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Friday
Jun142019

Can the SFO really use ‘participating informants’ to prosecute bribery?

The strong-arm tactics employed by federal prosecutors in the United States may be about to hit the UK, thanks to the Serious Fraud Office’s (SFO) new head, Lisa Osofsky, a former FBI lawyer. It will be interesting to see how her approach to law enforcement goes down with the normally more reserved culture of the UK.

Last year, for example, among others she called for an extension to corporate criminal liability law and the creation of an all-encompassing failure to prevent fraud offense.

I have no issue with Ms. Osofsky’s approach to the problem of corporate crime, and in particular tax evasion which she is seeking to address. But the law in the UK is somewhat different to that across the pond in the USA. She is quoted in the London Evening Standard as saying: “You can spend 20 years in jail for what you did or wear a wire and work with us.”

The issue of employing cooperating witnesses -- or ‘a rat’, as the mafia would refer to them -- is a sensitive one. The UK’s approach to the subject of covert investigation is likely much more rigid than Ms. Osofsky is used to. The UK’s Regulation of Investigative Powers Act 2000 (RIPA) is often the bane of UK law enforcement, frequently frustrating investigations due to the rigidity of the legislation, complicated further by the unyielding manner in which it is overseen and administered.

For the police (or as in this case the SFO and Her Majesty’s Revenue and Customs [HMRC]), to secure permission to "wire" a covert human intelligence source (CHIS) in order to gather evidence, requires an extremely high threshold. It is also reserved for the most serious of crimes, and very few tax evasion cases are likely to reach the required ceiling.

The RIPA S.3 (c) does allow for Ms. Osofsky’s plan, permitting the deployment of a CHIS “in the interests of the economic well-being of the United Kingdom.” But, as stated, the level of criminality under investigation will need to be extremely serious before permission to insert a CHIS and their wire will be forthcoming.

Indeed, the mere fact that Ms. Osofsky is suggesting the tactic that initial suspects be pressed to wear a wire in exchange for a reduced level of vulnerability to imprisonment, raises further issues under UK law: namely those affecting the deployment of a "Participating Informant" or PI.

The hurdles to the police using a PI are many. The Crown Prosecution Service’s (CPS) directives outline the restrictions as follows, from Part A (7):

"The need to protect an informant will not justify per se the grant of immunity or the giving of a restricted use undertaking,” and adds: “Offenders of this kind are always prosecuted before being used as witnesses. There are two main reasons for doing so. First, it is nearly always in the public interest to prosecute a person responsible for a large number of major crimes; and secondly, if such a person were not prosecuted, allegations of a 'deal' could reduce their credibility as a witness and, hence the weight of their evidence."

The guidelines continue, but I am sure you are getting the gist.

In this instance, Ms Osofsky’s motives are both honorable and in keeping with the serious damage that tax evasion inflicts upon the global economy, let alone in the UK. However, the composition of any application seeking permission to use a CHIS will require some careful consideration. But in her statement to the Evening Standard, Ms. Osofsky specifically alludes to the possibility of employing the services of a PI, with a view to reducing their own prison sentence, which takes the threshold to a whole new level.

I wish Ms. Osofsky well in her endeavors. Her approach is refreshing and innovative for the UK. Unhelpfully, she may find the prevailing legislation and guidelines will frustrate her efforts as they have frustrated others before her.

With thanks to Tony McClements, Senior Investigator at Martin Kenney & Co, for his assistance with this post. He served for 33 years with UK police forces and has specialized in Fraud & Financial Investigation since 1998. He is also a lecturer in these subjects at the University of Central Lancashire (UCLAN).

____

Martin Kenney is Managing Partner of Martin Kenney & Co., Solicitors, a specialist investigative and asset recovery practice based in the BVI, focused on multi-jurisdictional fraud and grand corruption cases www.martinkenney.com | @MKSolicitorsIn 2014 he was the recipient of the ACFE’s highest honour: the Cressey Award for life-time achievement in the detection and deterrence of fraud. He was selected as one of the Top Thought Leaders of the Legal Profession in 2018 and 2019 by Who's Who Legal International and as the number one offshore lawyer for asset recovery in 2017 and 2018.

Reader Comments (1)

I fear your author is confusing CHIS and RIPA considerations with SOCPA (Assisting Offender) legislation. Very different things but equally critical to combatting serious crime
Happy to explain more if FCPA interested.
June 14, 2019 | Unregistered CommenterIan Hynes

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