Winter Update 2016-17
Rolls-Royce case is a game-changer for DPAs
Approval of the Deferred Prosecution Agreement (DPA) between Rolls-Royce and the Serious Fraud Office (SFO) was a significant decision, described as a ‘game-changer’ both for the SFO and for businesses.
The reasons for its significance are manifold. First, it is the highest penalty ever levied against a UK company for criminal conduct, comparable to fines imposed by the US Department of Justice and so transforming the SFO into one of the big-hitters of corporate law enforcement.
Second, it confirms that DPAs can be available whether or not the company has self-reported; Rolls-Royce only self-reported once the SFO had begun to investigate on the evidence of a whistleblower.
Third, it shows that co-operation can have a meaningful impact on the potential penalty. In securing a DPA, not only did Rolls-Royce avoid prosecution but the fine levied was 50 per cent lower than it might have been, despite DPA guidelines providing for reduction of up to one third. In reaching his judgement, Sir Brian Leveson approved this further discount on the penalty in light of the company’s extra-ordinary co-operation.
This judgement sends a clear message to companies that DPAs are an attractive proposition far outweighing an early guilty plea. However, more work still needs to be done to incentivise companies to report, given the discounts awarded.
What the case also shows is that co-operation and adequate procedures are vital. Rolls-Royce conducted a comprehensive internal investigation, made available to the SFO with a waiver of any claim for legal privilege, which brought to light conduct which otherwise may never have been exposed.
The company was also able to demonstrate that the senior managers in place were not responsible for decisions taken during the relevant period and were committed to instigating wholesale changes and a major new compliance programme.
Lastly it is worth noting that a condition of the DPA is that Rolls-Royce fully cooperates with the SFO as needed with the prosecution of its former employees highlighting the potential for a conflict of interest between the organisation and its senior team.
GoodCorporation has undertaken a number of projects for clients who are dealing with the SFO. Often working in conjunction with external counsel, GoodCorporation has helped to benchmark their clients’ ABC programmes to help evaluate whether or not they were adequate and how well they compared to a group of over 70 anti-corruption assessments we have conducted. In addition we provide clients with investigations support where requested. Contact us for more information.
Can adequate procedures really prevent bribery?
The final GoodCorporation Business Ethics Debate of 2016
asked whether a robust anti-corruption compliance programme can change behaviour and prevent bribery, or is it just an insurance policy?
Dan Silver who has run global compliance teams in the oil and gas sector led the discussion by presenting both sides of the argument. While there has been significant investment in anti-corruption compliance programmes to provide clearly documented audit trails, this insurance policy approach has led to something of a compliance ‘arms race’ with more paperwork created in a bid to keep the regulator happy.
However, what we are increasingly seeing is that organisations are now moving to strengthen culture and values out of a desire to alter behaviour and drive real change.
In the debate a number of issues emerged which are difficult to manage, even for those organisations committed to implementing a strong ABC culture, including monitoring agents and intermediaries and conducting supplier audits.
As our debate summary shows, most agreed that preventing bribery will be a two-stage process, with documentary evidence needed as step one, followed by a wider change in culture and behaviour to drive up standards over time.
GoodCorporation works with clients to support acquisitions
When an organisation purchases a public limited company, the amount of due diligence that can be undertaken before the acquisition is finalised can be limited.
Consequently the purchaser may need to conduct further investigations of the acquired company once the deal has been done to ensure that any bribery risk or other wrong doing can be identified.
GoodCorporation has conducted such due diligence investigations to help ensure that the buyer has all the necessary information to assess and manage risk across the new organisation. Contact us for more information.
In Brief...
How should businesses safeguard children?
David Beckham’s condemnation of child abuse in football on Desert Island Discs is a reminder that while there is a framework for protecting children in the UK that is firmly rooted in legislation, policy and principles, child protection is everyone’s responsibility.
Safeguarding children is multifaceted. For organisations who work or come into contact with children, preventing abuse must be a high priority that is carefully risk assessed to ensure that proper systems and processes are in place to prevent abuse.
Our recent blog outlines the processes an organisation can put in place to safeguard children.
GoodCorporation has a framework on safeguarding children and has worked with the BBC to review the Corporation’s safeguarding and whistleblowing procedures.
Are businesses doing enough to safeguard children? will be the subject of our first Business Ethics Debate of 2017 taking place at the House of Lords on February 28. Attendance is by invitation only.
GoodCorporation increases its work in safeguarding
As part of our child protection work, GoodCorporation is conducting a review of the safeguarding and data protection policies of Safe Child Thailand, formerly known as the Thai Children’s Trust.
For over 30 years, Safe Child Thailand has supported organisations that care for the country’s poorest and most vulnerable children.
It sustains a range of projects which provide specialist help for children who have been orphaned or abandoned or who are battling with disabilities or serious illnesses.
Are Dutch companies doing enough to combat corruption?
GoodCorporation has hosted its first Business Ethics Debate in the Netherlands.
In light of the recent bribery scandals involving Dutch businesses, we asked if enough is being done to prevent bribery.
Aldo Verbruggen, a partner at Jones Day who specialises in corporate criminal investigations, led the discussion.
Aldo began by suggesting that Dutch companies are wrongly perceived as being ‘pure and innocent’.
The majority felt that Dutch businesses in general are not doing enough to combat corruption and that the authorities should strengthen legislation.
Attendees were split however on whether or not they felt their own organisations were doing enough to tackle corruption.
While the Netherlands still ranks among Transparency International’s least corrupt countries, it is perhaps worth noting that this year it slipped from 5th to 8th in the 2016 Corruption Perceptions Index.
Read the debate summary in full.