In a speech earlier this week Lisa Osofsky announced that the SFO will shortly publish guidance on its expectations in relation to self-reporting and cooperation. The speech suggested that waiver of privilege over internal investigations material will be seen by the SFO as a strong indicator of, if not a precondition to, cooperation for the purposes of the SFO initiating DPA negotiations:
“….companies can waive that privilege if they wish to cooperate… I will soon be issuing guidance for corporates and their legal advisers to provide them with added transparency about what they might expect if they decide to self-report fraud or corruption to my office.
And waiving privilege over that initial investigative material will be a strong indicator of cooperation and an important factor that I will take into account when considering whether to invite a company to enter into DPA negotiations; it also highlights whether a DPA is in the public interest in that case…I say this in light of the comments of Sir Brian Leveson, in the decision of the Court of Appeal in the SFO v ENRC, that a court “will consider whether the company was willing to waive any privilege attaching to documents produced during internal investigations, so that it could share those documents with the SFO.” The President of the Queen’s Bench has spoken. Especially in a jurisdiction where the judge plays such a critical role in determining whether to accept a DPA, it behoves us all to listen—and to take heed.”
Osofsky says that “the Courts do not like it” when a company “calls in a team of lawyers and then throws the blanket of legal professional privilege over all the material they have gathered” but the basis of this is unclear. Leveson, in the preceding paragraph of the ENRC judgment, states that it is “obviously in the public interest that companies should be prepared to investigate allegations from whistle blowers or investigative journalists, prior to going to a prosecutor such as the SFO, without losing the benefit of legal professional privilege for the work product and consequences of their investigation. Were they to do so, the temptation might well be not to investigate at all…”. See here for a fuller analysis of the ENRC judgment.
Osofsky’s comments follow on from Matthew Wagstaff’s speech in December, in which he said “the refusal to [waive privilege over factual accounts] may well be incompatible with an assertion of a desire to co-operate“. The joint SFO and CPS Code of Practice in relation to DPAs does not, however, refer to waiver of privilege as a factor weighing in favour of a DPA, only that (among other factors) “the prosecutor needs to establish whether sufficient information about the operation and conduct of P has been supplied in order to assess whether P has been co-operative. Cooperation will include identifying relevant witnesses, disclosing their accounts and the documents shown to them.”
Leveson’s comments in the DPA judgments to date make clear that waiver of privilege will be a factor in assessing the extent to which a company has cooperated, which is only one of various factors in favour of a DPA. A company should not be prevented from the prospect of a DPA solely on the basis of its refusal to give up its fundamental right to legal privilege, particularly given the broader issues which feed into a decision on waiver, including the now common trend for civil disputes to arise from criminal matters, and the likelihood of enforcement in other jurisdictions.
In practice, attempts by the SFO to put pressure on companies to waive their fundamental right to privilege may discourage self-reporting.