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The Americanisation of UK Corporate Crime Investigations
The New Law Journal
23 November 2007
The ongoing BA/Virgin cartel case brings sharply into focus the strong influence that US law enforcement agencies have imposed on corporate crime investigations in the UK. The influence of the US can be seen in both the investigative methods adopted by law enforcement agencies here and more obviously in relation to the prospect of extradition to the US for the four former BA directors.
US Style Investigations
Historically the UK law enforcement agencies have been very reluctant to grant immunity against prosecution to those who have admitted offences notwithstanding that they are willing to give evidence against others. The UK criminal courts have generally viewed any evidence of an accomplice with scepticism on the basis that they may seek simply to serve their own ends by providing evidence against others.
The US law enforcement agencies have traditionally favoured the practice of using those who admit offences providing evidence against others in exchange for a substantially reduced sentence or immunity for the whistleblower.
The Department of Justice (DOJ) has utilised the leniency and immunity provisions with some success in order to secure convictions, particularly in relation to cartel offences. As a result it appears that the Government has encouraged law enforcement agencies in the UK to follow suit. Legislation such as the Enterprise Act 2002 and the Serious Organised Crime and Police Act 2005 (SOCPA) have placed immunity from prosecution on a statutory footing and the OFT have published detailed guidance as to how immunity can be secured.
The way in which the BA/Virgin case has been handled by the UK authorities may be seen as mirroring the way in which cartel investigations are typically dealt with on the other side of the Atlantic: Virgin has qualified for civil immunity for all its current and former employees, and its directors have qualified to receive criminal immunity from prosecution in the UK for cartel activity.
The use of immunity provisions in the UK is not unique to the BA/Virgin case. They have been used in a number of cases including the Serious Fraud Office NHS/Pharmaceuticals prosecution of both companies and senior executives. It is likely to remain a feature of corporate criminal prosecutions.
The effect of the statutory immunity provisions is that those in the boardroom are increasingly vulnerable to others rightly or wrongly “blowing the whistle.” This means that before or after an investigation commences individuals may seek to explore whether immunity may be offered with a frequency which would have been unthinkable a decade ago. For some, the choice will be stark – cooperate with the authorities and give evidence as a witness against your colleagues or face the prospect of being prosecuted and a possible term of imprisonment.
Some of the BA executives who are currently under investigation may be approached by the DOJ in order that they may ascertain whether they would be suitable for immunity or leniency.
It is likely that those facing proceedings in criminal trials will be faced with evidence emanating from witnesses who, were it not for their cooperation with the investigating authorities, would be sitting in the dock alongside their co defendants. Indeed if the prosecuting authorities consider the whistleblower who was initially granted immunity has not cooperated fully with them that person may lose their immunity from prosecution and be prosecuted along with their former colleagues.
Extradition to the US
The BA directors await to see whether they will face extradition proceedings to the US. They will no doubt be mindful of the cases of the former Chief Executive of Morgan Crucible, Ian Norris and Sir Anthony Tennant, former Chairman of Christies, in which the British authorities have decided not to prosecute but the US have sought to do so through the extradition process. The clear message is that the US will commence criminal proceedings when they consider it appropriate in corporate criminal cases notwithstanding the view taken by the UK prosecuting authority.
Conclusion
The BA/Virgin case illustrates the major effect the US is having on the way in which corporate crime investigations and trials are conducted. Whether the influence of the US is welcome or not the business community needs to be aware of the fast changing way in which businesses are regulated and investigated and those who represent members of the business community need to continue to develop skills and techniques to avoid the US influenced changes operating unfairly.
Bullet points
1 The investigative methods used by the UK law enforcement agencies in corporate crime investigations are increasingly mirroring the investigative methods used by DOJ. The BA/Virgin investigation and the pharmaceuticals prosecution illustrate that point.
2 The US law enforcement agencies are increasingly using the UK extradition process to bring those who they believe have committed fraud offences to face charges in the US.
3. Those within the boardroom need to properly manage the risk of criminal investigation in areas of business which previously may have been regarded as solely regulatory issues including cartel activity.
4 The investigative techniques in corporate criminal investigations are rapidly changing and the US is imposing itself to a far greater degree on the UK criminal justice process. Specialist assistance should be sought by those who are under investigation to avoid those techniques and processes being used unfairly.