It is becoming clear that the main fraud investigating authorities are more than happy to share whatever information they have. The resulting flow of intelligence will inevitably make them more effective. But what does that mean for anyone who becomes the subject of an investigation by one of them or more than one of them?
The Serious Fraud Office (SFO) has made it clear recently that it is more than happy to share its intelligence with authorities both in the UK and on the other side of the Atlantic. Its declaration of co-operation followed the Director of Public Prosecutions’ issuing of guidelines regarding cases with shared jurisdiction with overseas authorities. The reality now is that the SFO is happy not only to cooperate with the Financial Services Authority (FSA) but also with overseas agencies such as the US Department of Justice (DOJ) and the Securities and Exchange Commission (SEC).
It was inevitable that such a “joined up’’ approach would develop and be officially acknowledged. After all, many cases of fraud and other types of serious and complex business crime have an international dimension, bringing them under the jurisdiction of two or more nations. Reports this year have shown that the number of requests for information about UK-based foreign nationals by foreign countries investigating tax evasion rose by almost a fifth in the last financial year; up from 1,564 in 2010-11 to 1,852 in 2011-12. The authorities know that the information they need is often abroad and available. So it comes as no surprise to learn that that the appetite is there on both sides of the Atlantic to team up in a bid to ensure prosecutions. Senior figures in the DOJ have spoken highly of the SFO’s new Director David Green. It would be a surprise if this admiration was not mutual – and an even bigger surprise if it did not lead to closer and more frequent cooperation. The case of Innospec – which saw it bribing public officials in Iraq and Indonesia to keep using damaging fuel additives – has seen authorities review the way they can operate on an international level. Lord Justice Thomas made it clear in the Innospec case that he was unhappy about the limits on the financial penalties he could impose because of the nature of the investigation and the agreements brokered between the US and UK authorities that were involved. The result of that displeasure is this latest statement of intent from the SFO and the DPP’s guidelines. It appears that the bottom line is one of making sure everyone works in tandem to ensure the best possible result.
The guidelines emphasise the early sharing of information between prosecutors in the nations where the illegal activity is alleged to have been carried out. It appears that such information will not be shared with a third state without the permission of the state where the information originated. The importance of coordination to respect the independence of individual jurisdictions is stressed. Such emphasis must be as a result of the Innospec case; where Lord Justice Thomas’ unhappiness at the corporate plea bargain that had been arranged highlighted the need to prevent one nation’s jurisdiction being limited by events and authorities in other countries. It seems now that the need for careful, detailed discussion of where and how prosecutions should be brought is at the top of the agenda. The issue of jurisdiction appears to follow the principle of a prosecution being brought in the nation where most of the criminal behaviour was carried out – with all relevant prosecutions to be carried out in one jurisdiction, if possible. Such a stance, however, may lead to difficulties in producing, preparing and transferring evidence (and even witnesses) from one country to another.
There is little doubt that the criticisms of Innospec have played a part in prompting the guidelines. The criticisms are probably one of the reasons for the introduction of Deferred Prosecution Agreements (DPA’s). But quite how these guidelines will be employed by US and UK agencies working together remains to be seen. The DPA’s do give companies who know they are guilty of wrongdoing the chance to make amends by effectively making a plea bargain, paying the penalty, reforming themselves and agreeing to external monitoring. Supporters of DPA’s argue that such an approach provides a more sophisticated response to wrongdoing than the simple decision to prosecute or not to prosecute. The DPA, they claim, is a quick, effective tool that can gain results for the SFO without the time, expense and inevitable risk of failure that accompanies a trial. According to the Ministry of Justice, DPA’s will give companies an incentive to self-report because they remove the uncertainty that companies face in the UK legal system once they have pleaded guilty. At present, judges can ignore plea bargaining carried out between defendant and prosecutor. However, those against DPA’s argue that corporate defendants that agree to a DPA in the US do so because they can then avoid prosecution in the UK under double jeopardy rules. If DPA’s are preventing UK prosecutions it is an extra argument in favour of the greater cooperation between jurisdictions that is outlined in the DPP’s guidelines.
Increased levels of international cooperation will strengthen the hand of investigating authorities and, therefore, give a defendant less scope for evading prosecution. At Rahman Ravelli, our experience in coordinating international defence cases is being increasingly called upon by defendants who find themselves investigated by a number of authorities in any number of countries. This is a trend that can only increase as authorities around the world turn to their colleagues in various countries to adopt an international approach to investigation and prosecution. Any defendant who ends up in such an unenviable position has to make sure that they are represented by solicitors who are familiar with working on an international, cross-border stage and capable of dealing with a variety of prosecuting authorities.