Corporate cooperation with the SFO

Much of the guidance reflects what has long been considered good practice in terms of record keeping, preservation of material, and presenting this to the SFO in a structured and logical manner. However, the SFO's comments with regard to witness interviews and privilege indicate a change in approach and arguably pose more questions than they purport to answer.

Benefits of cooperation
The SFO's guidance notes that cooperation is a public interest factor tending against prosecution when management has adopted a "genuinely proactive approach." A genuinely proactive approach in these circumstances is now said to be assistance "that goes above and beyond what the law requires."

However, even where a corporate has fully cooperated with the SFO, this will only be "one of many factors that the SFO will take into consideration" when determining the outcome of any investigation. So, in circumstances where a corporate may have done much of the heavy lifting in terms of conducting an internal investigation and self-reporting itself to the SFO in a manner which goes "above and beyond what the law requires", there is no guarantee that the corporate will benefit from its exceptional conduct in terms of prosecution or lack thereof.

Cooperation and privilege
Corporates will often want to undertake internal investigations to determine the nature and extent of any wrongdoing before engaging in a self-reporting dialogue with the SFO. In SFO v ENRC ([2018] EWCA Civ 2006), the Court of Appeal held on the facts that litigation was in reasonable contemplation in an internal investigation which led to a self-report to the SFO (and therefore litigation privilege attached to documents created for that purpose). Following this decision, it appears that the SFO is reconsidering its approach to obtaining material that would otherwise be subject to privilege by regarding it as "cooperative" if such information is offered up voluntarily (which goes beyond what is required by law).

The SFO's guidance states that a corporate will not attain the corresponding factor against prosecution in the DPA Code if privilege over materials generated during an internal investigation is not waived. The guidance goes on to say that corporates will not otherwise be penalised for a failure to waive privilege. However, these two statements are contradictory – on the one hand a corporate is entitled to maintain privilege over the materials generated during an internal investigation, however to do so will be seen as the corporate failing to act in a cooperative manner, and therefore run the risk of being ineligible for a DPA. This, in and of itself, appears to be a penalty for maintaining a claim to legal professional privilege.

Further, in order to maintain a claim to privilege in the first place, the guidance states that independent counsel must certify the privileged status of the investigation material. Arguably, such a requirement is unnecessary as materials will either be privileged or not, and the existing legal team advising on the internal investigation should be readily capable of determining their privileged status. This additional step only serves to increase the burden upon corporates who will have bear the cost of instructing independent counsel in what will already be a costly internal investigation.

The SFO’s position with regards to privilege, may also have an effect on parallel or follow-on proceedings to an SFO investigation. If a corporate decides to waive privilege over material for the purposes of cooperating with the SFO, it could be argued that this waiver extends to follow on civil proceedings. In such a circumstance a corporate may not be able to rely on privilege as the confidentiality (a relevant factor for determining privilege) has been lost in the material disclosed.

The SFO's recent guidance does offer some welcome clarification as to what is to be considered cooperation. However, with no guarantee of preferential treatment if cooperation is forthcoming, there is little in the way of an incentive for corporates to waive legal professional privilege over internal investigatory materials. Therefore, a tension remains between early cooperation with the SFO and conducting an internal investigation to determine whether there is in fact any wrongdoing which merits self-reporting.

Elliott Fellowes is an associate and Johnny Shearman a Professional Support Lawyer at Signature Litigation LLP.