The SFO has published a non-exhaustive list of “corruption indicators” to assist employees of companies to detect questionable practices. These 19 indicators give some insight into what the SFO will consider to be evidence of corrupt practices in any investigation it undertakes. Examples selected from the list include abnormal cash payments, pressure exerted for urgent payment, abnormal commission percentages, private meetings with contractors hoping to tender for contracts, lavish gifts being received, agreeing unfavourable contracts, an unexplained preference for certain contractors during tendering, avoidance of independent checks, missing documents or records, company procedures not being followed and the payment of, or making funds available for, high value expenses or school fees.
The SFO has sought to promote the self reporting regime for corporations where bribery is detected on the basis that it may allow a company to receive a civil rather than criminal penalty where the company engages fully with the regulator and may permit the management of adverse publicity. The reality of whether these benefits are available to corporations must now be in doubt following the cases of R v Dougall  EWCA Crim 1048 and R v Innospec Ltd  EWCA Crim 1048.
One benefit of such a negotiated settlement is that the automatic debarment provisions under art 45 of the EU Public Sector Procurement Directive 2004 (2004/18/EC) will not apply. If a company elects to use the self reporting regime it must consider the global effect as the SFO States it would expect to be notified at the same time as the Department of Justice in the US providing it has jurisdictional reach over the corruption.
Guidance has also been offered to corporations seeking to ensure compliance with the Act regarding the offence of failing to prevent bribery. In determining whether it is in the public interest to prosecute the SFO will look for evidence of procedures designed to reduce risk and encourage a non bribery culture within the business. Examples of this include a clear anti-corruption policy which is supported by those in senior positions, principles that apply regardless of geographical location, a policy on gifts, hospitality and facilitation payments, a helpline for employees to report concerns, appropriate and consistent disciplinary procedures and remedial action if corruption has previously arisen.
Plea bargaining and global settlements
The Attorney General’s Guidelines on Plea Discussions in Cases of Serious and Complex Fraud have been adopted by the SFO as the framework for negotiating plea bargains in corruption cases. The plea discussions will be confidential save as required for the purposes of the discussion or as required by law. This means that the discussions may have to be disclosed to another defendant as unused material. The fact that plea negotiation has been undertaken and failed should not be relied upon evidentially by a prosecutor in any subsequent prosecution of the defendant for offences which fell within the scope of the negotiation.
However, if an agreement has been reached and signed a prosecutor will be entitled to rely upon it as a confession, can use information given to gather further evidence, rely upon evidence given in the course of the plea negotiation where it gives rise to offences other than those which were the subject of the negotiation such as money laundering. The prosecutor can liaise with other agencies which have an interest in proceedings to see if they wish to take part in plea negotiations with a view to global resolution. Corporations which operate on a global level should note that a party who has not signed the agreement will not be bound by it.
The conduct of the SFO and the OFT in making plea agreements has come under the scrutiny of the court in Dougall and Innospec. The court restated the cardinal principle that sentence is a matter for the judiciary and is not a matter to be negotiated under the plea agreement or a matter to be jointly advocated before the court.
In Innospec the company entered into an agreement made between the DOJ, the SEC, the OFAC and SFO which specified the division of the sum these bodies had considered Innospec was able to pay. The court was critical of the scope and content of the agreement reached by the SFO and concluded that the director had no power to enter into the arrangements made and no such arrangements should be made again. The sums suggested had not been the subject of judicial determination in either the UK or the US (save that inherent in the Federal District Court’s approval of the plea agreement). The court commented that as in R v Whittle; R v Allison; R v Brammar (2008) The Times, 27 November, it was placed in a position where it had little alternative but to agree to the suggested financial penalties if it was to avoid injustice to the defendant’s legitimate expectations. Further criticism was made by Lord Justice Bean in his sentencing remarks in BAE Systems plc of the decision to grant of immunity from prosecution and the agreement was described as “loosely and perhaps hastily drafted.”
The court also addressed the issue of civil penalties being imposed on corporations rather than criminal sanctions and clearly stated it will rarely be appropriate for criminal conduct by a company to be dealt with by means of a civil recovery order as it would be inconsistent with basic principles of justice for the criminality of corporations to be glossed over by a civil as opposed to a criminal sanction. The court also stated that the suggestion that a press notice in a form approved could be issued by Innospec to manage adverse publicity was not acceptable.
In Dougall the Court of Appeal addressed the issue of the benefit to be given to defendants who co-operated fully with the authorities under s 73 of the Serious Organised Crime and Police Act 2005 agreements. The defendant agreed to provide full co-operation to any foreign competent judicial authority investigating the affairs of the businesses involved and its employees and in particular agreed to assist the US Department of Justice and the Securities and Exchange Commission. The court was addressed on the need for white collar defendants to have some guidance as to likely sentence if they co-operated to the extent of Mr Dougall. The court indicated that where the appropriate sentence for a defendant would be 12 months’ imprisonment or less, the argument that the sentence should be suspended is very powerful.
It appears that the SFO’s stratagems of encouraging self reporting, pursuing plea agreements and negotiating global settlements have been given only limited support by the UK courts to date. Business can derive little certainty from the guidance given by the regulator in cases where systemic corruption has occurred. New joint guidance from the Attorney General and the SFO is awaited. Court judgments do, however, make it clear that considerable mitigation can be drawn from full co-operation with the regulator although what sentence is to be imposed remains a matter solely for the judiciary.
In addition to its sentencing powers under the Act, the court also has the power to order confiscation against a convicted defendant who has benefited from his criminal conduct. The SFO also has the power to obtain a civil recovery order in proceedings before the High Court in respect of property obtained through unlawful conduct. The armoury of the SFO extends to directors’ disqualification orders and serious crime prevention orders.
Eleanor Davison, barrister, Outer Temple Chambers. This is an edited version of an article that first appeared in New Law Journal (3 December 2010).