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Deferred Prosecution Agreements and Self-Reporting – Greater Clarity from the SFO?

Posted on 14 November 2018

Deferred Prosecution Agreements and Self-Reporting – Greater Clarity from the SFO?

Lisa Osofsky, Director of the UK Serious Fraud Office, indicated in a keynote speech at the Trace European Forum in London on 8 November 2018, that the SFO is considering whether to issue guidance on what companies are expected to do in order to be granted a Deferred Prosecution Agreement [DPA]. The existing DPA Code of Practice says that "Considerable weight may be given to a genuinely proactive approach adopted by [the company's] management team when the offending is brought to their notice" but provides scant illustrations of what co-operation may look like.

In what could be seen as a move away from the approach of her predecessor, David Green QC, she stated that the agency is exploring whether to provide companies with information on what co-operation actually means when it comes to obtaining a DPA. The SFO has historically been reluctant to set out details of what it expects and this practice forces those advising companies to develop their own understanding of cooperation based on speeches by SFO officials and DPAs already in existence. This had led to a lack of clarity as to whether a company needs to self-report or, as was seen with Rolls Royce, co-operation would be sufficient.

Osofsky hinted that a key feature of the SFO's decision making process would be to "tell us something we don't know" and that in future the SFO would only offer DPAs to companies that cooperate, for example, by coming forward with new information.

She also emphasised that alongside the need to bring new information to the SFO's attention there would need to be evidence of reform before a DPA would be considered. Such an approach is similar to that of the DOJ in that "[they] want to know that [they're] not going to have a recidivist on [their] hand".

It is unclear however whether this approach will provide further clarity. At a fundamental level how can the company know what the SFO is aware of and what it isn't? In Osofsky's keynote speech there was also no reference to whether as part of co-operation the SFO will clarify whether or not it expects legal privilege to be waived by the company – hopefully this will be an area addressed in any guidance.

What does this mean for Deferred Prosecution Agreements?

Osofsky is adamant that she will be an aggressive prosecutor whilst at the same time emphasising reform based on communication with companies and understanding how they work. To this end, her approach may require future prosecutors to have previous expertise in compliance and an understanding of compliance programmes. She stated that this would not only help assess the adequacy of companies' procedures, but also the extent of their remediation. Such an approach, she says, will not make her "any less a prosecutor [simply] a more effective prosecutor".

She commented that the SFO was working with other UK authorities on matters expected to become public soon, and to "watch this space".

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