The Serious Fraud Office (SFO) published its much awaited corporate co-operation guidance on 6 August. Whilst the guidance delivers some much sought after clarity and should assist with accelerating investigations, there are some question marks over whether it sets the co-operation bar too high.
The guidance defines co-operation as, 'providing assistance that goes above and beyond what the law requires.' It states that co-operation will be a relevant consideration in the SFO's charging decisions for corporate prosecutions and offers of Deferred Prosecution Agreements (DPA). However, what weight will be given to co-operation and how much benefit may be gained remains unclear.
The guidance sets out in detail indicators of best practice. Many of the examples are already common practice for companies when engaging in investigations or dealing with regulators. These include the need to report suspected wrongdoing to the SFO within a reasonable time, preserve and provide available evidence and make witnesses available for SFO interviews.
There are examples which, on reading, appear to require companies to go above and beyond what could be considered co-operation and stray into the realms of effectively conducting the SFO's investigation on its behalf. For instance, shifting the role of disclosure onto a company by requiring it to 'assist in identifying material that might reasonably be considered capable of assisting any accused or potential accused or undermining the case for the prosecution' and 'facilitate the production of third-party material' would appear to blur the lines between co-operation efforts and prosecutorial obligations.
Further contentious examples of best practice include the suggestion that privilege should be waived on witness first accounts along with any recordings, notes and/or transcripts of the interview and that 'if the organisation claims privilege, it will be expected to provide certification by independent counsel that the material in question is privileged' – in the past, independent counsel have been appointed by the SFO.
In addition, the guidance does not clarify the position regarding internal investigations. It states that to avoid prejudice, companies should consult with the SFO before interviewing potential witnesses or taking overt steps. Naturally, some form of investigation needs to be conducted before making a report to the SFO, so to what extent a company is able to conduct an internal investigation remains unclear.
Finally, the guidance stipulates that companies 'provide financial information and calculations relevant to…disgorgement, financial penalty calculation and ability to pay.' This seems premature for the investigation stage where the SFO is contemplating its charging decisions and would appear to be a more appropriate exercise during sentencing discussions.
Whilst companies may follow all of the appropriate steps, the guidance makes it plain throughout that 'even full, robust co-operation…does not guarantee any particular outcome.' Moreover, should the SFO ultimately decide to prosecute an organisation instead of offering a DPA, equipped with all the material it has been provided in accordance with this guidance, the SFO would be able to control much of the narrative during litigation proceedings and vastly weaken the organisation's ability to put up a consummate defence. The guidance therefore raises questions surrounding the significant cost and management time that companies will need to incur to demonstrate co-operation without the guarantee of any benefits.