The Serious Fraud Office (SFO) joint head of bribery and corruption, Ben Morgan, issued a warning to lawyers yesterday (1 December) that the body will continue to prosecute companies for wrongdoing despite a successful first deferred prosecution agreement (DPA).

The SFO agreed the DPA, the first of its kind in the UK, with Herbert Smith Freehills and Jones Day client ICBC Standard Bank on Thursday (26 November).

But speaking at The Lawyer’s Managing Risk and Mitigating Litigation summit in London, Morgan said the mechanism would only be used in situations where a DPA was the appropriate tool, and where companies cooperated fully with the SFO.

“Please don’t mistake our willingness to go down this route on this case for a desire to force a DPA onto every corporate case that we take on,” Morgan told the audience of over 100 in-house counsel. “In some, quite specific situations they will be appropriate, and we will always have in mind their possible use, but they are not the answer to everything. It is a high bar, for a DPA to be suitable, and where it is not met we have the appetite, stamina and resources to prosecute in the ordinary way.”

He praised the “courage” of Standard Bank in deciding to cooperate with the authorities and for engaging fully to deliver a result which ”arguably has resulted in a better outcome for all involved”.

”We have been saying for some time that we thought the bar on cooperation would be a high one if it is to satisfy the court that a DPA is in the interests of justice, and, in this case at least, that appears to have been right,” Morgan added.

He said the SFO had noticed two schools emerging in the corporate and legal markets, with some prepared to cooperate and others “stuck in the past, either pretending to do so and trying to game the system, or outright rejecting it”.

Morgan said organisations had stopped conducting secret internal investigations resulting in whitewash documents, but instead companies were instructing external advisers to carry out parallel investigations.

“They will litter their correspondence with pledges of cooperation, but in fact seek to hinder, delay and generally disrupt what we are doing: we see these efforts for what they are, too, ‘pseudo-cooperation’,” he said. “There is no magic language that can be sprinkled over lawyers’ correspondence that changes our assessment of the substance of the cooperation a company has actually offered. And when it comes to a DPA, that assessment is crucial. We will only invite a company into DPA negotiations if our director is persuaded that they have offered genuine cooperation.”

“Every law firm we deal with tells us their corporate client is going to cooperate fully with our investigation,” he added. “Only a percentage of them actually do, in our assessment. So, the message for you is, if your instructions to your external lawyers are to cooperate with us, make sure they are really doing that.”

Morgan also exhorted his audience not to think about implementing policies, but to change the culture in their organisation. 

“The question people exposed to high risk situations need to ask themselves shouldn’t be, ‘Have I got a policy in place that makes this ok?’, but rather, ‘Is this, in fact, ok?’,” he said.

“It seems to me that the effectiveness of an organisation’s procedures should be judged by how things manifest themselves in a particular transactional context, not in the abstract. The quality of an organisation’s compliance culture isn’t defined by how much money it has spent on trying to implement it, or how earnestly people at the top talk about it, but rather by how people at the coal face actually live it,” Morgan said in conclusion.