Serious Fraud Office clarifies its view of “cooperation”

• United Kingdom

• Fraud and financial crime
• Litigation and dispute management

07-08-2019

The SFO finally issues long-awaited definitive guidance as to the expectations for corporate defendants seeking to gain cooperation credit

The Serious Fraud Office (SFO), the UK authority responsible for prosecuting and investigating serious or complex fraud and corruption, has published guidance on how companies can demonstrate  cooperation (the Guidance).

Along with self-reporting of wrongdoing, the concept of ‘cooperation’ has long been held out by the SFO as a key factor upon which their decision to offer a Deferred Prosecution Agreement (DPA), will hinge. For companies who have not been offered a DPA, cooperation is also a factor which would be taken into account during sentencing as mitigation.

Until now, however, beyond the odd snippet in speeches from SFO officials, there has been little guidance on what exactly the SFO expects cooperation to look like. The Guidance, published as an update to the SFO’s Operational Handbook,  defines cooperation as “providing assistance to the SFO that goes above and beyond what the law requires” and goes on to list what this assistance would include, namely:

• identifying suspected wrongdoing and criminal conduct together with the people responsible, regardless of their seniority or position in the organisation;
• reporting this to the SFO within a reasonable time of the suspicions coming to light; and
• preserving available evidence and providing it promptly in an evidentially sound format.

The Guidance then sets out a number of detailed examples of good general practice in these areas. Of particular note is the SFO’s preference for material to be presented to it in a “useful, structured way”, which could include compilations of selected documents, materials sorted in a particular way, background information on an organisation, collated financial records, and information on industry practice, “other actors in the relevant market” and specific market or industry defences.

A significant portion of the Guidance addresses digital evidence and devices, recognising the challenges that come with such material. This illustrates the importance of companies being aware of electronic data issues and recognising any weaknesses in their systems. Companies should be prepared to call on internal or external IT expertise in order to process data so that it can be provided to the SFO in its preferred format, and put in place methods of dealing with ageing technology or bespoke systems to avoid access problems in the future (bearing in mind that some SFO investigations can be lengthy). The Guidance also recognises that some relevant material may be held in places a company cannot access (examples given include private email accounts, messaging apps and social media) and suggests that companies should alert the SFO to such material.

The SFO has highlighted waiver of legal professional privilege as a point of cooperation in DPA negotiations in the past. The Guidance cross-references the 2014 DPA Code of Practice which states that providing a report of any internal investigation (including source documents) is evidence of co-operation. The Guidance further states that if an organisation decides to assert privilege over material, the SFO may challenge this assertion and companies will be expected to  provide certification from independent counsel to support the assertion. The  Guidance confirms that where a company decides not to waive privilege, whilst it will not gain cooperation credit it will not be penalised either for the non-waiver. 

Companies must remember that cooperation is not a silver bullet: the Guidance is clear that even what it deems “full, robust cooperation” will not guarantee a particular outcome. The Guidance also repeats that every case is different and the outcome will turn on the particular facts and circumstances. What is clear is that simply following the law to the letter, including complying with compulsory processes, is not enough. 

None of the points in the Guidance should come as a surprise to those familiar with SFO investigations, and some may comment that the document is long overdue. Nevertheless, the Guidance provides welcome clarity for companies facing an SFO investigation, or negotiating a DPA, and will go a long way to reduce uncertainty for companies faced with difficult decisions to make.

The Guidance can be downloaded from the SFO’s website.