U.K. anti-corruption enforcement threatened by budget cuts
Thursday, September 27, 2012 at 5:45AM
Alistair Craig in Adequate Procedures, CCorporate Criminal Liability, Deferred Prosecution Agreement, Libor, PPlea Agreement, Serious Fraud Office, Stric t Liability, Tchenguiz, UK Bribery Act, United Kingdom

After the fanfare of the U.K.’s Bribery Act 2010, which was predicted to bring about a significant upswing in national and global anti-corruption enforcement, the Government has proceeded to cut the budget of the Serious Fraud Office (SFO), the main enforcement agency, from £50 million in 2008/9 to below £30 million for 2013/14.

Although the SFO receives ad hoc funding for unfunded investigations and sporadic windfalls from recoveries, these are by no means large or guaranteed amounts. Critically, they do not begin to provide the financial bedrock required for effective ongoing enforcement. 

This lack of proper funding was recently illustrated when approximately £3 million of specific funding had to be provided for the SFO’s current Libor investigation. It was also probably a major underlying contributory cause behind the recent Tchenguiz debacle.

The unavoidable, and seemingly unpalatable, fact for all administrations is that expertise is directly proportionate to the available resources. For that reason, and as a recent raft of personnel departures would attest to, the SFO appears to have become a form of finishing school for those wishing to enter private white-collar crime practices.

The failure to provide proper funding is especially piquant in the light of s.7 of the Bribery Act, which introduced a strict liability offence of commercial bribery subject only to a statutory defense of adequate procedures being in place to prevent bribery. A key factor in establishing that defense will be the extent to which a commercial organization made available sufficient financial resources. A factor that the Government seems to pay little attention to itself.

The process of providing legislative form over that of financial substance is now focused on providing the SFO with the ability to use Deferred Prosecution Agreements (DPAs). The legislative consultation period for this proposal closed in August and enabling legislation may be expected in due course.

For the U.K. government, the real value of the proposed DPAs lies more in providing a demonstration of political resolve in dealing with or assisting in anti-corruption enforcement but without involving too much public expense. Doubtless, they may also provide a convenient means of disposing with sensitive investigations without the transparency of a trial. By reducing the number of  potential trials, they may also help to reduce the media noise that invariably follows a failed but often justified SFO prosecution.

Instead of tinkering around with issues of peripheral importance, the Government should embark on radical reform of corporate criminal liability and recognize and give effect to the truth of the adage that “you get what you pay for,” even in these austere times. Otherwise, the much vaunted legislation may quickly be regarded as more bark than bite.

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Alistair Craig, above, is a commercial barrister now practising in London having recently returned from Singapore. He can be contacted here.

Article originally appeared on The FCPA Blog (http://www.fcpablog.com/).
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