SFO publishes internal guidance on evaluating compliance programmes

• United Kingdom

• Fraud and financial crime
• Litigation and dispute management
• Aerospace, defence and security
• Industrial engineering
• Industrials

05-02-2020

The Serious Fraud Office (“SFO”) has quietly published a further chapter of its internal Operational Handbook containing guidance on how its staff should assess and evaluate the compliance programmes that they investigate (the “Guidance”). The eight-page note discusses key features of effective compliance programmes, recaps the investigatory tools available to prosecutors and comments on the six guiding principles to the Bribery Act published by the Ministry of Justice in 2011.

Any insight into the decision-making process of the SFO staff will be welcomed by companies and their legal advisers, and the Guidance does provide some points of interest in places. It begins by outlining that the assessment of companies’ compliance programmes is “relevant in all cases”. This is expanded to make clear that the purpose of the assessment is to inform a number of key decisions made by prosecutors. As expected this includes whether a company may be able to raise the ‘adequate procedures’ defence to a charge of failure to prevent bribery (under section 7 of the Bribery Act), whether to invite errant companies into negotiations for a Deferred Prosecution Agreement (“DPA”), and whether and to what extent the nature of a company’s compliance programme may be relevant to sentencing.

Interestingly, the Guidance also indicates that a compliance assessment will be relevant to the public interest element of the charging decision. When deciding whether to prosecute, the SFO can consider both the state of the compliance programme at the time of offending and the current state of that programme. The Guidance hints that even an organisation with poor compliance at the time of wrongdoing could escape prosecution if they have since progressed to take remedial actions and create a ‘genuinely proactive and effective compliance programme’.

In relation to settlement of potential charges, the Guidance similarly notes that an ‘important part’ of an organisation’s suitability for a DPA is whether it has already made compliance improvements, and how its compliance may change in the future. The Guidance also points out that a DPA might still be appropriate even where the organisation lacks a fully effective compliance programme. This point is likely to provoke some debate.

However, beyond these points, the Guidance may be of limited assistance. Around half of it is devoted to considering the long-established Ministry of Justice ‘six principles’ in relation to the ‘adequate procedures’ defence under the Bribery Act, although very little is added. In large part, the Ministry’s guidance is simply quoted at length, and no further practical pointers are provided which might aid SFO investigators – and companies themselves – in evaluating to what extent a compliance programme may in fact be regarded as adequate. Aside from the occasional suggestion that the Ministry’s guidance might apply differently to large organisations and SMEs, there is therefore little insight into how the SFO’s decisions are made in practice.

The key takeaway from the publication of the Guidance appears to be the SFO’s understandable refusal to prescribe any one approach to investigating compliance programmes. The Guidance contains little of substance in terms of what companies could change tomorrow. That said, the Guidance does reveal a somewhat pragmatic attitude on the part of the SFO, which companies looking to improve their compliance programmes will take as a positive point. We are no closer to understanding the internal decision-making processes of the SFO but, even if it achieves nothing else, the Guidance confirms that companies can be confident that steps they take to proactively remediate their problems should be recognised.

Now that the SFO has obtained Court approval for its seventh DPA (which included a record-breaking financial penalty), companies will have a further window into the SFO’s approach to evaluating anti-bribery compliance programmes.