UK anti-corruption developments and their extraterritorial reach | S3 EP8

When will a company be held responsible if its employees are involved in wrongdoing? Are all companies measured by the same degree of accountability? And how is anti-corruption legislation applied when multiple jurisdictions are involved? 

The UK is strengthening its anti-corruption legislation, making significant changes that will introduce a statutory test for corporate criminal liability, introducing a new strict liability offence of failure to prevent fraud, and expanding the investigative powers of the UK’s Serious Fraud Office. In this episode, we explore what impact these significant changes will have on Canadian and other international businesses. 

Joining us for this special cross-border episode are Neil O’May and Naomi Miles. Neil is a partner who leads our corporate crime practice in London, and advises and defends some of the world's most prominent organizations and individuals in investigations and prosecutions involving international fraud, corruption and market abuse. Naomi is a senior associate in our London office, who focuses on complex multi-jurisdictional investigations, risk mitigation and compliance. 

Note: since recording, the UK Parliament has made the decision to drop the offence of failing to prevent money laundering. You can read more about that decision here.

Transcript

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Transcript:

Neil O'May  00:00
If you want to be a cynic, and I am, I think that the government has identified companies as firstly, cash cows. So when they have been able to cooperate internationally with the Department of Justice, the Royal Canadian Mounted Police, EU regulators, they have got a lot of money in under deferred prosecution agreements, or by plea deals or whatever. And that has been in the billions, and they like to be part of that. And so that forms their view that they need to go after companies. That's where the money is. Individuals don't have that. And secondly, that if they do it cooperatively, they get much more out of it than doing it locally.

Erin Brown  00:42
Hi, welcome to Disputed a Norton Rose Fulbright podcast with Ailsa Robertson from Calgary and myself, Erin Brown from Ottawa. This will be Ailsa’s last episode before she goes on maternity leave. Ted Brook and I are excited to be stepping in to co-host the Disputed podcast alongside Andrew McCoomb, for the next little while. Since I will be appearing in more episodes, let me briefly introduce myself. I am a senior associate based in Ottawa with a regulatory practice covering issues such as international trade, economic sanctions, export controls, competition and procurement. Avid listeners may remember me from appearing as a guest in our episode about online advertising and social media influencers. Now, let's dive into today's episode. Today, we are looking at significant changes to anti-corruption laws and enforcement powers that are taking place in the United Kingdom and their impact on Canadian and other companies outside the UK. There are three key changes that we cover in this episode that businesses in Canada and abroad need to pay attention to. The first is a reform to corporate criminal liability in the UK for the first time in over 50 years. With the introduction of a statutory senior manager test much like the one introduced in Canada in 2003 that will make it easier to prosecute companies for economic crime offences committed by their senior employees. The second change is the introduction of a corporate offense of failing to prevent fraud or money laundering. The third relates to enforcement powers. The first two legal developments are happening at the same time as leadership and strategic changes to the UK Serious Fraud Office, or the SFO, which signal a new emphasis on greater cooperation with other regulators, data sharing, and the power to compel information from corporations outside the UK. Why are these changes relevant to Canadian businesses? Because they are going to have a very broad extraterritorial reach to talk us through these changes and their significance, we welcome two lawyers from our white collar crime team based in our London, UK office. Neil O’May leads the corporate crime practice in London, and advises and defends some of the world's most prominent organizations and individuals in investigations and prosecutions involving international fraud, corruption and market abuse. Joining Neil is Naomi Miles a senior associate white-collar crime lawyer, who focuses on complex multi-jurisdictional investigations, risk mitigation and compliance. Her practice covers all aspects of business crime, from money laundering, to market abuse and manipulation, to whistleblowing and modern slavery.

Ailsa Robertson  03:15
Neil, Naomi, thanks very much for joining us, and welcome to the podcast.

Neil O'May  03:19
Great to be here. Thank you very much.

Naomi Miles  03:21
Thanks for having us.

Ailsa Robertson  03:22
Okay, before we get into the detail on this topic, I wondered if you could start by highlighting the significance of what we're going to talk about to a Canadian audience. So why do Canadian and other foreign companies outside the UK need to be aware of changes in UK anti-corruption laws and corporate criminal liability?

