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Former UK prosecutor: The art of cooperating (or not) with the SFO

The SFO’s investigation into the activities of Petrofac drew to a close on October 4, 2021. Following its guilty pleas, the company was sentenced for seven counts of failing to prevent bribery between 2011 and 2017.

The lengthy SFO investigation has dented the fortunes of Petrofac. Petrofac’s  cooperation may have come too late, and while the company ended up with a reduced fine, its reputation has been tarnished.

Beyond that, the case raises some interesting issues around cooperation with law enforcement and regulatory investigations.

First, external advisors cannot make an organization’s decision to cooperate with law enforcement or regulatory investigations. Those advisors present options and set out consequences of each path. Still, the decision to cooperate or not falls to the senior leaders within the organization.

Second, leaders must be persuaded that cooperation is in the best interests of the company. They must also grapple with this fact – the investigation is now out of the organization’s control. It does not get to dictate the pace, scope, or remit of that investigation. Its role is now primarily reactive, but the one area in which it can play a proactive role is the cooperation that it provides to the investigating authority.

Third, it may not be in the organization’s best interests to cooperate for a variety of reasons, but care must be taken to fully acknowledge what non-cooperation will mean. The organization may genuinely believe that it is the victim of political machinations, or its leaders be fully persuaded as to the relative innocence of their organization in respect of the alleged criminality. However, the organization must grasp the reality of what it means to set itself on a collision course with the investigating authority and consider that even if it wins, will it really win? It must determine what the variations of success may look like and chart a course in that direction if it chooses not to cooperate.

Fourth, law enforcement and regulatory investigations are a serious distraction, diverting attention from the organization’s key priorities. They are a drain on human and financial resources. They are hard work! Non-cooperation is not for the faint-hearted, but neither is the cooperation expected by the Serious Fraud Office if an organization is hoping to position itself for an invitation to enter into DPA negotiations.

Fifth, early engagement with the investigating authorities to establish what they require from the organization is crucial. The SFO’s Corporate Co-operation Guidance refers to adopting a “genuinely proactive approach [upon learning] of the offending.” This means there is no time to waste. This should be followed by consistent and proactive engagement as the investigation progresses.

Sixth, there should be a clear and coherent strategy for resolution endorsed and supported by the senior leaders in the organization. The organization should establish its position on issues such as disclosing material that is properly subject to legal professional privilege and ensure that this position aligns with its strategy for a resolution.

Finally, there are best practice expectations of what cooperation should look like, but it isn’t prescriptive and will ultimately depend on the nature of the investigation and the investigating authority. Therefore organizations should be alert that what may have been a sufficient level of cooperation in another case may not be enough in respect of the investigation into their affairs.

An organization has an uncertain and arduous path to navigate in cooperating with an investigation, but that may be the path that bears the most fruit and best enables the organization to move forward and past its misdemeanors.

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