Lisa Osofsky, the new Director of the Serious Fraud Office (SFO), recently passed the milestone of having completed her first 100 days in office. On succeeding David Green CB QC, she promised to be a "new kind of Director". Understandably, the Director has taken time to get on top of her brief, but in a speech to US prosecutors in Washington DC on 28 November 2018, she gave some clear messages as to how the SFO is likely to evolve under her watch.
The speech focussed on the key themes of working with other international enforcement agencies, corporate co-operation, technology and corporate integrity. Although the Director had referred to these aspects in earlier presentations, this most recent speech gave additional detail as to what the SFO means, and what it will look for, in respect of each of these areas.
Working with others
The Director stressed that international prosecutors, regulators and law enforcement are working more closely together than ever before, and in this respect noted that a secondee from the US Department of Justice (DOJ) is already having an impact at the SFO.
Ms Osofsky has committed to learning how other agencies work, the law they have to apply and best practices that have been pioneered in other jurisdictions. Of note, the Director pointed to the use of co-operating witnesses in cracking white collar cases, which is a common practice in the US.
The Director was robust in setting out what the SFO will consider represents co-operation and what will not:
"Tell me something I don’t know. Help the prosecutor find the truth. Don’t obstruct, or mislead, or delay. Don’t hold things back.
Here’s what cooperation is not: it is not simply responding to requests that you are obligated to respond to. It is certainly not burying bad news or protecting certain executives. It is not slow-rolling us. It is not playing one prosecutor off another."
Giving further detail, Ms Osofsky stressed that co-operation means making the path to admissible evidence – in the form of documents, financial records and witnesses – easier for investigators.
In relation to witnesses, she gave a clear warning that seeking to claim privilege over first witness accounts taken in internal investigations was unlikely to be regarded as co-operation.
This is a resource that the Director is particularly keen to harness, and she emphasised the investment being made by the SFO in technology to:
- Help get to the hugely varied ways that criminals now converse.
- Lead more quickly to the discovery of both inculpatory and exculpatory documents.
- Help meet the discovery obligations that apply in UK criminal trials
Whilst the SFO will be amenable to not prosecuting companies in appropriate circumstances, the Director noted that favourable dispositions will not be available unless and until corporate compliance systems work. This will require good practices to be embedded into the corporate structures so that they cannot simply be undone when no longer convenient. If that position was found, in the Director's view, the SFO would be unlikely to recommend that a Deferred Prosecution Agreement (DPA) was a resolution that would be in the public interest.
The Director went on to comment the SFO would be likely to take a negative view of managers who bully compliance or audit officers trying to keep their companies on the right side of the line in terms of ethical conduct.
Concluding this aspect, the Director stressed that corporate rehabilitation requires a strong, ongoing compliance function, and that window dressing will not suffice. Companies should expect the SFO to ask tough questions, noting that the agency will not be recommending DPAs for recidivists.
Osborne Clarke comment
The Director is clearly seeking to identify the SFO's future direction of travel, and we expect that 2019 will be a pivotal year in establishing how successful the Director's hoped for new landscape will be.
Much may depend on how willing companies are to embrace the concepts of co-operation and integrity outlined in the speech. That in turn may be influenced by the ability of the SFO to demonstrate that tangible benefits will be obtained by companies that self-report and co-operate. Whilst not an aspect referred to by the Director in this speech, the success she has in achieving her aim of reducing the duration of SFO investigations may also be critical. At present, these can often be oppressively long, a factor that in itself may be likely to deter companies from engaging with the SFO.