Saturday, October 24, 2020

Are executives getting an easy ride in bribery cases?

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The Serious Fraud Office (SFO) has developed a lucrative model of targeting large companies in bribery and corruption cases, striking a Deferred Prosecution Agreement (DPA) to suspend criminal charges and extracting a sizeable financial penalty.

Last month, the SFO agreed a €991m (£831m) DPA with planemaker Airbus as part of a €3.6bn deal with prosecutors in France and the US to stave off prosecution for wholesale bribery around the world over many years.

SFO director Lisa Osofsky told the BBC: “It’s a very good win for the taxpayer.”

However, despite the successful conclusion of its seventh DPA, the SFO has not yet convicted a single executive in relation to these cases.

Lock ’em up

MPs and corruption campaigners say that individuals responsible for financial crime need to be held to account.

Kevin Hollinrake MP, co-chair of the all-party parliamentary group on fair business banking, says: “Big business often sees fines as simply a cost of doing business. Unless we start successfully prosecuting and jailing those responsible, corruption, fraud and bribery will continue.”

Susan Hawley, director of policy at Corruption Watch, points to the pursuit of former Volkswagen executives in Germany and the US in relation to the emissions-rigging scandal as an example to follow.

“When you see the heads of Volkswagen walk away in chains that has a really enormous impact on changing corporate behaviour,” she says.

City A.M. spoke to ex-prosecutors, former government ministers and white collar crime lawyers to establish why it is so difficult to get convictions in corruption cases and to ask what could be done to better hold individuals to account?

Bribery convictions ain’t easy

The task of convicting companies or individuals in fraud and corruption cases is not an easy one.

Investigations can generate huge numbers of documents (30m in the Airbus probe), which is a big problem for prosecutors who have to ensure they have disclosed any evidence to the defence that may weaken the prosecution case.

Trials are often long and complicated with defendants who do not fit the profile of the stereotypical criminal.

“Juries struggle with white collar criminals, they don’t look like criminals in the sense of what Southwark juries will often see,” a former SFO lawyer says.

Some former prosecutors argue the SFO needs to approach cases differently, focusing on trying to find limited, individual examples of wrongdoing and bringing charges, rather than trying to prosecute the full extent of alleged wrongdoing.

Ex-head of fraud at the SFO, Stuart Alford QC, now a partner at Latham & Watkins, said: “There is a danger of focusing attention on the corporate settlement and pushing towards that – and in doing so not giving enough time and attention and building into that settlement enough of the terms that would help with the prosecution of individuals.”

Ben Morgan, ex-joint head of bribery and corruption at the SFO and now a partner at Freshfields, says: “Rather than having a three-to-four month trial trying to convict somebody of everything they have done and potentially failing completely, why not break it down into smaller chunks – one precise count, one email exchange – and just charge that?”

Jonathan Pickworth, partner at law firm White & Case, says he thinks the SFO is more interested in achieving big cash settlements than going after individual wrongdoers.

“It’s now all about the money. If they can do their DPAs and generate revenue that is seen as a big positive by the SFO and no doubt some in the government,” he says.

An SFO spokesperson says: “We always pursue charging of individuals where the evidence is sufficient and it is in the public interest.”

Individual DPAs?

Lord Garnier QC, who oversaw the introduction of the UK DPA regime when he was solicitor general between 2010 and 2012, suggests the introduction of DPAs for individuals to ensure those committing wrongdoing are not allowed to escape without sanction.

“If we are going to convict companies and convict individuals, but also enter into DPAs with companies, there is a logic in thinking about arranging DPAs with individuals,” he says.

The idea is a controversial one, as it could lead to accusations that those with enough money are able to escape prison sentences.

“You can buy your way out of justice would be writ large over that,” Hawley says.

Spotlight on the SFO

The SFO is currently prosecuting three former senior Barclays executives for alleged fraud dating back to the financial crisis in a long running case expected to conclude this month.

One white collar crime lawyer says the outcome of the case will be closely watched by critics of the SFO.

“If they convict there [Barclays] it will go a huge way to calming people down, if they don’t it will be the same argument on steroids.”

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