Key factors the Serious Fraud Office will consider when deciding whether to initiate Deferred Prosecution Agreement negotiations.
The first use of a Deferred Prosecution Agreement, in relation to corporate offending is still awaited and so the approach that the Serious Fraud Office will take is similarly still to be seen.
A recent speech given by the Serious Fraud Office General Counsel Alun Milford may be helpful to companies considering whether to engage with the Serious Fraud Office to secure a Deferred Prosecution Agreement and so avoid full prosecution.
Mr Milford stressed that negotiations leading to a Deferred Prosecution Agreement (DPA) can only be initiated by a prosecutor who will need to take into account the factors set out in the Deferred Prosecution Agreement Code of Practice, issued jointly by the Director of Public Prosecutions in February 2014. For details on the DPA Code of Practice see Guidance on Deferred Prosecution Agreements.
Of note the Serious Fraud Office (SFO) will consider that co-operation and the free supply of relevant information are key. In particular Mr Milford commented that:
- A report will need to relate to matters not already in the public domain and which it might be assumed the SFO does not already know.
- A self report must be adverse to the reporting company
- The SFO will not simply take a company’s report at face value and will investigate the issues independently. The SFO is likely to take a negative view if its investigation concludes that the company’s report was slanted in a way that risked colouring the true position.
- Co-operation will be required for the duration of the criminal investigation.
- If a company instructs external lawyers or accountants to conduct an investigation, the SFO will want to see the evidence considered by the company’s investigation team at a very early stage and realistically this may need to be provided to the SFO at the time the self report is made.
- The SFO will review how the investigation was carried out and, of particular note, will want access to the product of any witness interviews.
This last point in turn may require the company to waive privilege in the internal interviews. That in itself is a difficult issue to deal with but, the signs are that the Serious Fraud Office will view a failure to waive privilege as an indication that the company is not in fact co-operating. If so the company may face full prosecution in circumstances where it had self-reported and given the Serious Fraud Office evidence that will convict the company that otherwise it might never have obtained.
Lawyers advising companies in relation to possible wrongdoing will therefore need to consider the nature and scope of any internal investigation very carefully. Perhaps most obviously should employees be interviewed if there is a risk that interview notes and statements will need to be disclosed. If so would the company be better served by not interviewing employees and confining the investigation to an analysis of the core documents which are unlikely to be privileged in any event.
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