This article first appeared on Law360 on 6 December 2018.
Speaking at The Lawyer’s Managing Risk and Litigation 2018 Conference recently, Matthew Wagstaff, Joint Head of Bribery and Corruption at the Serious Fraud Office (“SFO”), outlined the agency’s current priorities and future directions for 2019.1 The coming year looks to be an interesting one for the SFO; with new Director Lisa Osofsky firmly in post, expectations are high that she will shake things up in the next few months. In his speech, Mr Wagstaff covered three key priorities for the SFO: progressing cases at pace; working collaboratively with partners; and making the best use of the available tools.
Turning first to progressing cases “at pace”, it is no secret that SFO investigations often take many years to resolve, a point of significant concern given the impact an unresolved investigation can have on individuals and corporations. Mr Wagstaff makes clear that, under the direction of Ms Osofsky, the SFO is committed to progressing cases more quickly, particularly at the investigative or pre-charge stage. Mr Wagstaff’s assertions may help to provide reassurance to those who read recent comments made by Ms Osofsky reflecting on her desire to take on the most difficult cases2. She did not give the impression of someone keen to move at pace, acknowledging that nailing down evidence in such cases can be a waiting game – and did not shy away from the need to be patient. A good indicator of Ms Osofsky’s commitment to increasing the pace will be the numerous cases opened by the SFO many years ago that still await charging decisions. With cases dating back four or even five years, it seems doubtful that evidence gathering is going to be the reason for any hold up at this stage, particularly not in cases where a corporate resolution has already been reached with the company involved.
Mr Wagstaff’s second point is that the SFO recognises the need to collaborate effectively with other domestic and international law enforcement agencies. For many, this statement comes as no surprise. International co-operation has been an increasing theme in recent years3, producing landmark outcomes such as the three-way settlement between Rolls-Royce plc and prosecutors in the US, UK and Brazil. Under Ms Osofsky’s direction, this will no doubt continue; her background as a US federal prosecutor means that she is well-positioned to collaborate with her counterparts across the Atlantic. Indeed, Mr Wagstaff specifically noted that the US Department of Justice will be a key partner for the SFO in the coming months. Brexit, of course, has the potential to derail at least some international co-operation; as we noted last year in our article on the wider trend of collaboration between agencies4, the UK’s future as a member of Europol, Eurojust and the European Arrest Warrant is still up in the air. Unless these issues can be negotiated, the SFO may stand to lose some very valuable international enforcement tools in the near future.
Closer to home, however, such collaboration could become a point of contention. Mr Wagstaff refers to the National Economic Crime Centre (“NECC”), which launched last month and is tasked with planning the UK’s response to economic crime to ensure that resources are co-ordinated efficiently and effectively. However, there is concern that the NECC could encroach on the SFO’s independence. Although the government has been at pains to emphasise that both agencies will remain separate, the fact remains that the NECC can task the SFO with investigations as part of the former’s co-ordination role. Ms Osofsky and her team may well need to navigate some differences of opinion on what falls within the SFO’s remit. The developing relationship between the SFO and NECC will be one to watch throughout 2019.
Finally, Mr Wagstaff touched on the SFO’s use of the “tools” available in its investigations, with emphasis on the Bribery Act 2010 (“UKBA”) and deferred prosecution agreements (“DPAs”). Turning first to the UKBA, Mr Wagstaff asserts that the legislation, and in particular the corporate liability imposed by the section 7 offence of failure to prevent bribery, has been “highly effective”. Although he admits that there have been few prosecutions to date, he notes that the section 7 offence has encouraged corporates to self-report wrongdoing and co-operate with the SFO to a greater degree.
The SFO does not publish figures on self-reporting of misconduct, and it is near impossible to measure or quantify levels of co-operation in any reliable way. However, since the UKBA came into force in 2011, the section 7 offence has only featured in three concluded DPAs and one contested prosecution. These figures do not give the impression of a substantial increase in self-reporting or co-operation.
Mr Wagstaff’s discussion of DPAs was largely a run-of-the-mill description of the features of the UK DPA regime and the hurdles which a corporate must overcome if it is to be the recipient of a coveted invitation to enter into DPA negotiations. However, Mr Wagstaff dropped in a tantalising hint that Ms Osofsky may be considering providing guidance to companies on what effective co-operation with the SFO looks like in the context of a DPA. Given that her predecessor consistently refused to do so, this could prove to be a game changer. Practitioners will welcome some insight, however scant, into the new thought process at the SFO.
1 Speech by Matthew Wagstaff, Joint Head of Bribery and Corruption at the SFO, “Current priorities and future directions” www.sfo.gov.uk/2018/11/21/current-priorities-and-future-directions/
2 Bloomberg, “Mueller Protégé wants to Take ‘Hard Cases’ at U.K. Fraud Office” (29 November 2018)
3 WilmerHale W.I.R.E. UK, “International co-operation in Investigations” www.wilmerhale.com/en/insights/blogs/WilmerHale-W-I-R-E-UK/international-co-operation-in-investigations