Naomi Miles  03:42
That's-- that's a very good question. Good place to start. I think it's worth explaining or just highlighting that the UK Bribery Act, since it was brought into force in July 2011 has had significant impact on drug companies and services can extend to any company wherever incorporated, which carries on part all of its business in the UK. And the changes that we're going to be talking about today, and are going to be introduced imminently will have very wide extraterritorial reach much wider actually the Bribery Act and so it's going to make it much easier to prosecute companies for criminal offenses.

Neil O'May  04:24
Yeah. And it comes on the back of a view taken by the government that companies that are still doing bad things and the only way of dealing with that is either to hit their pocket substantially or to prosecute individuals on the board and senior managers and-- and it's really a rollout to extend the reach of all that-- that has been perceived to be going on. Not only in the UK, but in any business that is either has victims in the UK is carrying on a business in the UK and is undertaking international fraud or whatever. And anybody who's using the UK in some part of that fraud or bribery or whatever. And so it's-- it's a really big push and probably is, for the first time in the last, you know, 40 or so years, the greatest extension on the ability to prosecute companies and individuals that there has been.

Naomi Miles  05:29
I think there's also sort of bigger international cooperation contexts that we should flag. So we've got the DOJ continuing to reinforce its message of very close international cooperation with other agencies. Foreign corruption is an absolute focus of the Biden administration, and international cooperation is key to overcoming it. And so our listeners might well ask, why is that relevant? And it's just fact of the matter is that corruption is often multi-jurisdictional, particularly with international businesses. So changes to English law, combined with renewed cooperation and enforcement efforts by the SFO and DOJ, it just going to make it much more effective for prosecution's to be successful.

Erin Brown  06:17
Okay, so I think, I think we've given our Canadian audience some good context as to why they should be listening here. I've seen, you know, increased enforcement, action potential, potentially making it easier to prosecute, combined with that increased enforcement effort. So Canadian companies should really be listening to this, and listening to these updates, particularly given the extraterritorial nature of certain of these changes. So let's dive right in, what are the changes?

Neil O'May  06:46
So I think that-- I think there are three major changes that will come into effect, some at the end of this year, and others with a longer grace period, perhaps into the middle of next year. And they are, firstly, to be able to hold a company liable when senior managers of that company are involved in wrongdoing. Previously, the only way of doing so was to try to find the directing mind and will of the company. It was a concept which was very difficult to identify, but very high level, economic crime is covered now by any senior manager. And corporate liability is ascribed to the company if it involves any senior manager in the company. And we'll come on to define what a senior manager is. But it kind of doubles, triples, multiplies by 10, the number of people who effectively are going to cause liability to be ascribed to a company this the second one is, and following on from what Naomi said, is the extension of failing to prevent, that is a company that fails to prevent bribery, international bribery, has itself an offence, which brings with it fines, etc, etc. They're going to extend that to failing to prevent fraud, and failing to prevent money laundering. And so again, the number of offenses of international origin or otherwise, is multiplied by double, three times, 10 times. Finally, just on the back of that there is an extension of the powers of both internationally and locally to obtain documentation in-- in response to any of these investigations.

Ailsa Robertson  08:42
Do we-- do we have a definition of senior manager?

Naomi Miles  08:45
Yes, so a senior manager that begins to look at the role and responsibilities of an employee. So it will cover is when a senior manager is someone who plays a significant role in decision-making about the organization. But it's much more fact-based as opposed to an exhaustive prescriptive definition.

Erin Brown  09:12
And I think in our Canadian-- in our similar Canadian provision, there's something you know, some language to the effect of like acting within the scope of their authority. Is-- do you have a sense that there, there'll be anything like that, where the where the senior officer really has to be sort of like doing something that falls when within their normal scope of authority, rather than sort of like an-- an official, or an officer gone rogue.

