Michael West reports on how a shift in enforcement will herald a raft of new advisory work
At the tail end of last year, the government launched its long-awaited UK Anti-Corruption Plan, a disparate collection of actions, initiatives and priorities aimed at improving the UK’s transparency, strengthening investigation powers and toughening enforcement options. The strategy, if implemented, will mean an increasing workload for defence lawyers and further overhaul of companies’ compliance regimes.
Tony Woodcock, partner at Stephenson Harwood, says: ‘If resources are put into this, and the timetable is kept, then it represents a blueprint for a holistic approach to fighting corruption. I say holistic as it’s not just law enforcement, police breaking down doors or the SFO [Serious Fraud Office] conducting criminal investigations, it’s about getting people thinking proactively about how corruption can be prevented.’
While there were some repackaged announcements the plan’s wide-ranging remit, with measures to tackle corruption in sport, procurement, defence, local government and juries, would alter the current regulatory landscape. Action points are diverse and appear aimed at eliciting an overall cultural shift, taking the UK towards a US-style approach.
Measures that point towards this US approach include introducing more stringent economic offences, such as the widely mooted corporate failure to prevent economic crime as well as broadening corporate criminal liability.
Another key change is improving whistleblower protection and possibly using financial incentives to encourage more co-operation. As Jonathan Kelly, partner at Cleary Gottlieb Steen & Hamilton points out, this is ‘an SEC approach to whistleblowing, where you get a slice of the action’. He notes that previously the authorities ‘have always been worried about incentivising that kind of behaviour’.
With UK and US regulators increasingly working in tandem, such as with the investigation into Libor fixing, a shift in style in the UK and the potential lowering of the bar for corporate prosecutions will result in clients needing to make wholesale compliance changes for handling economic crime, as occurred with bribery offences after the Bribery Act 2010 came in. It should also give rise to more defence work, both pro-actively in advising corporates and banks on the potential impact and ensuring proper reporting structures are in place, as well as handling what are likely to be more aggressive investigations.
‘This is an SEC approach to whistleblowing, where you get a slice of the action.’
Jonathan Kelly, Cleary Gottlieb
According to Woodcock, the UK is strengthening its framework, despite its strong reputation already, to match standards set in the US. He says: ‘The UK is still thought of as being behind the game in dealing with corruption in comparison with, say, the Americans. If you were to ask them what they think about our anti-corruption and anti-bribery record, they would probably say it’s pretty pathetic. Our law is tough, but we haven’t seen much action yet.’
However, concerns have been raised that the tougher stance goes too far and will impose too great a regulatory burden. Action point 47 directs the Home Office to amend the Proceeds of Crime Act so that restraint orders can be obtained merely on ‘a suspicion’ of corruption rather than the current ‘reasonable grounds’. Regulatory specialists fear that the move, which Kingsley Napley partner Jo Rickards describes as ‘dangerous’, will make it all but impossible to fight orders in court as prosecution agencies will always have ‘suspicion’ in order to apply for a restraint order in the first place – however unreasonably held.
As well as the culture change, both clients and their advisers will need to come to terms with the increasingly preferred status of the National Crime Agency (NCA) in the eyes of the government. The NCA’s central role in future enforcement actions was highlighted by it receiving 52 mentions compared to the SFO’s 13 throughout the plan and, on top of greater responsibility for gathering intelligence and leading on corruption risks at the border, the agency was gifted a new central bribery and corruption unit, placing it in direct competition with the fraud office.
The new unit’s remit to ‘boost capacity to investigate cases of international corruption and act as a centre of excellence’, does little to quiet speculation over its enhanced role, although white-collar crime specialists foresee a few differences, such as a change in investigative methods to using more covert surveillance techniques and possibly a focus on smaller cases, allowing the SFO to lead on large and complex matters.
Although competition with the SFO may improve standards, Rickards fears that ‘investigation of corruption is one of the SFO’s key aims – it is possible there will be some turf war over who gets what unless the ground rules are sorted out early. There is still a big question mark over the SFO’s long-term future.’
The government is facing a strict deadline to push through the plan with a May general election looming. It intends to create the new corruption unit by April and has agreed similar timelines to many of the action points. The direction of travel also has cross-party support, with measures including extending corporate liability likely to come into force whatever the outcome of the election.
The challenging timeline would have been made easier had the government announced the plan when originally intended in early summer 2014. However, Woodcock sums up the general mood of lawyers when he says: ‘This is about long-term, largely cultural change. It will take time, and parts of the plan will fail, but the aspiration is to be applauded.’
michael.west@legalease.co.uk