‘Would you like to test the waters?’ SFO updates its Cooperation Guidance for corporates

The SFO has updated its Cooperation Guidance for corporates.  Most significantly, the guidance now sets out that, where a corporate is considering whether to submit a self-report, the corporate’s legal representatives may meet with the SFO’s Director of Legal Services beforehand to discuss the potential self-report.  This development provides an interesting means for corporates to ‘test the waters’ before committing to a self-report.  However, any decision to self-report is and must always be a carefully considered and balanced decision.  The same is true of any engagement with the SFO before a self-report is made.

The changes

The most significant change is that the guidance now provides that, where a corporate is considering whether to submit a self-report, the corporate’s legal representatives may contact the SFO’s Director of Legal Services via [email protected].  The guidance recognises that a corporate may wish to remain anonymous at this stage.  Following such contact, the legal representative will be invited to a meeting with the Director of Legal Services to discuss the potential self-report, including whether the SFO is the correct agency to receive the self-report. A note of any such contact will be made and shared with the Intelligence Division.

Other key changes include:

• The SFO has affirmed a number of its practical commitments within the guidance (adopting the words “We will…” in place of “We will seek to…”).  This includes a firm commitment from the SFO to establish contact with a self-reporting corporate within 48 business hours of a self-report or other initial contact.
• Multi-agency matters: New wording explains how the SFO will deal with referrals where another agency may be better placed to act.  The SFO will “Inform a corporate promptly if we think another agency would be better placed to receive the referral and in the event of multi-agency interest, work proactively with the other agencies to identify who is best placed to take the referral forward”.
• Deferred Prosecution Agreement (DPA) timetable: The six-month period for concluding DPA negotiations (“wherever possible”) now runs from acceptance of an invitation to negotiate, rather than when the invitation is sent.
• Co-operation: The guidance expands examples of co-operative conduct relevant to the SFO’s consideration of appropriate resolution of a matter (including DPAs) – including:
  • making relevant individuals, whether based in the UK or overseas, available for interview as required and, where appropriate, ensuring independent legal advice is made available to them;
  • proactively considering key areas of risk across the scope of its business, including, where appropriate, taking proportionate steps to reassure itself and the SFO that the full extent of any potential criminality has been reported; and
  • informing the SFO in advance of any witness interviews or other investigative steps proposed as part of any ongoing internal investigation by the corporate, to allow a deconfliction process to take place to avoid unnecessary prejudice being caused to the SFO investigation.  In turn, the SFO “will use its best endeavours to complete the relevant aspect of its investigation as soon as reasonably practicable so as not to delay the internal investigation more than is absolutely necessary and will keep the corporate informed throughout”.

Impact

The opportunity for dialogue with the SFO’s Director of Legal Services (and General Counsel) where a corporate is considering whether to submit a self-report of suspected offending – and the opportunity to do so on a ‘no-names’ basis – provides an interesting means for corporates to ‘test the waters’ first.  However, it is unclear how far this will shift the dial for corporates deciding whether to self-report to the SFO on discovery of suspected offending.

Any engagement with the SFO before a self-report is made must be very carefully considered.  Where conducted anonymously, particularly fine judgment calls will need to be made regarding the level of detail to be provided by the corporate.  This itself may limit the SFO’s ability to provide any meaningful indication of its views of the issues (and potential resolutions) at that stage.

Any decision to self-report is and must always be a carefully balanced decision, as there remain risks and very good reasons why companies may not wish to do so.  That includes, for example: the SFO’s ability to disclose information it has received to other government bodies; the risk – when pursuing all reasonable lines of inquiry – that an investigation becomes lengthy, complex and expensive; the risk that the SFO will decide to prosecute rather than open DPA negotiations; and the potential exposure for civil claims emerging from the alleged criminal conduct. 

It remains the case that a self-reporting corporate must go on to provide genuine co-operation to be eligible to be invited to negotiate a DPA.  The SFO will still consider inviting corporates that have not self-reported into DPA negotiations if they have “provided exemplary co-operation” with the SFO’s investigation.  Failure to self-report suspected offending is not, therefore, the final opportunity for a corporate to secure a DPA.

While the SFO’s new guidance is intended to further tip the balance and encourage corporates not to gamble with the risks of delaying, whether it will have that effect remains to be seen.

Please contact Burges Salmon’s Corporate Crime & Investigations team if you would like to discuss any of the issues raised in this article.