Neil O'May  09:34
I mean, I think that the officer gone rogue will fall outside of that. It-- but it's somebody who will effectively bind the company, in whatever they're doing. And the two words that they endlessly repeat within the legislation is significant role and substantial part of the business. So it's somebody who's head of a division, the sales division or deputy head of the division, who has oversight of that part of the business, which is a significant part of the business. And they're not just the run around who takes orders and carries out those orders. It's the person who takes the decisions and makes the orders.

Erin Brown  10:18
And is part of this all to really get at massive international corporations? Was there was there a disconnect or an inequality previously, with respect to how easy it was to prosecute, say, like a smaller organization where there's, you know, it's easier to have a directing mind and identify who the directing mind is, versus these major international corporations where there's, you know, different levels of-- is that part of the motivation for this change?

Naomi Miles  10:46
Absolutely. So the test, because it was first established in the 1970s, reflected business that was generally done that. It hasn't kept up with the realities of modern international corporations where you've got huge decentralized decision-making. So actually, what we ended what we've got at the moment, is an inequality in the law where it's much easier to prosecute a small company, in comparison with very, very large international organizations, as our clients are well-known. You have so many subcommittees and subdivisions, it's-- it's-- it's a sprawling, often sprawling, organizational structure. But there's other reasons as well. And it's--, it's also partly because the government is keen to provide legisla-- legislative certainty. And it doesn't, I think they're also very keen to achieve good corporate governance, as Neil was saying earlier. And they're looking to try and create a culture change, much like we saw with The Bribery Act.

Erin Brown  11:54
And how does this test apply? So if we're looking at senior managers, the reality for many corporations in today's world is that, you know, the entire team might not be located in the UK. So what if only a portion of the, you know, one senior officer’s in the UK, one is in Canada, and they're communicating like, how much of the offense has to be in the UK in order to fall into this new provision?

Neil O'May  12:18
It's only really a fingernail that needs to be in the UK, so long as some part of the Act’s that constitute the offense, take part in the UK, that's probably enough for jurisdiction of the-- the wider economic crime offenses. And that's, by way of example, if you have a Canadian registered company headquartered in Ottawa, the senior manager who's dealing with sales or whatever, is in Ottawa, he's either frauding or doing some economic crime, which is in, let's say, Southeast Asia, and he uses a UK bank. Even if that UK bank is entirely an innocent dupe, because the money passes through it, part of the act is in the UK, and there’s jurisdiction.

Naomi Miles  13:18
So the key point for our listeners of international companies is this, that the organization does not have to be incorporated in the UK to be found liable. And all that is needed, is that just some, just parts, doesn't have to be all of the offense is committed in the UK by a senior manager. And it doesn't matter whether that senior manager is visiting in the UK or elsewhere in the world, crucial bit is that part of the offense have been committed in the UK.

Ailsa Robertson  13:53
And the economic crimes that we're talking about. I mean, how-- is this kind of broad definition of economic crime and what's-- what's likely to fall under this?

Naomi Miles  14:02
It's very wide. So at the moment, we've got already a very long list of specified economic-- economic crimes, and they cover everything from the bribery offences through to tax offences, fraud, various offenses under the Theft Act, market manipulation, terrorism, sanction offenses, it's a long list. But what's also interesting is the government has committed at the first available opportunity to remove the reference to economic crimes and expand it to offenses. So, feasibly, we're going to see that long list of economic crimes also incorporate the likes of sexual offenses.

Ailsa Robertson  14:44
Do you think modern slavery offenses could potentially also fall under that too.

Naomi Miles  14:49
Yes, yes, I would say so. 

Ailsa Robertson  14:51
It's interesting.

Neil O'May  14:53
And the chilling effect of it is meant to be that a senior manager, if-- if they are up to no good in down the line in any event, the corporate also carries the can and the corporate pays for that individuals wrongdoing. 

Erin Brown  15:12
So before we move on to our next topic, let's come back to this question of what impact will this have on Canadian businesses? So obviously, we, you know, for example, something that's jumping to mind for me is that in Canada, we have an integrity regime, whereby companies can become debared from contracting with the federal government if they're convicted of certain corruption, bribery, Competition Act-type offenses, so anything that will make it more likely for companies to be convicted, seems really significant from a Canadian perspective, what else, what else do companies have to keep in mind in terms of-- of the sort of impact of this, of this, you know, provision that's going to make it easier to-- to potentially convict corporations?

