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U.K. Serious Fraud Office Issues Guidance on Corporate Cooperation

Client Alert | 4 min read | 08.08.19

On August 6, 2019, the U.K. Serious Fraud Office (SFO) released its highly-anticipated Guidance on Corporate Cooperation. Much like the approach taken by the U.S. Department of Justice, the SFO has stated in the guidance that “co-operation will be a relevant consideration in the SFO’s charging decisions.” While co-operation “does not guarantee any particular outcome,” under the SFO’s Guidance on Corporate Prosecutions and Deferred Prosecution Agreements Code of Practice, co-operation is a factor that weighs against prosecution when corporate management has adopted a “genuinely proactive approach” upon learning of potential wrongdoing. 

The SFO makes clear that its guidance is not prescriptive—there is no one-size fits-all checklist. Every decision whether to prosecute or reach an alternative resolution will turn on the facts of the particular case, and cooperation is one of many factors at play. That said, the SFO does expect to see some commonality “in the nature and tone of the interaction between a genuinely co-operative organization, its legal advisers and the SFO,” and provides a non-exhaustive list of indicators of good practice.

In particular, the SFO expects the preservation of all relevant materials—both digital and hard copy—and for them to be turned over promptly, in an organized manner, and on a rolling basis. The SFO wants assistance in identifying materials that would either bolster or undermine a potential prosecution. The SFO also seeks proper chain of custody logs.

Parties are encouraged to provide digital materials in a format that enables review on the SFO’s document review platforms, to preserve and provide passwords, recovery keys and the like, and to alert the SFO to digital material that the organization cannot access such as private email accounts, messaging apps or social media that have come to light in any internal investigation.

As expected, the SFO is particularly focused on financial records and analyses. The guidance suggests that records that show relevant money flows should be provided and parties should alert the SFO to financial material that the organization cannot access. In addition, parties should consider giving access to accountants who can speak to financial records and explain what they are about. The SFO also wants the provision of industry knowledge, context and common practices, including information on other actors in the relevant market, and for any potential defenses that may apply in the given market to be identified.

The SFO expects corporations to identify key witnesses both in and out of the company, to make employees and agents available, and avoid tainting their recollections. 

Finally, the SFO makes a request for what in the U.S. is referred to as “deconfliction” – namely a request by the investigating authority that a company’s legal team notify authorities before taking action that could potentially impede the government’s investigation. Specifically, the guidance states “to avoid prejudice to the investigation, consult in a timely way with the SFO before interviewing potential witnesses or suspects, taking personnel/HR actions or taking other overt steps.” This is a shift away from the U.S. approach. In its most recent revision to the Foreign Corrupt Practices Act (FCPA) corporate enforcement policy in March of this year, the Department of Justice (DOJ) amended its policy to state that it “will not take any steps to affirmatively direct a company’s internal investigation efforts” and emphasized that it will only request deconfliction “where appropriate.” The FCPA guidelines parallel the broader DOJ policy that deconfliction requests should only be made for “good strategic reasons.” It will be interesting to see if the same due process and other concerns that led to the U.S. shift have any impact in the U.K.

The guidance closes with a discussion of privilege. Given the lack of clarity on the interplay between privilege waiver and cooperation credit in the U.S., it should come as no surprise that this section may raise eyebrows in certain respects—three, in particular. First, any organization that seeks co-operation credit for providing witness accounts must also waive privilege over any interview notes. Failure to do so may jeopardize the possibility of a deferred prosecution agreement. Second, even if the corporation elects not to waive privilege, the SFO explains that it still has its own disclosure obligations to prospective defendants. The lack of specifics here may be somewhat disconcerting, but the SFO does footnote to a case, R v Derby Magistrates Court ex parte B [1996] 1 AC 487, which holds that privilege generally outweighs a defendant’s request for prior witness statements. Third, the SFO demands that when a corporation elects not to waive privilege, the withheld materials must be certified as privileged by independent counsel. This may emerge as an area of tension between organizations and the SFO.

All that said, insight and information is always helpful, and the guidance is welcome clarity on the issue.