A Happy New Year for the SFO?

Posted on Wednesday, date : 25 Jul, 2016by cavazos with no responses

A Happy New Year for the SFO?

The Serious Fraud Office (“SFO”) will wave goodbye to 2015 with a few triumphs under its belt, but what will 2016 bring for David Green?

2015 was a year of “firsts” for the SFO:

Tom Hayes was the first person to be tried for the manipulation of Libor. He was sentenced in August to 14 years in prison. This was slightly reduced to 11 years by the Court of Appeal on 21 December 2015.

On 30 November 2015, the President of the Queen’s Bench Division, Lord Justice Leveson, approved the UK’s first ever Deferred Prosecution Agreement1 after the SFO had conducted a 3 year investigation into CBC Standard Bank who admitted failure to prevent bribery under Section 7 of the Bribery Act 2010 (the “Bribery Act”).

This year also saw the first convictions under the Bribery Act in the Sustainable AgroEnergy trial with the first sentences for bribery offences to be passed in accordance with the new sentencing guidelines, effective from 1 October 2014, and the first conviction of a corporate for foreign bribery in Smith and Ouzman, which concerned that company’s security printing business in Africa.

The latest “first” happened on 2 December 2015 when the first admission of the failure to prevent bribery offence, under Section 7 of the Bribery Act, outside of a DPA was made by Sweett Group PLC.

It is probably safe to assume, at least for now, that the UK’s Home Secretary will shelve her plans for the NCA to swallow the SFO. The NCA has had a rocky 2015, in particular after the warrant scandal. In Chatwani2, the court described the conduct of the NCA in relation to search warrants, which were ruled unlawful, as indifferent to the constitutional safeguards and described the mistakes made by the NCA as grave errors that “went to the very root of the statutory scheme”.

It was not, however, plain sailing for the SFO in 2015:

The SFO will pick up a multi million pound legal bill after the judge dismissed the Welsh mining case3 in which six people were accused of a fraud conspiracy. The judge said that the attempt to prosecute was “improper and unreasonable” because no law was broken. Mr Justice Hickinbottom stated that “this was not simply an error of judgment: once the dismissal application had been formally notified and its essential basis set out, no reasonable prosecutor in the shoes of the SFO would have contested that application in the manner that the SFO in fact did.”

The SFO also faced strong criticism when Ben Morgan, the joint head of bribery and corruption, stated that the new foreign bribery fining policy will see the UK’s SFO consulting with the US on financial penalties even in circumstances where the US is not involved in the case.

Morgan stated that this was “to make sure the sanction would have been appropriate in the US”. The justification for choosing to consult with the US over any other country is because “it’s the US that is really the most active enforcer. It’s really the best frame of reference. There are only so many jurisdictions that have anything approaching a track record”.

The UK introduced new sentencing guidelines for fraud, bribery and money-laundering offences in 2014 and many have suggested that to use the US as a starting point would contradict the spirit of the ‘stepping back’ process set out in the guidelines or, worse, would amount to an abdication of jurisdiction. In addition, US sentencing guidelines provide for ‘prosecutorial discretion’ which would prove difficult to factor in circumstances where a US prosecutor finds himself advising on a matter without having any involvement.

A mixed story, then, for 2015. The SFO will no doubt be aware that it will be obliged to shine in 2016 or face the terror of rebranding or the humiliation of assimilation.

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