Neil O'May  15:58
So I think, I think the debarment part of it is, is now global, and certainly within the EU and the UK. That is a very important factor when any company is considering its liability, which is now extended. I think the other part of it is that the fact that somebody who has been found to be a senior manager and is committing wrongdoing is going to exponentially increase the level of fines against companies. And make it much easier to bring the prosecution and easier to do a deal, either a deferred prosecution or a strict plea deal with them, so that it will be fast, furious, and easy for the-- the authorities to deal with this. I think-- I think really, the only way of dealing with something like that is to have very strict procedures in place on an HR basis, on a financial control basis, in order to prevent any part of your senior management undertaking any potentially risky area without triple authentication of that particular process.

Naomi Miles  17:19
And something that's key to that is also conducting risk assessments that you can actually identify where potential issues could arise, and then critically appraise. So obviously, some procedures to mitigate the risk of some sort of offense that’s been committed.

Ailsa Robertson  17:36
I think there's-- it's interesting what you say about there being a kind of cultural change or trying to change, trigger a shift, in corporate culture. And I think that plays in nicely to the failure to prevent offenses, which you also mentioned, which are part of these-- these changes. So moving on to this failure to prevent fraud, failure to prevent money laundering. Can you talk a bit about what's going on here?

Neil O'May  17:59
So I think we've talked about the-- the issue that the companies are now going to be liable and have to keep an eye on their senior managers across the board. But the failing to prevent offenses, extend that yet again, and say that, you've got to keep an eye and more than an eye, you've got to have reasonable and adequate procedures in place to prevent fraud by any employee, or any agent, or anyone who carries on a service for you, outside the jurisdiction, if-- if it is in the economic crimes sphere. And so you must have a system of checks, 10 from the top and a number of other factors in a procedure which will is designed specifically to prevent economic fraud. And if you don't have that, and if there is a fraud by the lowest of individuals for the benefit of the company, that's a slam dunk as far as prosecution is concerned. I think the-- the other part of it is this - that when the failing to prevent bribery first came in, it was quite a big ask for companies to get procedures in place to prevent bribery, and we can talk about what is necessary in that compliance program. But it was a big ask. And there was an 18-month grace period for companies to get their act together. This is an even bigger ask. And what they're effectively doing, is they're requiring the company to be the policemen of other associated companies that are doing work or services for them. And so the procedures that are in place are invasive to those other organizations. But they're as important because the associated person or the associated company, or service company, whatever it is, if they’re committing a wrongdoing, it's just as bad as if you committed a wrongdoing in the-- in the mothership.

Erin Brown  20:11
I think there's a lot to unpack in-- in what you were just saying. But one of my questions is, you know, is this a specific defense? And if so, how efficient do you think that this defense of, you know, having reasonable procedures will actually be an avoiding prosecution?

Neil O'May  20:27
So, with the failing to prevent offenses, that is failing to prevent economic crime, it is a specific defense, that if at the time you had an adequate procedure in place or a reasonable procedure in place, then you would not be found guilty of the offence. However, the first question is, what is an adequate procedure in place? And in circumstances where a bribe has been paid, a fraud has been committed, a misrepresentation has been made in the box in the insurance market, you're in--, you're really on the back foot, to show that that was that was adequate. And so far in the English courts, there has been no successful defense mounted. It is, of course, essential that you have it. And the better it is, the more your mitigation and the more the less likely you are to have the business of a prosecution. But it is, I think, the driver for being a policeman, it's a driver for being at for having the procedures and having a good compliance and preventing it internally. But the reality is, it's probably not going to be much of a defense when it comes to it.

Erin Brown  21:48
Interesting. I sometimes wonder if the regulators put those, you know, specific defenses in, more as an encouragement to companies to put the procedure in place, do-- you know have the mitigation rather than actually being that efficient as a defense, and I think what you're saying, it sort of supports that? What would that procedure need to look like? Presumably it's not a, you know, a phoned in compliance procedure that's gathering dust in a drawer somewhere.

