SFO faces yet another defeat after small victory in DPA-related conviction
The Serious Fraud Office (“SFO”) has finally secured its first DPA-related conviction of an individual. Project manager Roger Dewhirst pleaded guilty in May 2022 to violating the UK Bribery Act 2010 after he accepted bribes amounting to nearly £291,000. The bribes were paid by Bluu Solutions Limited and its sister company Tetris Projects Limited (“the companies”), in exchange for five lucrative office refurbishment contracts between 2014 and 2016, worth over £11 million.
The companies, which were acquired by real estate firm JLL Group in 2015, each entered into a Deferred Prosecution Agreement (“DPA”) with the SFO in July 2021, pursuant to which they agreed to pay a total of £2.5 million for their roles in the bribery scheme. Details of those DPAs and Dewhirst’s guilty plea have only recently become public, following the ending of a 15-week trial which saw three other former executives of the companies acquitted of paying the bribes. It has also now been revealed that charges against Dewhirst’s wife for related money laundering had also been dropped.
Nonetheless, the conviction of Roger Dewhirst will be a welcome success for the SFO. The agency has failed to secure the conviction of an individual in a DPA-related case since it gained powers to resolve corporate investigations through DPAs in 2014, despite numerous attempts.
This ‘win’ should, however, be viewed in light of the fact that the conviction comes after a guilty plea by Dewhirst and relates to the charge of ‘receiving’ bribes, not ‘paying’ bribes - the latter being the basis on which the corporate DPAs were concluded. Whilst the conclusion of this case is a step in the right direction for the SFO, the agency is still yet to secure a conviction of an individual for conduct which is the subject of a DPA.
Success short lived?
However, with one step forward, the SFO has taken two steps back in its most recent defeat, just two months after the Dewhirst conviction. Earlier this month, the anti-fraud agency saw its prosecution of three individuals collapse due to “insurmountable problems with its disclosure”, despite the company that the three were employed by having entered into a DPA to settle the allegations in 2020.
This procedural failure by the SFO overshadows the recent victory and signals yet another blow for an agency that has seen a succession of prosecutions fail and convictions overturned in its recent history. Perhaps the most notable of these is the case of Serco, where proceedings were brought to a halt after it emerged that the SFO had made grave errors during the disclosure process. With each failure, the SFO has received further criticism of its ability to bring about the conviction of an individual following a DPA. (The outcome of the Serco case and that of the Unaoil investigation are considered in our blog post: A sobering read. What next for the SFO?)
What next for corporate crime enforcement?
It now seems likely (although its precise form remains unclear), that we’ll soon see the introduction of a corporate offence of failure to prevent fraud, modelled closely on the corporate offence of failing to prevent bribery under the Bribery Act 2010. This won’t assist the SFO with its prosecution of individuals or remedy problems with the disclosure process but it will make it easier for the authorities to prosecute and convict companies for fraudulent conduct and may lead to an uptick in corporate prosecutions and DPAs.
If Bribery Act enforcement is anything to go by (nine out of the 12 DPAs concluded to date relate to bribery offences), it will be more important than ever for companies to ensure they have adequate controls in place designed to prevent financial crime by those associated with them. In addition, we have seen an uptick in enforcement activity by regulators operating in other sectors, such as the Environment Agency and Office for Financial Sanctions Implementation. It is highly likely this trend will continue, leaving companies with plenty to think about.
First published on Thomson Reuters Regulatory Intelligence on 4 April 2023.