A nervous disposition
Corporate Crime analysis: Stephen Parkinson, partner and head of the criminal and regulatory litigation group at Kingsley Napley LLP looks at the most significant developments in 2015 in the area of criminal court procedure.
Legal developments and practical impact
What legal developments have had the biggest impact on your practice in 2015?
2015 has been an eventful year for corporate crime practitioners. Some of the key developments include the decision in R (Lord) v Director of the Serious Fraud Office  EWHC 865 (Admin),  2 Cr App Rep 340 in relation to section 2 interviews, the publication of the Yates Memo in the US and the first of two much-anticipated deferred prosecution agreements (DPAs).
In February, the High Court in R (Lord and others) v Serious Fraud Office ruled that it was lawful for the Serious Fraud Office (SFO) to have prevented a company's legal advisers from attending a section 2 (Criminal Justice Act 1987) interview of their employees where the SFO formed the view that such attendance had the potential to prejudice its investigation. Though the point in issue was a narrow one, the arguments ranged widely. Importantly, the court expressed the obiter view that there is no legal right to the attendance of a legal adviser at a section 2 interview, though the court noted that in fact it was the SFO's policy to permit the attendance of a legal adviser provided their attendance would not unduly delay or in any way prejudice the investigation. Unfortunately, the case appears to have emboldened the SFO to change its approach. It has now become quite challenging over the attendance of legal advisers, as I explain below, though I should emphasise that this is in some but not all cases.
In September, the US Department of Justice (DoJ) published a document which has become known as the Yates Memo, after the name of its author, Sally Yates, the Deputy Attorney General. The memo sets out six steps designed to strengthen DoJ investigation of corporate wrongdoing. The memo makes clear that companies will only be given credit for co-operation if they provide all relevant facts relating to the individuals responsible for the misconduct; and it emphasises the importance of focussing on wrongdoing by individuals and resolving the cases against them. The memo is of interest since corporate crime cases often involve a US dimension. It remains to be seen whether this will have an impact on the UK but I have to say it is unlikely. This is a rare instance of the DoJ playing catch-up with the UK, where the SFO and Financial Conduct Authority (FCA) have a long and respectable record of bringing cases against individuals, and where guidance is already clear that co-operation by companies must include providing information concerning their culpable employees.
It has been possible since February 2014 for the SFO to enter into DPAs, but the first DPA (ICBC Standard Bank) was only announced on 29 November 2015, with another expected by the end of this year. The signals from David Green, shortly after he was appointed as Director of the SFO, were that his focus would be on bringing cases to trial and he did not exhibit any great enthusiasm for DPAs. But with his (hopefully first) period of office about to expire he has now begun to emphasise their value in the right circumstances, in particular to avoid collateral damage to innocent parties such as shareholders and employees and he has said that he anticipates many more DPAs in the future.
How have these affected your ongoing cases and working life? How have you dealt with these on a practical level?
Post-Lord, those of us who regularly engage with the SFO have noticed that it has taken a more assertive approach over the attendance of legal advisers at section 2 interviews, in some cases declining to provide advance information, imposing conditions on attendance, requiring undertakings over the use to which material might be put and restricting attendance to one lawyer only, pending the outcome of a review of its policy. The Lord case occasioned in the SFO a rush of blood to its head, but in its haste to take the benefit of its victory it has been rather short-sighted as to the long term effects of its new approach. The role of independent legal advisers is to assist the interviewee to provide the best evidence that they can, as well as to protect their interests where this is needed. I know from personal experience that interviewees have found the new approach of the SFO unsettling and some have resented the tone and style of interviewers and their attitude to legal advisers. At some point, these individuals will be asked to provide a witness statement and they will have a choice whether or not to do so. In making that choice, they would not be human if they remained unaffected by their experience before and during the section 2 interview.
Any criminal lawyer advising a company will be bound to consider whether a DPA might be an appropriate resolution and to be fully familiar with the DPA Code of Practice. David Green has stressed the importance of co-operation in order for the SFO to be able to persuade the judge that a DPA rather than a prosecution is in the interests of justice. The SFO and FCA have reiterated that they want early and meaningful engagement, starting with the internal investigation where this takes place. Clearly when making a decision whether or not to enter into a DPA, the approach of the company will be a significant factor. For any company that recognises that wrongdoing has occurred and is determined to change, there is very little downside to co-operating with the SFO. Even if a DPA does not result, it is good mitigation. Co-operation is not in any event the same as conceding the strength of the SFO's case. It is perfectly possible to contest the merits while at the same time engaging positively with the SFO. Clients sometimes want Rottweilers as their lawyers, but the decision to appoint them usually comes back to bite them.
Have all of the expected developments of 2015 come to pass?
One development which has not come to pass was the proposed extension of section 7 of the Bribery Act 2010 (BA 2010) to include a wider range of economic criminality. This surprised some given the extensive publicity around the idea, a full consultation by the government, and almost unanimous support from the academic community. But the case for an extension of the law was not persuasive. It seemed likely that the compliance burden on companies would be large, while the benefits were fairly inchoate. There is a need for wholesale change of the law on corporate criminal liability, but it is better to have that debate than put in place a limp substitute. In my view the government made the right decision.
Clients and business developments
How has your business developed in 2015? Has this been a good year for work in your area?
2015 has been a busy year for Kingsley Napley as we are involved in all of the major SFO investigations, acting both for corporates and individuals, witnesses and suspects in cases that are complex and multi-jurisdictional. The SFO and FCA are now properly resourced organisations, staffed by skilled lawyers, investigators and accountants and they are tackling the most serious, complex cases, as they were set up to do. Those under investigation need representation from firms with proven experience in this area. General counsel recognise that they, or their employees, need specialist expertise when faced with these types of investigations and so we are frequently called upon to advise. With 12 partners, 14 solicitors, and extra paralegal support in my team, together with additional resources in the firm if needed, we are well placed to tackle cases of any size and complexity.
Stephen Parkinson was interviewed by Kate Beaumont for Lexis Nexis.
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