Naomi Miles  22:11
Absolutely not, the government will be producing guidance. And we would expect in that, that there'll be something that goes to what reasonable production procedures are-- might look like. But it won't be prescriptive, it won't be a sort of tick box list. And that'll be very deliberate, because the government appreciates that these procedures will need to be proportionate. And what is right for one company will not be right for the next. It also needs to be tailored to the industry in a particular risk profiles as much as the size of these companies. But I think we can--, we can expect that it will be perhaps quite similar to the six principles that we've got in the guidance to the Bribery Act. So it'll be things like the tone from the top and communication, clear communications, including training to employees. You might also look to think about your monitoring and review processes, carrying out risk assessments and due diligence is important. And also, we have other clients, and I'm sure our audience will be familiar with this, who put contractual procedures in place as well to try and reinforce their commitments to, in that case, anti-bribery, that in the future, as we discussed, it'd be wider than that, and to really--, to really reinforce their commitment to vis-a-vis their contractual parties. So it'll be a broad range of guiding principles, I suspect, even if it's not necessarily called principles, but it will probably look quite similar to the guidance that we've got with the Bribery Act.

Ailsa Robertson  23:57
I think it's important and interesting also to flag, these failure to prevent offenses don't actually require a conviction for the underlying eve--, alleged offense which--
Naomi Miles  24:09
No, not as its currently drafted anyway. 

Ailsa Robertson  24:12
Yeah. What would be the threshold prove that something-- a fraudulent activity had taken place if there hasn't actually been a conviction of that-- with regards to that activity?

Neil O'May  24:24
So I think the-- the threshold will be the usual one of beyond reasonable doubt. The reality is that certainly in bribery at the moment, and we would assume in fraud, companies tend to enter into discussions over deferred prosecution agreements. And then, there is a consensus between the prosecutor and the company as to whether the bribe has been paid, for instance, or the fraud done. And it may be in everybody's interest to get this done tomorrow, as opposed to three years’ time. And so in reality, the threshold will be lower. Just-- just talking about courts, when this issue - what is an adequate procedure, and what is a reasonable procedure comes to court. And it's-- it's discussed by way of mitigation to a failing to prevent events, the three things that of all their things they look for, and gets the most mitigation is 1) tone from the top, 2) active auditing, and 3) invasive analysis into the associated party or the company down the line. So as Erin said, the one the-- the procedure that's in the bottom tray of the drawer, doesn't get anywhere at all, the one that doesn't have a whole load of training online, and you can tick boxes and get through, it doesn't get anywhere at all, you've got to have people going out with an analysis, which is based upon a risk assessment to say this is a really difficult area, this is where we've got a real world risk. And so we've got really good procedures, and we've ordered them. And look, we had two instances where we dealt with it.

Naomi Miles  26:18
And the problem is evidence, because you need to be able to say the here-- here is evidence of that good culture, and of us committing to an anti-corruption strong zero-tolerance approach to corruption and being strongly anti-corruption in everything that we do. And our policy and procedures, is one of those, it is not the be all and end all as we've been discussing, you can't-- you cannot just have a piece of paper and go right, we're done, put that away and move on to the next day. But certainly, it's what guides everyone in how they behave, it's what will be referred to in disciplinary proceedings, it's-- it's what should be referred to when thinking about which organizations you're going to be going into business with. And so it is important, as long as it's actually used. We see a lot of policies and procedures, I saw one once which went, and this was just a handbook on anti-corruption of this particular organization and around 120 plus pages, and no one is reading that. So it's you-- we see extremes. But a good policy or procedure is one that is easy-to-read, is actually practical. And it guides the reader, the person who's actually doing business for this particular company, to what they need to do quickly and if they need more information, they know where to go to you within the company, who to speak to.

Ailsa Robertson  27:48
And bringing it back to just keeping in mind our Canadian listeners. What is the territorial scope of these offenses when we're talking about the failure to prevent offenses, why is it so important for businesses outside the UK to be cognizant of them?

