Advise clients on fraud rules

Tough new SFO policies on gifts and payments mean companies need lawyers on their side

Simon Airey

The Serious Fraud Office (SFO) has published new policies relating to gifts and hospitality, facilitation payments and self-reporting. All previous guidance, apart from the Joint Prosecution Guidance (JPG) has been withdrawn. The message in the new policies is clear: if there is sufficient evidence for a realistic prospect of conviction and if it is in the public interest, a prosecution will follow.

This is a different message to that broadcast by former SFO director Richard Alderman. His invitation to companies to “come and talk” to the SFO has effectively been quashed. The approach of the new director, David Green CB QC, is apparently more hardline and suggests a return to basics: “We are investigators and prosecutors. We are not here to offer advice, to preach or to make moral judgments.”

The withdrawal of guidance on self-reporting will disconcert certain sectors of the business community. Where previously there was a hope, even an expectation, that a self-report to the SFO might result in a civil resolution, now there is little or none.

It seems the SFO’s stance is aligned with the comments of Thomas LJ in the Innospec judgment, where he stated that corruption is at the top end of corporate offending and it will rarely be appropriate for such conduct to be dealt with civilly.

If and when they are brought into law, deferred prosecution agreements (DPAs) may offer some comfort. A DPA may avoid the worst consequences of a prosecution, such as debarment from public procurement contracts or World Bank funding. But with no clarity yet as to how DPAs will work or whether they will be generally available, will companies choose to brush matters under the carpet or turn a blind eye, hoping the whistle is not blown? If so, section 14 of the Bribery Act ought to give senior ­officers pause for thought.

The new policies give a little comfort in relation to gifts and hospitality. Legitimate hospitality is unsurprisingly of no interest to the SFO: “We are not the Serious Champagne Office,” Green has said.

The issue of facilitation payments remains fraught, however. The JPG suggests they are unlikely to be prosecuted in one-off ­instances: but that is not the nature of facilitation payments in the context of global commerce.

Such payments are endemic in many parts of the world and the apparent need to eliminate them instantly will cause real consternation in certain sectors. Companies that have been working towards ­zero-tolerance will suddenly be feeling a chill wind.

One thing is certain – having ‘adequate procedures’ in place to prevent bribery is even more important than before. Each month that passes since the implementation of the Bribery Act will see a decrease in the SFO’s tolerance. Now is the time for a health check and to ensure appropriate policies and procedures are in place – and are working.

Depending on a company’s confidence about its position, it may be prudent to ensure that any such review benefits from the rigour that is often present only within the confines of legal professional privilege.

Laura Ford, a solicitor at DLA Piper, assisted with this article