Legal Business Blogs

DPAs in spotlight as SFO ends long-running Rolls-Royce and GSK investigations

The Serious Fraud Office (SFO) has today (22 February) ended investigations into two landmark cases involving Rolls-Royce and GlaxoSmithKline, prompting scepticism from white-collar lawyers.

Despite agreeing a £497.3m January 2017 deferred prosecution agreement (DPA) with the car manufacturer, the SFO has pulled its bribery and corruption probe into Rolls-Royce following a ‘detailed review of the available evidence’.

Likewise, an investigation into GlaxoSmithKline, which dates back to 2014, has been scrapped. This also follows a review of evidence and ‘an assessment of the public interest’.

In a statement, SFO director Lisa Osofsky said: ‘After an extensive and careful examination I have concluded that there is either insufficient evidence to provide a realistic prospect of conviction or it is not in the public interest to bring a prosecution in these cases.’

Osofsky is relatively new to the director role, installed in June 2018 as successor to David Green QC.

The decision to halt the probes follows a major setback in the Tesco criminal prosecution: in the last few months, former executives John Scouler, Chris Bush and Carl Rogberg were all acquitted of fraud charges.

The acquittals came after another DPA, with Tesco paying £129m in March 2017 to avoid prosecution.

Sarah Wallace, head of Irwin Mitchell’s regulatory and criminal investigations group, commented: ‘In some ways it is extraordinary that the SFO are unable to charge any individual suspects in relation to Rolls Royce given the scale of the allegations in the DPA but maybe the director in the wake of Tesco wants to clear the decks of potentially difficult and time consuming cases against employees that pre-date her arrival and which could dog her tenure at the SFO.’

One senior white collar partner told Legal Business that Osofsky ‘obviously reached the conclusion that the cases were too high-risk’ and that ‘if the Tesco trial produced three convictions then she may have been more comfortable’.

But the conclusion of the investigations raises pertinent questions about the purpose of DPAs, and whether companies will be more likely to co-operate in the future with an increasingly poor SFO prosecution rate.

Aziz Rahman, senior partner at business crime specialist Rahman Ravelli, said: ‘These developments regarding Rolls-Royce certainly show that the DPA regime is in need of fine-tuning. The situation where a company can agree a DPA and avoid prosecution while individuals are left with years of stress and strain until an announcement like today’s is made certainly needs to be looked at.’