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Rapid Response Team: 0800 559 3500
Switchboard: +44 (0)203 947 1539
Rapid Response Team: 0800 559 3500
Switchboard: +44 (0)203 947 1539

Understanding Business Crime Defence: Insights and Expert Advice

Author: Azizur Rahman  13 March 2013
4 min read

Now more than ever, the authorities have the tools at their disposal to investigate and punish corporate wrongdoing. The huge fines being handed out are testimony to this. Compliance is the best insurance against such a devastating outcome.

Business corruption is as high up the agenda as it ever has been. The authorities are looking closely into where it may exist, they have more powers than ever at their disposal to deal with it and a range of approaches they can choose to offer to those under investigation. As a result, big fines for wrongdoing have not been thin on the ground recently. Last year, the Financial Services Authority (FSA) handed out fines totalling more than £311M – more than a million pounds for each working day. These included £160M to UBS and £59.5M to Barclays over Libor – UBS was also fined a further £29.7M for unauthorised trading - £10.5M to Card Protection Plan for mis-selling of products, £4.2M to the Bank of Scotland for failing to keep accurate mortgage records and even £8.75M to the bankers Coutts for, among other things, failing to maintain effective anti-money laundering controls.

Such big penalties should hardly be surprising. Now that the authorities have greater powers to pursue and prosecute they are likely to be using them more often. The Bribery Act 2010 may have hardly seen a glut of prosecutions yet but that should not lead anyone into a false sense of security. Many bribery investigations are likely to be complex and lengthy – at Rahman Ravelli we are involved in an operation that is in its third year and spans continents and governments. There was never any way that the courts were going to become stuffed with Bribery Act cases the moment it passed into law. When it is considered that the authorities also have the Companies Act 2006 and the Fraud Act 2006 at their disposal, it is clear that they do not lack ways of seeking a prosecution. The Fraud Act made many more people – such as sole traders, trusts and partnerships –liable for fraudulent trading prosecutions; effectively giving the authorities a whole new sphere in which to seek convictions. When it is considered that the Bribery Act even places an onus on companies found to have been involved in bribery to prove that they had taken all adequate procedures to prevent it, its scope becomes clear. These adequate procedures were outlined in guidance in 2011: proportionate procedures, top-level company commitment, risk assessment, due diligence, communication and training, monitoring and review. Such procedures place a fairly hefty burden on any company looking to avoid a prosecution for bribery. Add to this the on-going tightening of the Money Laundering Regulations and it’s clear that the legislative building blocks have been slowly but surely put in place to help the authorities build strong cases against suspects.

One argument against the need for such thorough and principled activity is that the authorities lack the resources to carry out such investigations and take them all the way to conviction. But that also may be about to change. The Serious Fraud Office (SFO) is talking bullishly about gaining extra funds for cases as and when it needs them, the National Crime Agency (NCA) is set to start work late this year, the Financial Services Authority (FSA) is being remodelled for greater effectiveness and there seems to be a greater willingness among authorities - both within this country and around the world – to share intelligence and expertise to catch the bad guys.

It is this joined-up thinking by the authorities and the increased legislation at their disposal that puts them in a more powerful position. In the UK alone, they can now call on Code of Practice 9 (COP9) and Deferred Prosecution Agreements as tools of choice when looking for admissions of guilt without having to take the matter to trial. No surprise perhaps that the SFO has felt able to warn the UK pharmaceutical industry that it was being watched very closely and that information was being freely exchanged between relevant authorities both here and in the United States. When you are given such a warning the only real course of action is to make sure you are legally compliant.

If facing investigation, a company’s best defence will always be that it has done whatever it could to be legally compliant. Being able to show a workplace culture that emphasises and enforces a policy of careful risk management will stand a company in good stead should it be investigated. Companies have to be able to show that they regularly reviewed operating procedures to make sure they followed best practice. Such a review has to be thorough and be explained clearly to staff and any other relevant associates, such as suppliers and agents acting as third parties.  The culture of compliance has to include some sort of whistle blowing facility, whereby staff can report possible wrongdoing in confidence; knowing that the company will investigate and take appropriate action where necessary.

If any wrongdoing is detected, the company has to seek immediate legal advice. Ideally, expert advice should be sought when originally drawing up procedures to ensure legal compliance. But such advice can definitely not be put off a minute longer if wrongdoing is discovered. Only specialist legal experts can determine the best course of action when it comes to self-reporting what has been discovered. With DPA’s now set to be a regular feature in tackling corporate corruption in the UK as well as the US, companies have to be legally represented to ensure the best possible outcome when declaring their misbehaviour to the likes of the SFO. It is likely that the SFO will be looking for a DPA settlement with a punitive element that avoids the cost, time and uncertainty of a court trial. While such organisations are keen to avoid trials, they never give any unconditional guarantees in return for self reporting so the whole process has to be handled carefully by those with the relevant legal experience and expertise.

To put it bluntly, those who have discovered the illegalities are rarely the best people to handle negotiations once the matters have been reported. When the stakes are so high it really is time to invest in expert advice that can save a company time, cost and reputational damage.

Azizur Rahman C 09369

Azizur Rahman

Senior Partner

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Aziz Rahman is Senior Partner at Rahman Ravelli and its founder. His ability to coordinate national, international and multi-agency defences has led to success in some of the most significant corporate crime cases of this century and top rankings in international legal guides. He is recognised worldwide as one of the most capable legal experts regarding top-level, high-value commercial and financial disputes.

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