Naomi Miles  28:05
Yeah, it's-- it's a really good question and a really good point which we want to stress, which is that this that the unlike section seven of the Bribery Act, which is that the failure to prevent offence under the UK Bribery Act, which only applies to companies incorporated in the UK or that carry on a business here, in in this situation, the failure to prevent offence contains no such limitation on where the organization is incorporated or formed. In other words, it throws open the doors to why territorial scope, and therefore quite easily can bite on companies outside of the-- of the UK.

Neil O'May  28:53
So where there's a Canadian company that is using individuals elsewhere in the world, either by way of an agent or a supplier. And any part of the fraud, any part of the fraud occurs in the UK, even if it is through a bank, even-- even if it is one person traveling through and being part of the arrangement, and that will give a jurisdiction to the UK courts. The victim actually doesn't need to be a UK corporate or a UK national, it can be a victim outside the jurisdiction done by somebody outside the jurisdiction but using something within the UK, whether a person or a bank account or something else. That's it.

Ailsa Robertson  29:42
And what about the flip side? If it-- nothing is necessarily used in the UK, but there is a UK victim? Would that also count?

Neil O'May  29:50
That is the second screen, yeah, if there is a UK victim, or a part of the acts were done in the UK, it's an all, not an and.

Ailsa Robertson  30:02
And could a UK victim be something as broad as the UK tax payer?

Neil O'May  30:07
That will be very broad. But at the moment, certainly, if there-- if there is an effect on the market, and the investors are in the UK, and they would have a claim, as a result of the market being moved in a way that was the result of fraud, that would certainly ground a jurisdiction. Often in these regulatory findings, where there is a corporate liability, either by way of failing to prevent, or by actually committing the offence, because it's going to be a senior manager. The follow on litigation that is attached to that, if it is in the UK, allows the whole of the civil arena to be opened up to those people who have been affected. And obviously, the civil jurisdiction is much wider and broader. And so they latch it on to the regulatory finding. And, you know, that's millions and billions as well.

Erin Brown  31:07
So I think the final area that we wanted to discuss was the-- was the SFO and I think you alluded before to the expansion of its powers. So you know, happy to hear your views on that and also some predictions maybe from the future where we're going from here.

Neil O'May  31:20
After five years, the director of the Serious Fraud Office is changing. And the new director has been appointed, who is a former assistant commissioner at the Scotland Yard. So he's a police officer, as opposed to traditionally a lawyer. And I think that given his background, and what he's said about his future role over the next three to five years, is that he will be very focused on improving the investigation process within the Serious Fraud Office and getting it happening quicker. We've just had two cases that have been rolling on for between eight and 10 years of investigation concluded without a prosecution, that has been massively disruptive to those companies and massively resource heavy. And I think that the criticisms that have been raised against the SFO over the period mean that those investigations will be well, at least halved but really brought in line with the DOJ. The other thing is that I think, as a police officer, very traditionally, they will be keen to prosecute companies and individuals. So I think there's been a little bit of a perception that companies have been prosecuted, and the individuals have been let go, let's say that, that's how the public have perceived it. I think that will change. And on the basis of the best behaviour modification is to threaten jail with-- to the individuals who are part of the operation, then that's what will come through. And it is right that the number of people who have been prosecuted and convicted has been really appalling compared to other jurisdictions, and I think that will change. And I think the third thing that will change is that whilst presently, the Serious Fraud Office has a very niche separate arrangement being both the investigator and the prosecutor, all wrapped up in one organization, there are moves afoot, I think, which this director would not be unhappy with to subsume it into a much broader national criminal-- national crime agency, which deals with triaging all the various parts of economic crime to bring all the international and national resources together in one place, and so not averse at all to international investigations, and not averse to putting all the resources front end into investigations as much as into prosecutions of corporates and individuals, I think that's where we're going.

Ailsa Robertson  34:27
Yeah. And on top of that, we've also got an increase in powers for the-- the SFO to compel information.

