In the last few weeks of 2015, the enforcement landscape for corporate entities carrying on business in the UK changed forever. On 30 November 2015, Lord Justice Leveson approved the UK's first Deferred Prosecution Agreement (DPA) between the Serious Fraud Office (SFO) and Standard Bank plc. The DPA suspended an indictment against Standard Bank alleging failure to prevent bribery contrary to the Bribery Act 2010. Just days later, on 18 December 2015, Sweett Group plc pleaded guilty to a charge of failing to prevent an act of bribery intended to secure and retain a contract, contrary to the Bribery Act.
Both Standard Bank and Sweett Group were required to pay substantial financial penalties as a result of their breaches of the Bribery Act. These fines confirmed that corporate criminal liability under the Bribery Act is no longer merely a theoretical possibility. One knock-on effect of these corporate resolutions, however, has been the unseen impact on third-party individuals who are implicated in the wrongdoing, but whose voices are not necessarily heard.
Failing to interview individuals at the centre of allegations of wrongdoing runs roughshod over the rights of those individuals
defendants convicted in 2015 – 2016
defendants convicted in 2014 – 2015
In reaching a DPA with Standard Bank, the SFO relied upon Standard Bank's internal investigation for its evidence for the Statement of Facts. The SFO conducted some additional interviews as part of its investigation but did not request or obtain any documentation from the Government of Tanzania or the local agent.
Indeed the SFO has reportedly received a petition signed by more than a 1,000 people, including Tanzanian politicians, calling for the SFO to reopen its investigation into Standard Bank. The petition comes after the former head of investment banking at Stanbic Bank claimed that Standard Bank misrepresented the fact that it was not aware of the local third-party involvement in the deal. The former Stanbic employee also claims that, although Standard Bank's internal investigation report implicated her in the alleged bribery, she was not given an opportunity to see the allegations or respond to them before they were published.
Similarly, in the Sweett Group case, a number of individuals were referred to by name in court and implicated as being involved in bribery. However, some of these individuals were not interviewed by the company or the SFO as part of the investigation which led to the company's guilty plea. It therefore appears that in both these cases, conclusions have been reached without giving all the individuals implicated a chance to respond to the allegations brought against them.
A common theme for corporate investigations
At the same time that the SFO is coming under fire for its investigations into the Standard Bank and Sweett Group cases, the Financial Conduct Authority (FCA) has also been under increased scrutiny for the way it has handled the publication of its findings in respect of several of its recent investigations.
A number of individuals have lodged appeals with the Financial Services Tribunal concerning the FCA's enforcement notices in respect of its investigations into the so-called 'London Whale' trades, the foreign exchange market and also LIBOR benchmarks. These traders claim that they were prejudicially identified in the enforcement notices in respect of these investigations and that, by explicitly criticising their conduct without giving them a chance to respond, the FCA showed complete disregard for their rights, reaching its conclusions without carrying out a full and proper investigation. One such challenge, in relation to the 'Whale trades' enforcement notice, will be considered by the UK's Supreme Court later this year and could result in the FCA being forced to amend its findings in respect of its investigation.
Significantly, the Financial Services Tribunal recently rejected an application by the FCA to stay an application from a former bank trader regarding his identification in an FCA Final Notice in relation to its investigation into alleged EURIBOR benchmark manipulation. The SFO had supported the FCA's application for the stay on the basis that, until the SFO's criminal investigation into the former trader for alleged EURIBOR manipulation has concluded, there would be a real risk of prejudice. The judgment by the Tribunal indicates that the judiciary recognises individuals implicated in reports of corporate wrongdoing should be given a timely opportunity to voice their concerns.
Only time will tell
Failing to interview individuals at the centre of allegations of wrongdoing runs roughshod over the rights of those individuals and also potentially leads to a truncated and incomplete investigation. The law as it currently stands might permit this kind of approach, but there is a fundamental unfairness about it. Anyone named as a perpetrator of corrupt acts is tainted by such serious allegations, particularly when they are endorsed by the courts. Inconvenient as it might be to law enforcement agencies, at least offering those individuals the right to give their version of events would go a long way to mitigating that unfairness.
Read other chapters in this report:
The Bribery Act: The changing face of corporate liability
This publication is provided for your convenience and does not constitute legal advice. This publication is protected by copyright.
© 2016 White & Case LLP