Following increasing demand, the Serious Fraud Office (‘SFO’), has recently produced its Corporate Cooperation Guidance, which sets out how businesses should cooperate with the SFO in cases of self-reporting for fraud or bribery. Such cooperation does not arise from any legal duty to self-report, but it is a factor to be taken into consideration by the SFO when making decisions about prosecuting offenders, and whether or not a Deferred Prosecution Agreement is appropriate instead of a prosecution. Even if there is a prosecution, self-reporting can be a powerful and compelling mitigating factor, to be taken into account by a court in determining what penalty should be imposed. The Guidance has also been introduced as a way of offering greater transparency as to how the SFO operates.
The Guidance indicates that the following conduct will be considered by the SFO to be cooperative:
- Reporting relevant circumstances to the SFO within a reasonable time of the point when suspicions first arose.
- Identifying responsible employees regardless of seniority or position in the business.
- Adhering to investigatory best practices, including proper data preservation, and providing evidential material promptly and in an organised, useful, and structured way.
- Making company accountants or other personnel available to speak about financial records and transactions.
- Providing notes, recordings, or transcripts of witness interviews and making available to the SFO witnesses who are competent to give that evidence.
- Consulting with the SFO before interviewing witnesses or taking any disciplinary action.
There are some issues in putting the Guidance into practice; for example, the suggested cooperative conduct will lengthen the investigation procedure and will increase the cost and time of internal investigations. Additionally, an internal investigation is often appropriate at an early stage, for a business to gain context and background to potential allegations, and that frequently involves individuals being interviewed by the business. The Guidance suggests however that even preliminary interviews should not take place until after a report of the situation to the SFO. This can be criticised as unrealistic.
Any decision by a business whether or not to self-report an incident of suspected fraud or bribery is complex and is a delicate balance of legal, reputational and commercial considerations. The publication of the Guidance is nevertheless a step in the right direction following years of the SFO remaining silent as to its procedures and approach where businesses self-report.
How can Clarion help?
Clarion has considerable experience in advising UK and overseas businesses on how to assess bribery risks, the drafting of anti-bribery policies and procedures, employee and management training, the conduct of internal investigations and self-reporting. We would be happy to discuss your specific circumstances.
For further information or assistance, please contact David Williams, Partner, at firstname.lastname@example.org
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