Rahman Ravelli Solicitors

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DAMAGE LIMITATION Putting right the wrongs and minimising the damage when your company is accused of business crime.

15 September 2016

When any company is accused of business crime, it faces major decisions.

It must decide what legal support, if any, to offer to those who are accused of the wrongdoing. But most importantly, the company has to do what it can to ensure its continued existence. Whether the company is now being run by a new regime or by those untainted by the allegations, those in charge must look forward and plan ahead.

Investigation

The Serious Fraud Office’s (SFO) announcement that it is investigating alleged “fraud, bribery and corruption’’ in Airbus’ use of overseas agents is the latest in a series of big name investigations in recent years. Airbus is unlikely to be the last major corporation investigated and, like some before it, it may wish it had devoted more time to compliance to prevent such problems.

But the immediate problem it faces is managing the problem. Observers believe the Airbus investigation could take four years or more. No company can stand still for four years: those in charge have to develop a strategy to deal with the legal problems in a way that allows it to keep functioning and even expanding.

Decisions

Having represented individuals and corporates in high-profile corruption allegations over the years, we believe that some crucial decisions have to be taken by organisations at the centre of such allegations.

Many investigations are international. Any company accused of business crime may need legal representation from a firm that has experience of negotiating with many countries’ agencies and police forces, a network of international contacts and the resources and expertise to prepare a defence case that goes beyond borders and jurisdictions.

Closer to home, anyone running a company that is facing corruption allegations – or suspects corruption is being carried out in its name - must be able to make a reasoned, accurate assessment of the possible problems it is facing. Only then can a company know whether it has legal issues that it should self report and be able to assess the possibility of securing a deferred prosecution agreement (DPA). Again, these are issues where legal advice is valuable. Such assessment will also, if conducted thoroughly, pin point the people whose ignorance of - or blatant disregard for – the law have led to the situation the company finds itself in.

DPA’s

The SFO has recently secured its second Deferred Prosecution Agreement (DPA). Introduced in the Crime and Courts Act 2013, DPA’s allow a prosecution to be suspended for a defined period provided the organisation meets certain conditions.

The Code of Practice for DPA’s, issued by the Director of Public Prosecutions and the SFO Director David Green, emphasises that they are a discretionary alternative to prosecution. It requires the authorities to consider whether a DPA is in the public interest, taking into account factors such as how serious the offence is, the value of the gains or losses and the risk of harm to others or market stability.

Factors

According to the Code, the authorities can also consider whether a civil recovery order is appropriate under the Proceeds of Crime Act 2002. But when it comes to making such decisions, the authorities will take a number of factors into account:

  • Does the company have a history of wrongdoing? 
  • Is the alleged wrongdoing an established part of the company’s business practice? 
  • Does the company have an effective compliance programme in place to prevent or at least identify wrongdoing? 
  • Has the company already been subject to warnings or penalties? And did it comply with them? 
  • How much time had lapsed between the wrongdoing taking place and it being reported? And was it reported fully and accurately?

Such questions will be at the heart of the authorities’ decision regarding whether to enter into a DPA. But they can also be seen as a useful check list for anyone looking to put right the wrongs that led to a company’s legal difficulties.

Advice

With the right legal advice, a company can be proactive, cooperative with investigators and seen to be taking remedial action; whether it be compensating those affected, disciplining or dismissing those who are to blame or doing whatever it can to make the company, as the Code says, “effectively a different entity from that which committed the offences’’.

Such activities can include introducing a tougher policy on hospitality, creating procedures for due diligence, revising management systems and identifying – and acting on - areas where there is the greatest corruption risk.

These activities are no guarantee that a DPA will be offered by the SFO or any other authority. The Code of Practice makes it clear that criminal proceedings can be brought at any time during discussions regarding a DPA if those under investigation are found to have supplied inaccurate or misleading information – and any information that has been supplied during DPA discussions can be used in a prosecution.

But by using the DPA Code of Practice as a yardstick and taking appropriate legal advice, companies that have found themselves in legal difficulties can navigate a path that helps put them back on the right track with minimal damage.


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