by Lisa Osofsky

Thank you.

I have just completed my first month as Director of the Serious Fraud Office.

As a new director, I have spent my first weeks meeting the talented and hardworking SFO team – from lawyers to investigators to accountants to computer experts to the administrative team who are the backbone of every government agency all around the globe.   I have come to an office with strong values and a commitment to justice, a dedication for searching for the truth. 

And this team has been briefing me on the many cases in the investigative pipeline.  A good team makes good cases, and the SFO team has some absolutely terrific cases.  All I can say for now is “watch this space.”

It is my good fortune to have taken the helm of an agency that has made an enormous mark in the past five years, an agency that has spent the past few years bringing high-profile cases and entering into high-profile corporate dispositions.  It is now my honour to lead that team as it continues that trend line, to bring bigger and better cases, and to make the world even more inhospitable for those who would lie, cheat, steal and bribe to line their pockets.

I want to pause for a moment on the importance of the task.  This room is full of people who are – or have been – actively engaged in the fight against fraud and corruption:  from law enforcement, to the private sector, to NGOs, and to those in academia.  This community – this extended white-collar community – full well understands the nature of the destruction.  We have seen too much.  We understand the damage when money intended to build schools or hospitals is siphoned into the pockets of crooked public officials instead of being used for bricks and mortar.  We understand the personal devastation when con artists cheat hard working retirees out of their savings and pension monies – increasingly con artists affiliated with international, digital, organized-crime gangs.  We understand the damage to people.  We understand the damage to democracy.  We understand the damage to the rule of law.  It is why we do what we do.  It is why symposiums like this one exist.

So first and foremost, thank you for being part of the solution.

We live in an amazing time.  We take for granted what only decades ago would be viewed as miracles.  What was science fiction when I was a child is now basic and boring technology that is in the hands of every teenager (no, every pre-teen) in America.

For my purposes today, there are two main consequences of this.  First, this technology has shrunk the world.  Criminals in any part of the world can bribe and cheat and steal in any other, and can do it in nanoseconds, virtually invisibly.  Second, as we have all seen by reading the headlines – similar headlines all around the world, by the way – these wonderful, new digital tools are also economically and socially disruptive.  History teaches us that criminals thrive on disruption and volatility.  For example, in the UK, it only took moments after TSB suffered IT failures for the fraudsters to jump on this, leaving many innocent victims in their wake. As head of a crime fighting agency, I am committed to making our country a dangerous and difficult place for criminals like these.

And what do these truths mean for those of us engaged in the fight against fraud and corruption?  In particular, what do they mean for the SFO?

I am a UK citizen and a barrister.  As you can probably hear from my accent, however, I grew up in the US, and one of my first jobs as a lawyer (yes, I am also a US trained lawyer) was as a federal prosecutor in Chicago.  As a junior prosecutor, I was taught an awful lot by the seasoned agents who I worked cases with.  What I learned over and over, every time I stepped before a jury or grand jury was Keep It Simple.  So let me keep it simple: (1) we at the SFO need to work at pace.  And (2) we in law enforcement all around the world need to work more closely with each other. 

We cannot afford to work at analog speeds when criminals steal in nanoseconds.  On the SFO side, we have renewed a dedication to moving cases more quickly.  We will use the very effective tools that Parliament has given us, including importing those which   have proved effective in other jurisdictions, including the USA.  Let me give you a point of reference.  The FCPA was enacted in 1977 – over three decades ago.  In contrast, the UK Bribery Act became effective in July 2011 – seven years ago.  In every human endeavor there is a learning curve, and my predecessors did enormous good work getting the agency to where it is. 

Nor can law enforcement afford to work in geographic law enforcement siloes.  We must work closely together, we must share information, and – together – we must follow the criminals across borders.  That, of course, also means understanding how the different systems work and where differences in rules of law will drive how we cooperate.  Before I got there, the SFO and DOJ had been nurturing closer ties.  Upon arriving, one of my first priorities has been to reach out to the US Department of Justice to discuss how we can work even better together.  Indeed, as many of you know, right now there is a DOJ lawyer seconded to the SFO, actively working on SFO cases.  And this is by no means limited to the DOJ.  I have begun talking to and meeting with prosecutorial counterparts around the world.

So let me take them one at a time: One, moving at pace through proactive techniques; two, international cooperation; and three, understanding differences among the systems – which I will illustrate by talking about a few differences in UK versus US Deferred Prosecution Agreements.

The Roskill Model and Proactive Techniques

Long before Bob Mueller was named Special Counsel, he was Number 3 at the US DOJ and he sent me to work the BCCI bank failure–and other fraud cases with a US nexus.  That was 25 years ago and I was stationed at the SFO.  What was new for the UK, but very familiar to me, was prosecutors and investigators, cops and accountants working side by side throughout the life of the case.

This model of working across disciplines to fight and prosecute crime, so common in the US, is unusual in the UK.  We follow what is known as the Roskill model, following publication of a report examining fraud trials; this was led by Lord Roskill.  The Criminal Justice Act 1987 gave effect to the recommendations in that report and established the SFO. 

International Cooperation

It wasn’t just working hand in hand with investigators that was part of my DNA as a prosecutor, it was working collaboratively—whether it was across jurisdictions, across agencies, or across sectors. 

That’s the way to make strong cases—cases with impact.  The most complicated and difficult cases – the cases the SFO makes and will continue to make – require it. We are engaged in a worldwide effort to bring criminals around the globe to justice.     

