SFO finally publishes guidance on corporate co-operation

The extent to which a corporate co-operates with the SFO is one of the factors the SFO will take into account in deciding how to proceed with a prosecution and whether to offer a deferred prosecution agreement. The SFO has previously been reluctant, however, to provide formal guidance as to the level of co-operation expected from a corporate looking to secure "co-operation credit". 

That changed this summer when the SFO Director, Lisa Osofsky, delivered on her earlier promise and published "Corporate Co-operation Guidance". The 5 page document forms part of the SFO Operational Handbook and, together with the Guidance on Corporate Prosecutions and the Deferred Prosecution Agreements Code of Practice, sets out what the SFO expects in terms of "genuine co-operation". 

This transparency is to be welcomed, but it does mean that corporates are now in no doubt as to the high level of co-operation expected. The guidance is therefore an essential resource for any corporate looking to secure "co-operation credit".

Here we look at the key takeaways:

• High threshold confirmed… but no assurances given
• Early co-operation is key
• Collation and provision of evidence
• Industry information
• Witness interviews and waiver of privilege
• What about individuals?
• Is the guidance helpful? Will it incentivise self-reporting?

High threshold confirmed… but no assurances given

The guidance confirms that the threshold is high: "Co-operation means providing assistance to the SFO that goes above and beyond what the law requires".¹

Practical guidance is provided in the form of a non-exhaustive list of "indicators of good practice". While not a checklist, the guidance is essential reading for any corporate looking to secure "co-operation credit". 

However, corporates will be disappointed by the lack of guidance as to the specific benefits of co-operation. The guidance makes it clear that co-operation is one of many factors that the SFO will consider; even "full, robust co-operation - does not guarantee any particular outcome"². This contrasts with the US position where there is a presumption of a declination (no further prosecution by the DOJ) or specific reductions in favour of corporates that co-operate.³

This reticence could be due to the fact that a greater degree of judicial control is exercised over the approval of DPAs in the UK, as compared to the US. The SFO is therefore not in a position to give any guarantees. That said, the DPAs approved to date do illustrate how full co-operation can be a key factor in securing judicial approval.

Early co-operation is key

In a speech delivered earlier this year, Ms Osofsky recognised the need for corporates to conduct preliminary investigations in order to better understand what they may be reporting before they report it.⁴  This is reflected in the guidance which expects corporates to report suspected wrongdoing "within a reasonable time" of suspicions coming to light. Tactical delays will count against them. 

That said, any early investigation will need to be mindful of the "ultimate objective of cooperating with law enforcement by preserving vital evidence…". The guidance reinforces the need for data preservation and preservation of digital integrity: any early investigation team will need to ensure protective measures are taken. 

Evidence: collation and provision to the SFO

When she became Director of the SFO in August 2018, Ms Osofsky made it clear that the SFO needed to be more efficient in the way it handled evidence. This goal is reflected in the guidance: the onus is placed on the corporate to ensure evidence is preserved and provided in an evidentially sound format. 

Co-operation extends not only to the corporate's documents, but those in the hands of third parties and data stored overseas that are in the corporate's control. 

These high expectations are mirrored in the indicators relating to digital evidence and devices, and hard copy and physical evidence. Similar expectations apply to a corporate's financial records and analysis.

This will increase the burden on evidence gathering and document review in internal investigations. Although the SFO recognises that the indicators are not an exhaustive checklist, any corporate seeking to secure "co-operation credit" will need to pay close attention to these requirements. 

Industry information

The list also covers industry and background information, with corporates expected to: provide industry knowledge, context and common practices, identify potential defences particular to that market/industry, provide information on other actors in the relevant market, and notify the SFO of any other government agencies by whom it has been contacted or to whom it has reported. 

Witness interviews and waiver of privilege

Witness first accounts are a valuable source of evidence. In any investigation the SFO will be keen to secure these. 

Corporates are expected to consult with the SFO before interviewing potential witnesses or suspects, or taking personnel/HR actions. That may be difficult in circumstances where a preliminary investigation is first required before the SFO is approached. 

Where interviews are conducted, corporates will not only have to provide access to first witness accounts, but will also need to provide any recording, notes and/or transcripts of the interview if they are to secure "co-operation credit". Any privilege in those interview notes will need to be waived.

This signals an end to the SFO's previous practice of accepting oral summaries of witness first accounts where privilege was claimed. This is unsurprising given the judicial criticism it attracted.⁵

Ms Osofsky has previously remarked that a waiver of privilege over witness first accounts "will be a strong indicator of cooperation and an important factor ….. when considering whether to invite a company to enter into DPA negotiations".⁶  However, this is not a decision to be taken lightly, particularly if cross-border investigations or proceedings are likely. The implications will have to be carefully thought through and any waiver given on a very limited basis.

But what if you don't want to waive privilege?

The guidance confirms that the SFO will not penalise a corporate that does not waive privilege. However, it will expect any claims to privilege to be well-founded and justified. This reflects the robust and sceptical approach adopted by the SFO towards claims of privilege, particularly in relation to witness first accounts. 

The guidance imposes two new requirements that will need to be satisfied in order to demonstrate a valid claim to privilege:

• certification of claims to privilege over witness first accounts by "independent counsel"; and
• the provision of "privilege logs" in respect of all documents withheld on grounds of privilege. 

For further guidance and practical tips on privilege in investigations, see our Quickguide. 

What about individuals?

The SFO remains eager to prosecute those individuals responsible for bribery. The identification of those responsible for suspected wrongdoing and the provision of evidence remains a key part of co-operation conduct. This section of the guidance will need to be analysed carefully.

Corporates that protect specific individuals or unjustifiably blame others will not be regarded as co-operative. Likewise, corporates are to avoid putting subjects on notice and creating a danger of tampering with evidence or testimony. 

Corporates are also expected to identify material that might assist any accused or potential accused or undermine the case for the prosecution. Those reviewing the data will therefore need to be aware of what this could include.

Is the guidance helpful? Will it incentivise self-reporting?

The guidance is in line with previous statements and speeches given by the SFO. It also reflects the high level of co-operation provided in the 5 cases that have resulted in a DPA (for more detailed analysis, see Appendix 2 of our Quickguide on bribery and corruption). 

Although it does not tell us much that is new, the list of steps that the SFO expects corporates to take will be helpful to any corporate conducting an investigation where the corporate wants to ensure that the DPA route remains open to it. 

However, it is questionable as to whether this will incentivise self-reporting. The high bar set and the absence of any assurance as to the credit secured ensures that decisions on self-reporting and full disclosure will remain difficult. There is also the cost: Rolls Royce is reported to have spent £123 million on its internal investigation and co-operation with the SFO. That, and the limited success the SFO has had in securing convictions against individuals in cases where the corporates fully co-operated,⁷ raises questions as to whether the guidance will incentivise corporates to fully co-operate as intended by the SFO.  

1. Page 1 of "Corporate Co-operation Guidance".
2. Page 1
3. See the DOJ's FCPA Corporate Enforcement Policy.
4. See Fighting fraud and corruption in a shrinking world, 3 April 2019.
5. The High Court criticised the SFO in R (on the application of AL) v Serious Fraud Office [2018] EWHC 856 (Admin). See our briefing for more detail.
6. See Fighting fraud and corruption in a shrinking world, 3 April 2019.
7. For example, Tesco, Rolls Royce and Sarclad entered into DPAs but the SFO failed to successfully prosecute any of the individuals implicated.