Can the SFO ‘crack’ more cases by getting suspects to co-operate?

Richard Sallybanks and Jonathan Flynn look at the considerations which can arise when entering into co-operation agreements under the Serious Organised Crime and Police Act 2005.

Over the past few months, Lisa Osofsky, Director of the Serious Fraud Office (‘SFO’) since late August 2018, has spoken of a series of measures designed to speed up SFO investigations and increase the number of convictions for white collar crime. These include greater collaboration with prosecuting authorities overseas (particularly in the US), utilising technology to expedite the investigative process and, significantly, encouraging suspects in the UK to co-operate with the SFO in order to ‘crack’ more cases.

In a speech in Washington DC on 4 December 2018, Ms Osofsky said: “…we in the UK have heard loud and clear from our colleagues in the United States how valuable co-operators can be in cracking white collar cases. We have different practices and different rules in Britain, and co-operators have, to date, been more widely used in narcotics or gang cases. Suffice to say, we are intently exploring this area in the white collar world.”

These sentiments were echoed in Ms Osofsky’s evidence to the UK’s Parliamentary Justice Committee on 18 December 2018, when she talked of the need to “get an insider who can help us [the SFO] understand what the scheme was and what the relevant documents are” as opposed to having to “wade through what can otherwise be a morass of documents”.

In the UK, the statutory framework governing co-operation agreements is contained in the Serious Organised Crime and Police Act 2005 (‘SOCPA’). Introduced in April 2006, these provisions added to rather than replaced the pre-existing common law mechanisms.

There are two main types of SOCPA agreement: a section 71 agreement, which confers immunity from prosecution in exchange for a suspect’s full co-operation; and a section 73 agreement, which requires a suspect to plead guilty to an offence, but enables the court, when sentencing, to take into consideration the co-operation provided (often resulting in a substantial reduction in sentence: R v Blackburn[1]; R v Dougall[2]).

Whilst SOCPA agreements have been around for a number of years, the provisions are infrequently used by the SFO (section 71 less so than section 73).[3] This is no doubt due, in part, to a reluctance by some prosecutors to ‘do a deal’ with suspects (particularly if that ‘deal’ involves granting full immunity). However, it is also important to recognise the reasons why suspects (and their lawyers) might view SOCPA agreements with some scepticism.

One of the main difficulties with the SOCPA regime is that in order to co-operate at an early stage in an investigation, a suspect will have to make admissions in an interview under caution, often before the person knows the full strength of the evidence against him or her. For obvious reasons this acts as a disincentive to providing the full and frank disclosure that SOCPA requires. Whilst the SFO has the power, under section 72, to conduct an interview which cannot be used against a suspect, this power is rarely used.

In addition, the conditions imposed by SOCPA agreements are often onerous and prolonged. As well as making admissions in interview (and, in the case of section 73, pleading guilty to a criminal offence), SOCPA agreements invariably require a suspect to co-operate in any ongoing investigations in the UK and overseas, which will often include appearing as a witness at the trial (or trials) of their co-accused.

Equally, where a person is a suspect in a cross-border investigation, entering into a SOCPA agreement in the UK does not automatically prevent prosecution overseas. Theoretically, if a suspect pleads guilty to a criminal offence in the UK (pursuant to a section 73 agreement) they can seek to rely on the internationally recognised principle of autrefois convict, ne bis in idem or, as it is more commonly known, double jeopardy if prosecuted elsewhere in respect of the same conduct. However, outside of the EU such protection is not universally applied and separate agreements must be obtained with overseas authorities conducting parallel investigations (for example, a non-prosecution agreement (‘NPA’) in the US). Problems can nevertheless arise in practice if, subsequent to the SOCPA agreement and conclusion of the UK proceedings (and any parallel investigation), another overseas authority begins an investigation.

Entering into a section 73 agreement also carries an inherent risk: in the past, some suspects have co-operated with the SFO (and pleaded guilty to an offence) only to find that their co-accused were not charged or, if charged, were ultimately acquitted. In those circumstances the co-operator ends up as the only person convicted, with all the adverse consequences that follow, including serving whatever sentence the court imposes (even a suspended sentence will have conditions attached to it), reputational damage and potential difficulties obtaining future employment and visas to travel overseas. One such example (in the context of the UK’s anti-trust enforcement) is the case of R v Snee where the defendant, Mr Snee, co-operated with the Competition and Markets Authority, pleaded guilty to a cartel offence, gave evidence at trial against two co-accused and received a suspended sentence; his two co-defendants were however acquitted at trial.[4]

Whether the SFO can overcome all or some of these difficulties remains to be seen. Ms Osofsky may ultimately find, however, that using SOCPA agreements to ‘crack’ more SFO cases is easier said than done.

 

Richard Sallybanks is a partner at BCL who specialises in complex business crime and regulatory defence work. Richard has been involved in numerous SFO, FCA, HMRC and CMA investigations and prosecutions, and has experience of concluding a section 73 agreement with the SFO (and associated NPA with the US DoJ). Richard has acted in a number of FCA criminal and regulatory investigations for brokers, traders and senior executives, including in relation to allegations of insider dealing and market abuse, and is experienced in cartel investigations, both domestic investigations conducted by the CMA and cross-border anti-trust investigations (including those conducted by the US DoJ).

Jonathan Flynn is an employed barrister at BCL specialising in criminal and regulatory law. He has particular expertise in fraud, bribery and corruption, restraint and confiscation proceedings, and general crime. Jonathan has acted in a number of high-profile, complex and multi-jurisdictional cases, including investigations/prosecutions by the SFO, FCA, HMRC, and NCA.

 

Footnotes:

[1] [2007] EWCA Crim 2290

[2] [2010] EWCA Crim 1048

[3] The Government White Paper that preceded SOCPA noted that “the assumption will always be… that the majority of co-operating defendants would be offered sentence reduction rather than full immunity”.

[4] https://www.gov.uk/government/news/director-sentenced-to-6-months-for-criminal-cartel