On 6 September 2018, following hot on the heels of the important decision on the application of litigation privilege in internal investigations in ENRC v Serious Fraud Office (read our recent summary here), the Administrative Court handed down its judgment in R (KBR Inc.) v Serious Fraud Office concerning the Serious Fraud Office’s (SFO) powers to compel the production of documents held outside of the United Kingdom by companies incorporated outside of the United Kingdom. The Administrative Court held that where there is a “sufficient connection” to the United Kingdom, the SFO can compel the production of such documents. Continue reading
Today the Court of Appeal of England and Wales issued its judgment in The Director of the Serious Fraud Office and Eurasian Natural Resources Corporation Limited regarding the privileged nature of documents created in the context of an internal investigation.
The Court of Appeal reversed the High Court’s decision and found that all of the interviews conducted by ENRC’s external lawyers were covered by litigation privilege, and so too was the work conducted by the forensic accountancy advisors for the books and records review. The Court of Appeal found that ENRC did in fact reasonably contemplate prosecution when the documents were created. Moreover, while determining that it did not have to decide the issue, the Court of Appeal also stated that it may also have departed from the existing narrow definition of “client” for legal advice privilege purposes in the context of corporate investigations. Continue reading
The Law Commission has published an extensive consultation paper examining the UK’s current Suspicious Activity Report (“SAR”) regime for reporting suspected money laundering to the National Crime Agency (“NCA”) and outlining provisional reform proposals. The consultation runs until 5 October 2018, after which the Law Commission will present its final recommendations to the Government. This is the first step in a process that could result in significant changes to Part 7 of the Proceeds of Crime Act 2002 (“POCA”), affecting all organisations that deal with money laundering issues.
We summarise below the key views expressed and changes proposed in the consultation paper, and analyse the likely practical effect if the reforms are implemented. Continue reading
by Evan Norris and Alma M. Mozetic
On July 31, 2018, the High Court of England and Wales denied the U.S. Justice Department’s request for the extradition of Stuart Scott, a British foreign exchange trader indicted in 2016 as part of the DOJ Fraud Section’s multi-year effort to investigate and prosecute foreign currency market manipulation. The decision in Scott v. Government of the United States of America marks the second time in 2018 that DOJ has lost an extradition fight in London. The Department has reportedly indicated that it will appeal. If the decision stands, Scott will join a handful of U.S. court cases that have the potential to impact DOJ’s ability to reach across the globe to pursue foreign nationals for violations of the FCPA and other financial fraud statutes. Continue reading
Following the consultation papers published in July and December 2017, the UK Financial Conduct Authority (“FCA”) on 4 July 2018 provided responses to the industry feedback it received and issued near-final rules on extending the Senior Managers and Certification Regime (“SMCR”) to almost all FCA-regulated firms. Notably, the FCA has confirmed that the new rules will apply from 9 December 2019. We summarise below the limited changes from the FCA’s initial SMCR proposals, the main features of which have been covered in our previous client updates.
In addition, the FCA has published a consultation paper regarding the introduction of a new directory of financial services workers (the “Directory”). This will be available from 10 December 2019 for banks, building societies, credit unions and insurers, and from 9 December 2020 for all other firms. The key aspects of the Directory and firms’ significant related notification obligations are outlined below. Continue reading
by Liz Campbell
Prosecuting corporate criminality is not straightforward. As a result of these difficulties, the UK Parliament is turning to an indirect form of corporate criminal liability: the Bribery Act 2010 introduced the corporate offence of failure to prevent bribery (FtPB), and this provision has been emulated with respect to the failure to prevent the facilitation of tax evasion in the Criminal Finances Act 2017.
In brief, a relevant commercial organisation (C) is guilty of FtPB if a person associated with C bribes another person with the intention of obtaining or retaining business or an advantage for C. An ‘associated’ person is an individual or body who ‘performs services’ for or on behalf of the organisation, and this definition was framed broadly intentionally. Crucially, the corporate entity can rely on the section 7(2) defence that it had “adequate procedures” in place designed to prevent persons associated with it from bribing. Continue reading
In R (AL) v Serious Fraud Office, the English High Court considered the SFO’s obligations to individuals prosecuted following the deferred prosecution agreement (“DPA”) in July 2016 with a company anonymised as “XYZ Ltd”. The Court’s decision is likely to force the SFO to adopt a much more aggressive approach in relation to company counsel’s notes of interviews conducted during a company’s internal investigation. In particular, when those interview notes are potentially relevant to the defences of individuals being prosecuted, this judgment is likely to lead to the SFO putting further pressure on companies to produce the notes, through court proceedings if necessary. We analyse these and other issues covered by the judgment below. Continue reading
Defense lawyers all around the world have heard loud and clear that prosecutors and police agencies have announced a new age of international cooperation. Prosecutors from one country have been posted to the offices of another. Agents from nations around the world now sit at desks next to each other in central locations like London. Global resolutions of big cases are being announced by enforcers in multiple jurisdictions. One of the main subject-matter focuses of these joint cases has been anti-corruption – namely the Foreign Corrupt Practices Act in the United States and the Bribery Act in the United Kingdom. Continue reading
On March 23, 2018, Congress passed the Clarifying Lawful Overseas Use of Data Act (the CLOUD Act), amending key aspects of U.S. surveillance law and providing a framework for cross-border data access for law enforcement purposes. The Act addresses two problems that have been the subject of heated debate for the past five years. First, by amending the Stored Communications Act, 18 U.S.C. §§ 2701 et seq. (SCA), the CLOUD Act clarifies that American law enforcement authorities can compel providers of electronic communication services — such as major email service providers and social media networks — to produce data stored outside the United States. Second, the Act establishes new rules facilitating foreign law enforcement access to data stored inside the United States. In short, this new legislation impacts any provider that may receive either U.S. or foreign orders to produce data in furtherance of criminal investigations. Continue reading
As governments around the world watch the rising tide of public sentiment and law enforcement actions against corruption, some are looking to the United Kingdom Bribery Act 2010 (the “Act”) as a model for crafting their own criminal sanctions, including with regard to corporate criminal liability. Section 7 of the Act, which is captioned, “Failure of commercial organization to prevent bribery,” defines the offense in just 45 words:
A relevant commercial organisation (“C”) is guilty of an offence under this section if a person (“A”) associated with C bribes another person intending—
(a) to obtain or retain business for C, or
(b) to obtain or retain an advantage in the conduct of business for C.
Unless the company, as an affirmative defense, can “prove that [it] had in place adequate procedures designed to prevent persons associated with [it] from undertaking such conduct,” it faces a criminal fine without statutory limit. Continue reading