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Part Three: Industry Trends in White Collar Crime

Part Three: Industry Trends in White Collar Crime

Historically, there has been limited action by the Serious Fraud Office (SFO). However, practitioners observed that there been a more pro-active approach in recent years. Indeed, one of the aftermath effects of the credit crunch, as projected, was the increase in corporate crime work. The Bribery Act is likely to have a huge influence in that regard. It has been described as the toughest anti-corruption legislation in the world. The first case brought under the Bribery Act, the prosecution of the Redbridge Magistrates Court clerk, sends a clear statement that prosecuting agencies are prepared to use the strict provisions of the Act to deter fraud of all kinds and at all levels. At the same time, Mr Green has publicly declared that the SFO will focus on ‘top drawer’ cases.

Indeed, one of the aftermath effects of the credit crunch, as projected, was the increase in corporate crime work.

One of the most renowned white collar experts in the UK, Joanne Rickards, stated in her interview before The Lawyer that corporate crime investigations will continue to be a common trend. In the current market it is clear that the bulk of the work will be divided between first tier white collar crime boutiques such as BCL Burton Copeland, Peters & Peters, Bindmans and full-service international giants such as Allen & Overy, DLA Piper and Baker & McKenzie. Rickards believes that global law firms hold a distinct advantage over smaller firms as white collar criminal work will almost inevitably have a cross border element.

Indeed, her firm, DLA Piper, capitalises fully on its advantage in this competitive field. The firm is highly regarded by both Chambers UK and the Legal 500, being ranked second and first tier respectively. One of the key advantages for DLA is its unmatched presence in high risk jurisdictions, particularly in Africa. The firm recently acted for MW Kellogg in its investigation by the SFO for alleged bribery relating to the Bonny Island Project in Nigeria.

DLA also acted for former Italian Prime Minister, Silvio Berlusconi, in proceedings for allegedly bribing lawyer David Mills. Mills was initially convicted in 2009 of receiving bribes in the amount of £380,000 from Berlusconi in order to falsely testify on his behalf during trials in the 90s. His conviction was quashed on appeal to the Italian Cessation Court on the grounds that the payments were received in 1999 not 2000 thus the prosecution being invalidated by the statute of limitations. Interestingly enough, it was Berlusconi who altered the statute of limitations from 15 years to 10 years in 2005. Subsequently, Mills declared that the claim that he had been bribed by Berlusconi was manufactured in order to defraud the Inland Revenue to treat the funds as a gift. Mills admitted that the funds were in fact a payment to be treated as income and did not derive from Berlusconi at all.

Not to be outdone, Magic Circle firm Allen & Overy has its own first rate (as ranked by both Chambers and the Legal 500) corporate crime practice. As mentioned in part 1, the firm acted for BAE Systems, which is one of the three biggest defence companies in the world, in connection with investigations into alleged bribery payments in Eastern Europe and Africa.

This prosecution was the epitome of ‘high profile.’ Not only was the decision whether to prosecute vested in the Attorney General, but also a committee was assembled to make an independent review into BAE Systems’ practices. Chaired by Lord Woolf, the committee made a total of 23 recommendations with particular emphasis on adopting stronger anti-bribery measures and a global ethical code of conduct.

This prosecution was the epitome of ‘high profile’.

BAE Systems pleaded guilty to a charge of breach of duty to keep accounting records (which is the common charge for bribery under the old law) in relation to payments made to a former marketing adviser in Tanzania. A particularly intriguing part of this case is the penalty itself. Of the entire £30 million agreed penalty, the company was ordered to pay £29.5 million for the development of education in Tanzania. This entails the purchase of textbooks for all of the country’s primary schools and teacher’s guides for all primary school teachers – a truly noble and humanitarian penalty.

The practice of corporate crime is not simply restricted to court litigation and dealings with the SFO and DoJ. It also interlinks with corporate transactional work. When one is advising a global company that intends to acquire a company in a high risk jurisdiction, an examination of the target’s compliance policies and anti-money laundering programmes is an integral part of due diligence. Considering that the Bribery Act has a wider scope than the FCPA, more and more global companies would seek law firms which have an expertise in corporate crimes and regulation. In addition, more and more clients will seek compliance advice even when litigation is not pending against them in order to better assess and manage risk.

White collar crime is undoubtedly one of the most demanding areas for innovative thinking.

An example is provided by the lawyers at Berwin Leighton Paisner, who assisted Tesco in producing anti-bribery guidelines in accordance with the new Act. Members of the Silver Circle’s firm highly respected compliance practice (ranked Band 2 by Chambers UK) have assisted the Ministry of Justice in drafting guidance on the Bribery Act 2010. They have also assisted in drafting guidance on the Act for the Futures and Options Association and the British Bankers’ Association. The firm also advised Castlestone Management in relation to a dawn raid by the Financial Services Authority.

White collar crime is undoubtedly one of the most demanding areas for innovative thinking. This is because there are always new types of fraud being invented. Financial scammers will constantly think of newer, more complex and sophisticated schemes, and thus it is integral to have the ability to think outside the box regardless of whether one is acting for the prosecution or the defendant side. Indeed, it is often the case that to be able to merely discover the crime you have to display a level of innovative thinking as, or even more, advanced than that of the criminal himself. This is no easy feat considering that white collar criminals are often times highly respected and distinguished financial masterminds.

Another exciting feature of this area of law is that it allows you to study, be a part of and influence the change in organisational and corporate behaviour. Many concerns have been raised that the Bribery Act effectively criminalises actions that are not necessarily illegal in the jurisdiction where they were committed, and thus places UK companies at a competitive disadvantage. Notwithstanding its negatives, the Act will inevitably lead to a change in the way British businesses operate. This author hopes that confining the ‘eat what you kill’, ‘all or nothing’ high bonus mentality, or at the very least, subjecting it to a requirement of conducting business with integrity and transparency will lead to a positive change and restoration of the public’s confidence particularly in the financial services sector.

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