesses or suspects’, there must be an expectation of a self-report before anyone has been spoken to any detail. Although the general direction of the guidance seems to move away from the SFO’s former aversion to internal investigations, the conundrum remains that a company has to decide to self-report before it has ascertained from those involved whether it has a serious issue, and its extent. In the Tesco DPA, the company was dissuaded by the SFO from carrying out detailed investigative interviews, with the result that the internal investigation was limited. The risk of losing an aspect of cooperation credit if there is later found to be a significant problem, has to be balanced against the risk of not progressing an investigation in order that the company can understand, the full extent of the issues. Although the Guidance does little to resolve this dilemma, the SFO appears to be moving towards a more US position in understanding the role of internal investigations as part of the corporate process in these situations.