For example, I attended the International Association of Prosecutors in Johannesburg last month: chief prosecutors and Attorneys General from 99 countries ranging from Mongolia to Uganda to Russia. The topic was the independence of the prosecutor; the backdrop was State Capture Commission hearings in South Africa while its chief prosecutor addressed us. It was enlightening to hear from other jurisdictions on the topic of protecting the prosecutor.  

Uganda was a particularly sobering contrast: their prosecutors have guards with AK 47s which is a different view of protecting the prosecutor than that faced by much of the audience.

Our kinds of cases are becoming increasingly multijurisdictional and complex, so cooperation to achieve global settlements like Rolls-Royce are ever more important.  Strengthening and deepening the relationships that make this happen is a major focus for me.  I’ve started with European partners and US colleagues: meeting to build relationships, discuss case work and share information and strategy.

I’m also interested in working with the newcomers to Deferred Prosecution Agreements – Argentina, Canada and Australia – to share best practice and offer advice based on our experience.

Of course relationships closer to home are also important: with UK law enforcement and regulatory partners, including via the new National Economic Crime Centre, non-governmental organisations, and the legal, academic and private sectors.

In building these bridges, one of the things we need to focus on is that prosecutors in different countries live by different rules.  These rules affect how we conduct our own investigations, and how we interact with each other and with our targets. 

For example, the routine use of the SFO’s compulsory powers to obtain information and interview witnesses we call Section 2 powers – can have the effect of immunizing persons in the US, as the case US v. Allen recently taught us.  Data privacy rules in Europe are far more stringent, causing frustration among US prosecutors who are used to getting what they want quickly with a subpoena.  Criminal discovery rules in the UK (we call them “disclosure” rules) are different,

As we undertake more cross-border investigations, it is incumbent on us all to understand the differences, rules that often explain why agencies will attack the same investigative problem in radically different ways.

Understanding the differences

In this world of enforcement variations, one of the differences I am most frequently asked about is how a UK Deferred Prosecution Agreement is different from the US version.  So, by way of illustration, let me talk about those differences in a little bit of detail.

DPAs are familiar territory in the USA: familiar to me through prosecuting, and also through monitorship work.

They are much newer in the UK, where they came into effect in the Crime and Courts Act 2013 (Schedule 17 is the legal basis and sets out the offences for which they are applicable).

The ability to reach DPAs first became available February 2014 and the SFO first used the power in November 2015. So far there have been four brokered by SFO:  three concerning corruption and one concerning fraud.

The key differences between the regimes is that UK DPAs are judicially supervised, and they are only available to corporates, not individuals. We don’t have non-prosecution agreements in the UK – this would leave the courts out of the picture.

In the UK, the prosecutor may invite a corporate to enter DPA negotiations if we are satisfied that it is in the public interest to do so.  

If the parties agree on a statement of facts and provisional terms, a preliminary Court hearing is sought. The purpose of the hearing is for the Court to decide whether a DPA is likely to be in the interests of justice, and whether the proposed terms are fair, reasonable and proportionate.

If that test is met, the Court declares approval at a final hearing: this is done in public where the court sets out its reasoning for approval. The judgment, the statement of facts and the agreement are published to ensure transparency.

The judge (must be convinced corporate is reformed in order to agree to a DPA; but we don’t have the same sort of active monitorship practice that we do in the USA where there is a history of thorough testing and auditing and searching reports to a challenging regulator, prosecutor or court; although monitorships are permitted they are not yet used the way we do in America.

Cooperation is important to the regime and DPAs are only considered appropriate if a self-report or company has fully cooperated with the prosecutor.

The public interest analysis is crucial in considering whether a DPA could be appropriate. Factors for determining this include the seriousness of the predicate offense or offences; the importance of incentivising the exposure and self-reporting of corporate wrongdoing; the history (or otherwise) of similar conduct; the attention paid to corporate compliance prior to, at the time of, and subsequent to the offending; the extent to which the entity has changed both its culture and in relation to relevant personnel and the impact of prosecution on employees and others innocent of any misconduct. Only designated prosecutors can use DPAs: the SFO, the Crown Prosecution Service or if designated by an order of the Secretary of State.

The funds go to the general Treasury in the UK; the SFO does not benefit directly from funds paid out by the targeted company; although it may recover some or all of its costs.

UK DPAs operate in a different legal context to the US model. It’s harder to establish corporate criminal liability in the UK.  This is because UK prosecutors must satisfy the “identification principle”, meaning corporate liability arises only where the offence is committed by a natural person who is the directing mind or will of the organization. This principle was developed in 19th century when most English companies were run by fewer than half a dozen people. The result is cases where only the individuals but not their employers have been charged (for example, the phone hacking scandal). It’s fair to say that juries don’t like this, and the public doesn’t like it either.

Are these backed by demonstrable commitment at the appropriate level?

Here, we, at the SFO, demand evidence of reform; we do not want recidivists and will want assurance that companies are doing everything they can to ensure the crimes of the past won’t be repeated long after the watchful eye of the prosecutor moves on to another target.

Conclusion

I intend to use all the powers at my disposal as our country’s lead prosecutor of serious, complex fraud and corruption. My approach will be international, cooperative across all jurisdictions, sectors and perspectives and, importantly for my adopted jurisdiction, proactive throughout the life of our cases—meaning from intelligence work to inception, to investigation, to trial and resolution, to recovering the proceeds of crime.  My goal is to make sure the UK is a high risk place for the world’s most sophisticated criminals to operate.

After just over a month, I am unequivocal in reporting that I am very much looking forward to at least the next five years in the chair.

Thank you.

Lisa Osofsky is the Director of the Serious Fraud Office, U.K.