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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 SFO Investigations: A Comprehensive Guide on Sector Inspectors

Author: Azizur Rahman  30 January 2014
4 min read

The Serious Fraud Office is aggressively targeting certain sectors of industry because it believes it can uncover evidence of bribery and fraud. Oil, gas and construction face close inspection – making it vitally important that anyone operating in these sectors have a strong compliance culture.

It seems as if the SFO is out to clean up. The anti-fraud body is beginning proactive sweeps of sectors in a bid to prevent wrongdoing or, at the very least, detect it as early as possible. For a body normally known for reacting to crime rather than looking for it, this marks quite a change to its plan of action.

SFO director David Green has spoken openly of “sectoral sweeps’’ in a bid to make his organisation’s intelligence capability far more effective. And if anyone wondered where he envisaged the SFO brush to be doing most of its sweeping, he outlined it in the clearest possible terms. “ I would look at sectors that are most vulnerable to economic crime,’’ he explained, “such as construction and public contracts, oil and gas.’’ As statements of intent go, Mr Green’s is fairly straightforward. It is not the first time UK authorities have named certain parts of industry they plan to have a closer than normal look at. But the way in which the SFO intends to go about its work is a departure from its normal way of operating.

The SFO has always, rightly or wrongly, responded to problems rather than pre-empted them. Companies self-reporting, whistleblowers coming forward to highlight improper practices, tip offs and information from other agencies have traditionally been the ways the SFO has come to find out about illegal business behaviour. Now, if Mr Green is to be taken at face value, the SFO is prepared to go up a gear in its pursuit of evidence of wrongdoing. The SFO is set to go looking for the wrongdoing rather than wait for it to find its investigators. In making his bold statement of intent, Mr Green cited the annual report by Transparency International, which laid out the industry sectors where corruption and other business crime are most prevalent. Those sectors, it would appear, can now expect to be monitored very closely.

  Looking for particular trends in certain sectors is not something new. The UK’s Competition and Markets Authority has said it will be paying close attention to the energy and banking sectors. UK financial investigators have long carried out what are known as thematic reviews – searching for certain problems or issues in particular types of company. Two or three years ago, anti-bribery controls in investment banks came under scrutiny as the Bribery Act was about to come into effect. What marks the SFO’s statement out as noteworthy, however, is the extent to which Mr Green wants his organisation to go about its pro-active work. He has spoken of using secret surveillance powers: tactics such as the interception of communications that have to be officially sanctioned under the Regulation of Investigatory Powers Act. Such a practice will usually require the Home Secretary’s formal permission, as it is normally used for security purposes.

Such talk is a clear raising of the bar when it comes to the SFO’s effectiveness. The SFO has been monitored by the independent inspectorate for the Crown Prosecution Service. This monitoring has already produced a report, issued exactly a year ago, that criticised the SFO for such basic failures as poor record keeping and inconsistent intelligence gathering. Six months prior to this report, Mr Green took over at the head of the SFO, pledging to reinvigorate the way it worked and raise its image above the perception many had of it as an accident-prone, unsuccessful prosecuting authority.

Whether the talk of sector sweeps is Mr Green’s main attempt to make the SFO a tougher, better organisation remains to be seen. Time will tell. But, for anyone working in the sectors Mr Green has deemed worthy of sweeping, this should serve as the very strongest reminder possible of the need to make sure their companies are above and beyond reproach. Turning a blind eye to wrongdoing, hoping it isn’t happening or being unaware of it simply is not good enough. A previous belief that no one would either spot what was illegal or blow the whistle will no longer suffice. If the SFO itself is coming looking for the evidence such a devil may care stance is fairly useless.

So what can be done? Well, compliance goes a long way to cutting out the risks of a company facing prosecution – whatever the sector they are in. Some of it verges on being good, careful common sense. For example, if your staff work abroad, what measures have been taken to make sure they comply with UK law and the law of the country in which they are doing business? Has anyone else that the company has dealings with – such as suppliers, agents and third parties - been checked thoroughly? Has ongoing monitoring been arranged as a precaution?

At Rahman Ravelli, we assist and advise companies of all sizes on compliance matters. Compliance can only be effective if a company introduces and then maintains systems that prevent any possibility for wrongdoing. In our experience, companies are increasingly keen to maintain a compliance culture once they realise the potential benefits. It soon becomes clear that the need to avoid prosecution, fines, imprisonment, loss of reputation and business – as well as huge legal costs and loss of working hours – make compliance a worthwhile priority. Compliance measures will vary, depending on a company’s location, size and – as clearly shown by the SFO’s latest statement of intent – business sector. But each company will face its own risks.

The Bribery Act, the Fraud Act 2006, Money Laundering Regulations, the Companies Act and the Enterprise Act amongst others can all be used to prosecute companies. The Bribery Act alone covers the activities of any company with a UK connection anywhere in the world. So simply hoping for the best is no substitute for compliance.

It is only a matter of months ago that the SFO said it would be cracking down on serious and complex fraud and anyone it suspects of bribery. It seems to be looking for more criminal convictions than civil settlements. When you add to this the SFO’s latest talk of proactive sector sweeps involving, where necessary, surveillance and interception of communications, compliance cannot be considered an option. It is a necessity. If the SFO does uncover the wrongdoing it clearly believes exists in sectors such as oil, gas and construction, a company can only really mount a credible defence to any charges if it can show it took all necessary action to reduce the opportunities for wrongdoing being carried out in its name.

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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