Author: Azizur Rahman
3 February 2015
4 min read
Knowing what has happened in 2014 allows us a chance to predict the main events of 2015. Libor, forex and Tesco may well be names we hear more of in the coming months. But issues such as compliance, Serious Fraud Office (SFO) funding, international cooperation and the Bribery Act will also be a major part of the landscape.
We have said it before but it does bear repeating: we do not have psychic powers or access to a font of privileged information mere mortals can only dream about.
All we are is a legal firm that has earned a little praise in 2014 and a significant business crime caseload. That latter factor means we don’t take very much time off over the festive period. But despite our heavy workload we do enjoy having a little look ahead and so we’ve collected a few thoughts on what 2015 may bring us in terms of business crime news. Please don’t take what we say as gospel and certainly don’t go betting your mortgage on anything we say here. It is all, to use a much-used phrase, just a bit of fun.
Firstly, and it’s a fairly safe bet, 2015 is going to see the issue of compliance remaining at the top of the news agenda. It was a year ago when we said that it was going to be in the news in 2014 and it didn’t let us down. Compliance is an issue that tends to lie below the surface of many of the big business crime stories and there is no reason to believe it will be any different next year. This year has seen many major international companies facing compliance problems and even professional football and Formula One racing have come far too close to the law for their comfort. Compliance, it seems, just won’t go away. The only real question it poses for 2015 is who will be most affected by it.
From the long, drawn-out investigations into Roll-Royce’s and GlaxoSmithKline’s activities abroad, it would be surprising if these two names did not appear in an unflattering light during 2015. Certainly Rolls-Royce, with its allegations of bribery and corruption, is in for an eventful year as the SFO continues its investigations; having secured extra funding from the Treasury. If charges are to be brought, it is likely that we will see them next year. In a similar vein, the investigations into GSK continue afoot, with Britain’s biggest pharmaceuticals group waiting to see what punishment will follow the £300M-plus fine it received three months ago for corruption in China.
Whether such sagas will prompt senior figures in other companies to pay extra attention to compliance remains to be seen. Their response is difficult to predict but it may well be that one or two more high-profile cases may be enough to make even the most reluctant supporter of compliance rethink their stance in 2015.
Maybe Tesco will be the case that does it. At this stage, we cannot say how long the investigation into its questionable accounting procedures will take or what it will find. But we feel pretty confident when we say that Tesco will have to brace itself for more tough times in 2015 before it has any hope of turning the corner and restoring its battered pride. We could see charges being brought next year but much will depend on the length and complexity of the investigation. It could be that we are still writing something similar about the supermarket giant in a year’s time.
A more clear-cut situation is the Libor one. With 13 charged in the UK over Libor manipulation, the first criminal trial is due to start next May. Perhaps then we will learn in more detail precisely what had been going on in a scandal that feels as if it has been with us for a very, very long time. Which cannot be said about forex. Just when the issue of Libor looked to have been processed by the authorities, along comes forex to show us that banking has completely failed to clean its act up. With six of the biggest banks having been forced to pay £2.6 billion in fines, the question now is whether criminal prosecutions are brought against anyone. There is no doubt that the SFO will be busy with forex during 2015. But when it comes to the likelihood of anyone being charged over it next year, our crystal ball goes a little bit misty. The possibility of charges appears to be a strong one at this stage but much will depend on just how much information on forex the SFO has to digest in 2015. If it appears relatively straightforward then we could well see charges before 2016. Yet if the mountains of data and evidence appear almost insurmountable, it is possible we could be waiting some time yet for anyone to appear in a court dock.
If there has been a trend emerging during 2014, it has been one of international cooperation between law enforcement agencies when it comes to tackling business crime. The operation against boiler rooms last spring that involved four countries, two continents and more than a hundred arrests was an indicator of the levels of international coordination now being employed to tackle business crime. With countries now looking beyond their immediate neighbours when establishing law enforcement partnerships, the element of global coordination now present in tackling business crime can only mean more multinational operations. Quite what that will mean for prosecutions in 2015 remains to be seen.
If we had to pick one piece of legislation that we believe will see its profile rise in 2015, we would plump for the Bribery Act. As the Act makes any company with a connection to this country responsible for the behavior of its staff, agents, third parties or partners anywhere in the world, it can only be a matter of time before the prosecutions start to gather pace. Criticism that the Act was a lame duck in its first couple of years has been replaced by a belief that it is now a piece of legislation that the authorities are increasingly keen to utilise. And, going back to our first prediction, it emphasises the need for compliance.
For the SFO, the Act is a valuable tool. Almost as valuable as the extra funding the Chancellor has given the SFO to investigate forex. The combination of extra funding, regular use of the Bribery Act, a large number of high-profile investigations and a lot of people waiting to assess its success rate will make 2015 a crucial year for the SFO. Succeed on a number of fronts and it will have justified itself after a few years of less-than-flattering incidents. Fail on any number of prosecutions and its existence will again be called into question. It would be hard right now to predict exactly what kind of a year the SFO is likely to have.
Like so much in business crime, the outcomes are often far from predictable.
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.