SFO rhetoric about cooperating witnesses continues to pile on the pressure

Lisa Osofsky, Director of the UK’s Serious Fraud Office (SFO), has talked about wanting to bring cases to life for juries by relying on cooperating offenders to give evidence against senior individuals. She reinforced this message last week at the GIR Live, Women in Investigations conference. The SFO’s aim here is to bring more senior directors to account for wrongdoing, adding to the pressure they are already under during criminal investigations, where corporate entities are increasingly required to hand over evidence of wrongdoing by their employees (including among the senior ranks), when they are seeking to qualify for cooperation credit (and potentially secure a Deferred Prosecution Agreement).

The power to make a deal

The SFO has had the power to make these deals for a long time, but has only very rarely relied on it. Sections 71-74 Serious Organised Crime and Police Act 2005 (SOCPA) allows them to offer:

• complete immunity; or
• a cooperation agreement (pursuant to which the “Assisting Offender” will receive a reduced sentence for the criminal offence, on the condition of cooperating).

The CPS Guidance sets out the procedures for the prosecution when exercising these powers. These include that immunity should only be offered in “the most exceptional cases” (such as where it is unlikely that any information could be obtained without an offer of immunity, and very unlikely that any prosecution could be launched against the person to whom the immunity is offered), and after consultation with the Attorney General.

A rocky road to nirvana?

Of course, the upsides for individuals who are granted immunity instead of being prosecuted are clear. In contrast, in respect of Assisting Offenders, the path is less clear. It is the route of getting to the point where the agreement is signed with the prosecutor which can prove problematic. The CPS Guidance sets out a rigorous process. It requires a person to cleanse themselves by “fully admitting” to the criminal offences under investigation and agreeing to cooperate (which usually requires them to give evidence in “criminal or other proceedings” arising from the investigation). These admissions will generally be required during a recorded scoping interview (a type of pre-caution interview to help the SFO decide whether they have useful information to give).  If the prosecution proceed with the agreement following the scoping interview, the offender will be required to repeat these admissions in an interview under caution.  The offender may also be required to waive privilege “to support the process of cleansing”.

The U.S. system is more “fleet of foot” in respect of these sorts of agreements, enabling it to offer Non Prosecution Agreements far more flexibly; as is the UK criminal cartel regime, where individuals are regularly awarded formal immunity from criminal prosecution pursuant to the Enterprise Act 2002. In the days when dishonesty was a requisite requirement of the criminal cartel offence, and the subjective limb of the Ghosh test for dishonesty still applied, individuals could still be offered full immunity from prosecution in cartel cases in circumstances where they did not admit dishonesty (because they were not aware that what they were doing was dishonest at the time). A concern with SOCPA agreements is whether individuals may be encouraged to improperly report upwards or to admit dishonesty in order to qualify for an agreement. Hence the requirement for the process to be rigorous – and the resulting tensions between the need to encourage individuals to cooperate, but at the same time fully test their evidence.

One illustration of this tension is that these interviews where an individual “cleanses” their crimes are likely to find their way into evidence in a subsequent prosecution if the agreement falls apart. The Libor trial of Tom Hayes is a case in point. He was cross-examined at length in his criminal trial on the responses he had given under caution, on tape, during days of SOCPA interviews, prior to the proposed deal falling apart.

Another potential hurdle for the SFO is that where the evidence of cooperating witnesses has been tested with juries here in England, there is a sense that juries do not like them (see, for example, the Galvanised Steel Tanks cartel case, where the prosecution relied on the evidence of both immunity witnesses and an Assisting Offender, and all defendants were acquitted).

These sorts of agreements “are a very big deal”

During my fireside chat with Lisa Osofsky, I therefore asked her whether she has “a plan to tackle these issues”. She confirmed that these sorts of agreements are “a very big deal, especially full immunity”. In terms of the process, she recognised that, in comparison to the U.S., there are different rules to abide by and different practices.

Keeping juries interested

In response to the point about juries being sceptical of this sort of evidence here, she commented that large volumes of documents can be “boring to a jury”, but could be “brought to life” by an insider, with their evidence corroborating the documentary evidence. She said that in the U.S., juries appear to be more accepting of these witnesses, but that here there was a “cultural hesitancy” to use this device in white-collar crime investigations, due to what has been perceived to be the public’s (and juries’) dislike of “turncoats” and “supergrasses”.

A time for a change of attitude?

Her comments on how she thought UK juries might be persuaded of the value of this evidence appear to be confined to Assisting Offenders, rather than those granted full immunity. She said that she thought that juries here would could come to accept that an offender might want to provide information in exchange for some type of leniency while not getting off “scot-free”: “People don’t love to love the supergrass, but if the evidence corroborates what is being said, then our juries could live with a little bit of leniency for someone who had been on the inside and has given extraordinary cooperation to the government”.

Corporate liability

The environment is likely to become ever more challenging as far as corporate and senior director criminal liability risks are concerned, if the SFO manages to secure key Assisting Offenders evidence against the controlling minds, and convince juries as to the weight of their evidence. If the government adds to the SFO’s armoury with the Failure to Prevent Economic Crime offence, as anticipated, then this will also continue to pile the pressure on corporations and their senior executives. However, this is of course all subject to government time, resources to spend on enforcement and individuals being persuaded that the risks of not entering into a deal outweigh those of doing so.

Eve Giles interviewed Lisa Osofsky at the 2nd Annual GIR Live, Women in Investigations conference held on 12 June. The first blog post in this series on section 2 interviews can be read here.