Neil O'May  34:34
Yes, indeed, we've had some scraps in court, which have identified quite serious limitations to the ability for free charge, during investigations, the SFO to reach out to get material outside of the bribery regime, in normal fraud, and extra jurisdictionally, there are a number of measures that are coming in to the-- this new bill going through which extend that to fraud investigations, and also extra jurisdictional making-- make it much easier. But the reality of the fact of the matter is that actually, in the last five years, and one of the things that the SFO has shown is that certainly with the whole of North America, and with the EU, the cases where there is no forced obligation or power necessary. And there has been a huge amount of local data, trawled in cases, which is then passed on under the usual gateways for prevention of crime. And those are, if you like, as-- as effective as the ones-- as the powers that are under the economic crime bill. But if you think about it, you know, a-- an international criminal investigation mounted by the UK, you can do two ways - you can serve documents, sort of notices on the corporate that's based in Ottawa, and try and extract it that way. Or, you can have a word with your mate in the RCMP to pay them a visit, it's much more likely that they will get it either voluntarily or under some scheme, there'll be an agreement of some kind to share through a gateway and it comes over much, much more easily. And that that's, that's what we see all the time now.

Ailsa Robertson  36:30
I wonder what your thoughts are when it comes to whether companies should self-report in these circumstances? I mean, given these potentially new powers to compel information, and the expanded scope of these offenses, what are your thoughts on whether a company should self-report if they suspect that there has been a failure to prevent fraud? And would that advice differ if it was a foreign company as opposed to a UK company?

Neil O'May  37:00
I think two things for that. I think it is right that this Bill with the powers and with the mutual legal assistance arrangements, makes it easier to-- to investigate, and therefore, is a stick in order to hold over a company to say why don't you self-report quicker, because we'll just find you out anyway. However, the carrot is just not there. Or, a lot of fandango has been heard about the merits of deferred prosecution agreements. Actually, they are painful, painful experiences. And companies have to go through the balancing act, or what is the risk that we will be prosecuted against the risk of us effectively handing a prosecution to a regulator that would not have otherwise been able to get to us, because in the UK, at least, and this differs, I think to North America, the-- the reduction in level of fine when you self-report is not significant, as opposed to pleading guilty. It's the same, though, if you're prosecuted and you plead guilty, it's the same effectively as if you self-report. So the incentive is not there, there are moves afoot to make the incentive much greater. And therefore you get much greater discount by self-reporting and self-reporting early, but they're not in place yet.

Erin Brown  38:34
So we've had a fascinating discussion today on a number of different changes. What I'm-- what I'm hearing overall, is more powers for the SFO, more actual offenses, the new failure to prevent fraud offenses or offense, and then a change in corporate liability that will make it probably, you know, presumably easier to prosecute companies. So a lot of you know, changes afoot here to make companies really, you know, potentially subject to some greater enforcement and greater risk here. So what are your you know, any final-- any final thoughts to pull all this together for-- for, for companies in terms of next steps or--, or recommendations?

Naomi Miles  39:19
Yeah, I think that's absolutely right. And so, all of those things combined, mean that I think our clients and international companies, Canadian companies every well for the good for them to--, to have to think about what steps they can take to get ahead of this. And by that, I mean, look at what is in place already what when was the last time that a risk assessment was conducted, an audit was conducted, look at what your supply chains and your-- your contractual obligations and where your risk arises, look at the location in which you're conducting business. And think about what could be done now to mitigate the risk of these offences being committed within your house. And like we said, yes, that's policies and procedures, but it's also about over-the-top commitment training, and an overall good corporate culture, which has zero-tolerance to corruption.

Neil O'May  40:21
Yeah, I mean, there's no way around the-- the greater ability to be prosecuted. The only way of dealing with it is prevention. And if you put a lot of effort, and unfortunately, money into the prevention, in the long-term, that must be the only answer to avoiding massive fines for the actions of your associated companies and your senior managers.

Ailsa Robertson  40:54
Well, Neil, Naomi, thank you so much for your time. It's been a fascinating conversation and really, really important for businesses in many, many jurisdictions in which we operate to pay attention to these issues. So watch this space. Thank you.

Naomi Miles  41:06
Thank you very much.

Neil O'May  41:11
Thank you, very interesting discussion, thank you.

Ailsa Robertson  41:16
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