As part of its publication scheme set up pursuant to freedom of information requirements, the UK Serious Fraud Office (SFO) has over the past two years published a number of sections of its internal Operational Handbook. On August 6, 2019, the SFO published the section on Corporate Co-operation Guidance (Co-operation Guidance). While each case will be assessed on its particular facts and circumstances, the Co-operation Guidance provides some welcome clarity as to the SFO’s approach to an issue that can place companies in a difficult position, including with respect to documents over which the company may have a claim to privilege.
Corporate Co-operation Guidance: Key Provisions
The SFO will take into account co-operation as a relevant consideration in its charging decisions, as previously set out in the Guidance on Corporate Prosecutions and the Deferred Prosecution Agreements Code of Practice (DPA Code). The Guidance on Corporate Prosecutions provides that a factor tending against prosecution is the extent to which the management of a company under investigation has adopted a “genuinely proactive approach” in that investigation. The Co-operation Guidance expands on the SFO’s expectations in this regard, stating that “co-operation means providing assistance to the SFO that goes above and beyond what the law requires.” This includes identifying suspected wrongdoing and the individuals who may be responsible, “regardless of their seniority or position in the organisation,” and reporting to the SFO “within a reasonable time of the suspicions coming to light.”
The Cooperation Guidance seeks to clarify the SFO’s position in respect of various other key investigative themes, including:
- Data gathering and production: This section contains detailed provisions on good general practices, such as preserving relevant digital and hard copy material, obtaining and providing material promptly to the SFO, providing lists of custodians and the locations of documents, and providing material in a useful and structured way. The SFO also expects companies to identify relevant material in the possession of third parties, and provide relevant material held abroad where it is in the possession or under the control of the organization.
With respect to privileged material, the Co-operation Guidance provides that companies should submit a schedule of material withheld as well as the basis for asserting privilege. The SFO makes clear that it may challenge a claim to privilege over relevant material (such as first accounts, internal investigation interviews or other documents) where it considers it appropriate to do so.
- The implications of asserting privilege over witness accounts obtained during an internal investigation: If a company claims privilege, it will be expected to provide certification by independent counsel that the material in question is privileged. Importantly, the Co-operation Guidance provides that companies will not be penalised if they choose not to waive privilege. However, if a company elects to withhold privileged material, it will not attain the corresponding factor against prosecution in the DPA Code. The SFO also makes clear that if privilege is not waived and a trial proceeds, it will apply for a witness summons where appropriate. If a company does waive privilege, it should also provide any transcripts and identify a witness competent to speak to the contents of each interview.
- The company’s dealings with individual witnesses and suspects: The SFO expects to be consulted before the company or its lawyers interview any potential witnesses or suspects to avoid prejudicing the investigation. Companies should also refrain from tainting a potential witness’s recollection by showing the witness other witness accounts or previously unseen documents.
- The SFO’s powers of compulsion: The Co-operation Guidance provides that even where an organization is co-operating, there may be circumstances in which the SFO will nevertheless use its powers of compulsion to obtain relevant material. Compliance with compulsory process does not necessarily indicate co-operation but, equally, the SFO’s use of compulsion will not automatically mean it considers a company to be non-cooperative.
Companies will be particularly interested in the SFO’s guidance in relation to the perennial issue of privilege over witness accounts. While the SFO’s assurance that companies will not be penalized for making a genuine claim to privilege is to be welcomed, companies will nevertheless have to decide whether the benefit of disclosure to attain the maximum co-operation credit from the SFO outweighs any potential prejudice to the company. Although there is no affirmative obligation to waive privilege, it is a factor that the SFO can (and will) take into account when considering whether a company is eligible for a Deferred Prosecution Agreement (DPA) at all. It is worth noting that every DPA concluded in the UK to date has involved a waiver of privilege.
The SFO’s expectation that companies obtain certification of any claims to privilege from independent counsel may create a dilemma for multinational corporations that are subject to parallel proceedings in the United States in cases where first accounts have been obtained from witnesses in that jurisdiction. U.S. rules of privilege generally afford protection to first accounts. However, depending on the circumstances, a claim to privilege over such documents under English law may be less clear-cut, even following the Court of Appeal’s judgment in ENRC.
A further issue arises with respect to limited waiver of privilege, which is typically upheld by the English courts, in contrast to the position in the United States. So even where a company obtains independent certification of its documents, it will still have to balance the potential advantages in seeking co-operation credit from the SFO by providing the documents against the risk of third parties in any subsequent proceedings in the United States claiming that privilege in those documents has been lost as a result of such disclosure. This issue is accentuated by the fact that to obtain co-operation credit, the SFO expects companies to provide relevant material held abroad where it is in their possession or control.
Companies will have to give careful consideration to these issues at the outset of any internal investigation. Where the investigation has any potential nexus to the UK, companies should seek English law advice at the earliest opportunity to ensure that the best possible outcome for their business is achieved.
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