‘Plea bargaining’ uncertainty hits Serious Fraud Office anti-bribery drive

Published on 10 Aug 2011 under category: legal

Bribery and Fraud in the UK

According to the Serious Fraud Office (SFO) only 10 companies have taken advantage of a US-style scheme to “self-report” potential bribery and fraud offences amid widespread uncertainty about how judges respond to such deals, according to the director of the organisation.

Richard Alderman, SFO chief, launched a high-profile campaign back in 2009 encouraging more businesses to turn themselves in to the authorities in exchange for more lenient treatment – a common practice in US corruption cases.

However, UK businesses had been deterred from doing so by a range of factors, including the previous array of anti-bribery laws – replaced in July by the new Bribery Act – and uncertainty over how the judiciary would view plea bargaining, said Mr Alderman. Describing the response to date as “quite disappointing”, he called for new judicial guidance on sentencing in bribery cases.

Judges have long been wary of “plea bargain” deals. Mr Alderman pointed to recent court rulings, such as that of John Dougall, a former healthcare manager, who was imprisoned in spite of SFO pleas for his sentence to be suspended because of the help he gave authorities.

Mr Dougall was eventually given a suspended 12-month jail term on appeal, but only after the courts made it clear that prosecutors did not have the power to make US-style agreements on sentencing.

Steven Francis, regulatory lawyer at Reynolds Porter Chamberlain, himself an ex-enforcement official at the Financial Services Authority, said the inability to “do a deal” was harmful.

“It has to be more certain than the SFO saying maybe you’ll get off if the judge is in a good mood,” he said. “All of these economic-crime cases – whether it’s insider trading, fraud, cartels – are about the dissemination of information, and there is hardly ever direct evidence of it. You need a whistleblower to bring the cases, and you have to find a way of incentivising them to come forward.”

Mr Alderman said there were a number of reasons why self-reporting was still in its infancy in the UK. “I was expecting more and I’m sure we will get more . . . people are still unsure about the rules of this and they are conscious of the fact that judges are troubled by these issues.”

In the US, figures from law firm Shearman & Sterling showed that in 2009 and 2008 almost half of the corporate corruption cases that came to light were triggered by self-disclosures to prosecutors.

Mr Alderman said: “In the US, if you are a whistleblower who has been involved in offences, you may go and talk to the Department of Justice and do some sort of plea bargain, because if you do the plea bargain you may get one or two years. If you don’t do it you may get 50 years.”

He said that, by contrast in the UK, a whistleblower who co-operated and offered to give evidence would only get a “few months” less in jail than someone who offered no co-operation with prosecutors but pleaded guilty in court at the first available opportunity.

Cubism Law fraud solicitor Dan Hyde commented,

"In the UK courts are not used to or fond of deals that are struck and that are not binding on them. There needs to be a fresh approach if we are to incentivise self reporting and cooperation."

The contrast is set to become yet starker with the implementation this month of the Dodd-Frank whistleblower regulations in the US, which provides for potentially large cash rewards to whistleblowers if their tips lead to large enforcement actions in the courts.

One idea currently being floated by prosecutors in the UK is whether agencies could use more US-style deferred prosecution agreements – in which a company agrees to co-operate with the government in exchange for avoiding an indictment for corporate crime.

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