Companies headquartered or operating in the UK continue to watch the SFO and, in particular, to try to sort out if that organization really is shifting toward the US model in its anti-bribery efforts. George Brown of Reed Smith, TRACE’s partner firm in London, sends this post about the SFO’s recent guidance on voluntary disclosure.

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Recent statements in the press made by those in UK law enforcement record a clear intention to try a new and pragmatic approach to the investigation and prosecution of criminal behaviour. The UK’s creaking criminal justice system is such that, — trying to punish all wrongdoers by way of a full trial is simply not cost effective. The UK is taking as a model the US system, whereby plea bargains result in cases being concluded more quickly and efficiently. More wrongdoers can be punished this way than has been achieved by the UK authorities over the past few years, especially with respect to “white collar” crime. The UK authorities look upon the adoption of this “US system of justice” both as in the public interest and garnering popular support.

In its most recent step toward a U.S.-style system, the SFO published its guide entitled “Approach of the Serious Fraud Office to dealing with Overseas Corruption” on July 21, 2009. In the Guide, the SFO sets out the procedure that it will follow where a corporate self-reports incidents of corruption overseas.

The Guide states that provided certain criteria are met, in particular that Board members are not involved in corrupt activity, the SFO will seek to settle cases using civil powers rather than criminal sanctions. On a practical note, given the outcome of Mabey & Johnson, it is possible that the SFO may take a pragmatic approach even when senior executives or board members are involved, limiting any prosecutions to the body corporate as opposed to natural persons. (Of course, the Guide does not provide any guarantee that as a result of self-reporting overseas corruption natural persons will not be investigated).

In order to qualify for ‘favourable’ treatment, the SFO requires that the matter be reported in a timely manner. If the incident also falls under the jurisdiction of the US Department of Justice then a report to the SFO should be made at the same time as a report is made to the US DoJ. Any delay in reporting the incident could be regarded by the SFO as a negative deciding factor. The SFO also requires that the company demonstrates a general commitment to resolving any issues associated with the corrupt act. It is important that the company deals with the SFO in a transparent and open way, co-operating in any further investigation and taking appropriate action to improve its corporate ethics including, if necessary, appointing a compliance monitor.

Ending a case by settlement can bring a number of benefits, most notable is probably the opportunity to manage adverse publicity. In addition, the mandatory sanction of debarment from public and utilities contracts under Article 45 of the EU Public Sector Procurement Directive will not apply if a case is concluded by a civil settlement.