Business Crime Update | Autumn 2018

Written on 14 Nov 2018

We are pleased to release our autumn 2018 edition of the Business Crime Update.

In it, we welcome the new Director of the SFO, Lisa Osofsky, and look forward to seeing how her time in office will evolve. She has promised to be a "new kind of Director", and we examine what that might mean in the first of our articles in this edition.

In a speech in New York in October, the Director left this key take away:

"So let me keep it simple: (1) we at the SFO need to work at pace. And (2) we in law enforcement all around the world need to work more closely with each other."

With a secondee from the US DoJ already in post at the SFO and receiving good reviews, the second of the Director's limbs is in hand, but the speed of case progression is still very much work in progress, and 2019 will be watched with interest on this front.

Ms Osofsky will have to make critical decisions in a number of high profile legacy cases left by her predecessor (David Green QC CB), which include ENRC, G4S, GSK, Rolls-Royce and Unaoil. Whilst these decisions will be awaited with interest, no less important will be the way in which the SFO takes on, and progresses, new cases that it is referred. In early comments, Ms Osofsky has noted her intention of shortening the often tortuously long periods that SFO investigations can take, and a quicker more efficient SFO is certainly to be welcomed.

The start of new Director's term coincided with two significant judgments – ENRC and KBR – both of which we analyse in this Newsletter. The former, which it has been confirmed will not be the subject of an appeal to the Supreme Court, restates what had long been understood to be the basis of litigation privilege and provides no small comfort to those undertaking internal investigations on behalf of clients. They are now able to continue doing so in the knowledge that the product of the investigation is likely to be covered to by litigation privilege. If ENRC was a reversal for the SFO (in our view it ought not be seen in that way and may assist, with companies being more willing to self-report issues) KBR was a decision that may well embolden the SFO in taking a more robust approach in requiring companies to produce documents held outside of the jurisdiction. In our view, an increase in disclosure requests is likely following this decision.

Also included in this edition of the Newsletter is an overview of new anti-corruption provisions recently adopted in India, put together by our colleagues at BTG, an analysis of the Fire Safety Regulations in the light of the Grenfell tragedy from experts in our Health and Safety team, and a review of the latest weapon in the prosecutors tool box, Unexplained Wealth Orders.

As always, if we can assist in in respect of any Business Crime-related matter please do not hesitate to contact me.

Kind regards
Jeremy Summers

New SFO Director sets out her priorities in keynote speech

Lisa Osofsky, the new Director of the Serious Fraud Office, began her five year term of office on 28 August 2018, and within her first week gave a keynote address to the Cambridge International Symposium on Economic Crime 2018.

Charting her career in both the USA and the UK, Ms Osofsky opened by making it clear that she would be “a different kind of Director“. She also confirmed her commitment to the independence of the SFO throughout her tenure, a statement that should be welcomed by all.

Read more >

Court of Appeal revisits scope of litigation privilege

In welcome news for companies seeking to assert privilege over the fruits of their internal investigations, the Court of Appeal has now overturned an earlier High Court decision which had placed significant limits on the scope of litigation privilege.

The Court of Appeal also restated the public interest in privilege attaching to internal investigations, which will be useful for companies seeking to assert privilege over documents created as part of those investigations. Companies will still need to be wary, though, as authorities may seek notes of witness interviews or other preparatory materials as a condition of settlement discussions, and should still exercise extreme caution during internal investigations.

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High Court finds that SFO can compel production of documents held outside UK

In a significant judgment handed down on 6 September 2018, the High Court held that the Serious Fraud Office can compel the production of documents located outside of the jurisdiction from a foreign company.

This decision is the first determination by an English court of the extraterritorial reach of the compulsory document production powers that are available to UK criminal law enforcement agencies, and the ruling may embolden other agencies, for example the Financial Conduct Authority and the Competition and Markets Authority, who have similar compulsory powers.

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India | Prevention of Corruption (Amendment) Act

Earlier this year, the Indian Parliament introduced legislative reforms to the existing anti-bribery and corruption law in India. The changes bring more clarity to concepts such as what constitutes "undue advantage", and introduce new criminal punishments for certain offences.

BTG Legal explain the changes, which businesses trading in India need to be aware of.

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Fire safety regulation update | Grenfell Tower Inquiry and proposed changes to the regulatory landscape

In this update, we look at the on-going public inquiry into the Grenfell Tower tragedy, as well as a separate government-commissioned review.

We anticipate that wholesale changes to the fire safety regulatory regime are likely in the near future, looking at the whole lifecycle of a building, from construction to occupation. However, businesses should not wait for the government to introduce new legislation before they take action.

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High Court dismisses appeal against first Unexpected Wealth Order

In early October 2018, the High Court dismissed an appeal against the first Unexplained Wealth Order, granted under new powers that came into force in January 2018. Despite the wide-ranging defences presented in opposition to the UWO, the judge upheld the order, indicating that the regime has the teeth required to act as a useful tool for prosecutors.

Although the case concerned an individual, the reasoning suggests that a similarly robust approach would be taken by the courts when considering a UWO served on a company.

Read more >