Four UK white collar crime predictions for 2019
The coming year presents itself as particularly unpredictable for white collar crime enforcement in the UK, given the shadow of Brexit, changes of staff at the SFO and a series of long-standing cases due for resolution. Nostradamus would struggle, but, nevertheless, here is RPC's forecast of what to expect in 2019.
1) Streamlined SFO Caseload
First, the late summer of 2019 will mark Lisa Osofsky's first full year in her new role as Director of the Serious Fraud Office (SFO) and we expect that her new approach to the office will become increasingly visible as the year progresses.
In particular, mid-December last year Ms. Osofsky told the House of Commons Justice Committee that she was personally reviewing evidence in more than 70 of the SFO's cases to determine why it is taking so long to reach a charging decision. Our view is that this will likely result in a number of cases being brought to a conclusion one way or another over the course of 2019.
Ms. Osofsky and her team, including a new General Counsel (a role that is currently vacant), may decide that certain investigations would be better suited to other prosecuting agencies (in the UK and abroad) with better access to witnesses and evidence. A past example of this was the ceding of jurisdiction over the HP Autonomy investigation to US authorities by Ms. Osofsky's predecessor in 2015.
Other corporate cases may be pushed towards resolution through deferred prosecution agreements, saving the time and uncertainty of going to trial. Some cases that have seen long periods of inactivity may be dropped entirely and others brought to trial.
Whatever the method of resolution, we expect Ms Osofsky's proactive drive for greater speed and efficiency in investigations to result in the SFO ending 2019 with fewer years-old legacy cases than it started with. We also expect aggressive new prosecutions of both individuals and corporates and no move to a 'regulator' style relationship with UK business.
2) Increasing use of SFO tools
The SFO has a number of powers and tools available that can potentially help to accelerate its cases and increase success rates. One example is the use of cooperating witnesses, potentially protected by immunity from prosecution (common practice in the US).
The SFO has the power to confer immunity, with the consent of the Attorney General, under Section 71 of Serious Organised Crime and Police Act 2005 (SOCPA). Section 73 of SOCPA also effectively allows them to offer suspects a 'deal', with an expectation, but not guarantee, that the Courts will reduce the sentence. To date these powers have rarely been used, partly because English juries might give the evidence of a witness offered immunity less weight. However, the SFO has stated that it is 'intently exploring' the use of cooperating witnesses and SOCPA provides the framework for putting that into effect.
In our view, 2019 will see Sections 71 and 73 emerge from their relative obscurity and become a material consideration for UK white collar crime investigations.
Other powers available to the SFO include the use of recently introduced Unexplained Wealth Orders (UWOs) through the Criminal Finances Act 2017. While the first of these orders was issued last year by the National Crime Agency (NCA), they also offer the SFO's Proceeds of Crime Division a potentially valuable tool for pursuing corruptly acquired wealth and assets. The coming year may therefore see the SFO become the second UK law enforcement agency to make use of UWOs while proactively pursuing the proceeds of white collar crime through civil recovery orders.
3) Continued discussion of corporate criminal liability but limited or no change
2018 saw increased attention from lawmakers on the question of the UK's model for corporate criminal liability. David Green, Ms. Osofsky's predecessor as Director of the SFO, had long called for the introduction of a general offence of "failure to prevent economic crime", modelled on the Section 7 offence in the UK Bribery Act. In late November Ms. Osofsky renewed this call in her testimony to the ongoing House of Lords Committee on the Bribery Act, as did Sir Brian Leveson, President of the Queen's Bench Division, and various NGOs.
As a result, there appears to be growing support across parts of the UK Government to change the law and apply a "vicarious liability" model for corporate crime, similar to that employed in the US.
To a certain extent, change in this critical area will depend on the House of Lords Committee's final report on the Bribery Act, due to be released by 31 March 2019. A strong endorsement of the effectiveness of the s7 "failure to prevent" offence for bribery could galvanise Parliament into pressing ahead towards extending the offence to all economic crime. On the other hand, a more lukewarm report from the House of Lords might serve to kick the issue into the long grass for the foreseeable future.
However, whatever level of support a change in the law finds, Parliament's time and attention are currently preoccupied with the ongoing Brexit negotiations. This is unlikely to end even when the UK completes its transition period in 2021. As such, it seems to us unlikely that lawmakers will find sufficient opportunity in 2019 to consult on, draft, debate and adopt the significant legislation required to overhaul the UK's current model of corporate criminal liability. Much more likely are some concrete first steps and statements in the direction of a change, which fall short of actual new law.
4) Brexit will have limited impact in 2019 on day-to-day white collar crime enforcement
At first glance, the UK's forthcoming departure from the EU appears to present numerous challenges for domestic white collar crime enforcement, with the potential loss of both the European Arrest Warrant and access to EU shared crime agency databases. These issues may indeed cause some disruption in the short term this year, particularly in the event of a "no-deal" Brexit.
However, any cooperation agreements between UK and EU law enforcement agencies that are lost through the UK's departure from the Union are likely to be quickly re-established through alternative means, such as new legislation, multi-lateral agreements or simply the sort of practical assistance the UK regularly gives and receives from non-EU countries.
Ultimately, maintaining a close cross-Channel partnership in the fight against white collar crime is of such clear mutual benefit to all parties that it is one of the few areas unlikely to prove truly controversial when determining the UK's future relationship with the EU.