Bill Waite: Rolls-Royce is the tipping point for UK anti-bribery enforcement
Thursday, January 19, 2017 at 8:22AM
Bill Waite in Deferred Prosecution Agreement, ICBC Standard Bank, Innospec, Rolls Royce

In December 2016, Risk Advisory hosted a dinner in Washington, DC, at which the Director of the Serious Fraud Office, David Green, kindly agreed to engage in a conversation with me.

During that conversation he said there were deferred prosecution agreements (DPAs) in negotiation which were of “an entirely different magnitude” to SFO v Standard Bank plc and SFO v XYZ Ltd and that they would demonstrate the agency’s ability, intent and effectiveness. 

Rolls-Royce is the first of those DPAs and marks the tipping point in anti-bribery enforcement in England.

First, the magnitude of the fine, disgorgement and costs -- together amounting to half a billion pounds -- is the largest combined sanction ever imposed in English criminal legal process. It is a game changer.

Second, the degree of the sanctions imposed marks the end of any potential regulatory arbitrage between the English courts and those in the United States. Thomas LJ in Innospec said there should be no distinction -- and now there is none. 

Third, it dictates the terms on which engagement should be made with the SFO and provides direct and material guidance on the amount of discount for fines that is available if engagement is forthright -- in Rolls-Royce’s case, because of “extraordinary cooperation,” opened and acknowledged by the Crown -- 50%. That level of discount reflects the U.S. position.

Fourth, in identifying the features that justified both the DPA and the sanction, Sir Brian Leveson removed doubt or ambiguity over the circumstance in which a DPA would be sanctioned by the court.

This substantially reduces a perceived weakness in the DPA process when it was first introduced. In the United States, all negotiations are with the prosecution and in the absence of a deal which is either manifestly not in the public interest or corrupt -- judges have no mandate to intervene. 

The English position enshrines open justice and requires sanction by the court. In the absence of guidance it was difficult for corporations to measure the risk that the court may refuse a DPA. This judgment provides guidance from the President of the Queen's Bench Division to all judges. As a consequence, corporations can be more confident about how they will be treated if they choose to disclose to the SFO.

Fifth, the judgment makes clear that if the board remains as it was at the time of the alleged corruption it is going to be difficult, if not impossible, to persuade a court to approve a DPA -- and that confused compliance processes and inadequate, or worse still, ignored due diligence processes will not even begin to lay a foundation for a corporate defence.

Finally, Sir Brian Leveson's judgment acknowledges and endorses the SFO Director’s strategy.  Since taking up office David Green has said on many occasions:

Now the Director has senior judicial weight behind his statements -- those who did not listen before should certainly listen now.

I understand that Sir Brian Leveson has reserved the next DPA to himself because, once again, it is of a very material scale. One should not anticipate any change in his thought processes or the strategy of the SFO.

Just as the tipping point has been reached in England and Wales, one question arises: Is the U.S. tipping in the other direction? President Elect Trump has described the FCPA as “a horrible piece of legislation” and said that the U.S. should not be the world's policeman. Initial indications are that there will be substantial deregulation of the financial markets.

Whether this will extend to criminal law enforcement -- given, among other things, the amount of monies raised for the U.S. Treasury as a result of FCPA enforcement -- is yet to be seen.

There would be a degree of irony if, after 20 years of adverse criticism, things tipped in the other direction and the SFO became the lead global enforcer. 


Bill Waite, pictured above, is a contributing editor of the FCPA Blog. He’s one of the founders of The Risk Advisory Group, established in 1997 with the objective of building Europe’s leading independent risk management consultancy. He serves as the group’s CEO and general counsel. He formerly practiced as a criminal barrister before joining the UK Serious Fraud Office in 1991 as a prosecutor. He can be contacted here.

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