In a recent case, the Supreme Court stated that the test for dishonesty in fraud and other acquisitive offences – known as the 'Ghosh test' – did not correctly represent the law. Although this case was decided on principles of civil law, it arguably has further reaching implications as it represents a fundamental change to a basic tenet of criminal law and means that judges in future criminal trials will be required to give a different jury direction when summing up cases involving dishonesty.
Following the judgment in the Serious Fraud Office's (SFO's) declaratory relief application against the Eurasian Natural Resources Corporation, it appeared that the mining company would have to disclose documents which it claimed were subject to legal professional privilege. The judgment was widely scrutinised because of the impact that many expected it to have on the conduct of internal investigations and dealings with the SFO.
In August 2017 the Financial Reporting Council launched a consultation on amendments to its Guidance on the Strategic Report, which encourages businesses to consider a number of issues, including non-financial reporting. The guidance was first published in 2014, but is being revised in light of new regulations that came into effect for reporting periods commencing January 1 2017.
In July 2017 the Financial Conduct Authority notified RBS plc that it had commenced an investigation into RBS's compliance with the Money Laundering Regulations 2007. The investigation concerned a number of UK and US companies and the passing of huge sums of Russian money through British banks. In addition to RBS, 16 other UK-based financial institutions and certain US banks were allegedly involved in the scheme.
The Serious Fraud Office (SFO) Annual Report for the year 2016-2017 will be the last report overseen by David Green, who is due to step down as director in April 2018. In 2017 12 new criminal investigations were opened, with Airbus and Unaoil joining the list of high-profile investigations. The report provides an overview of the SFO's performance, covering matters such as stakeholder engagement, digital and technological capabilities and the statistical analysis of casework.
In July 2017 the Supreme Court published its judgment in a case concerning the reporting of an individual's name, which had been mentioned during trial proceedings to which he was not a party. The individual had been arrested in respect of similar offences for which others were on trial, but a charging decision over him had not been made before the trial's commencement.
In July 2017 the Serious Fraud Office (SFO) opened investigations into the oil services company Amec Foster Wheeler Plc and the Rio Tinto mining group. One month later, the SFO announced that it would investigate corruption allegations against British American Tobacco Plc. Although the SFO did not give any further details, the tobacco giant had announced in February 2017 that it was investigating claims that it had bribed officials in East Africa to undermine anti-smoking laws.
A group of alleged fraudsters are being prosecuted after stealing personal details from the Civil Service Sports Council membership list and using them to fraudulently claim tax credits. Separately, research has found that one in five victims of identity fraud between 2012 and 2015 were company directors. In particular, criminals are using publicly available data from Companies House to target these individuals.
Judgment was recently handed down in respect of the Serious Fraud Office's claim for a declaration that documents generated in the course of an internal investigation into the Eurasian Natural Resources Corporation were not subject to legal professional privilege. The judgment clarifies that because investigation and prosecution are not part of the same amorphous process, documents generated in the investigation phase do not, by default, benefit from the protection of litigation privilege.
Charges in respect of corruption offences under Section 1 of the Prevention of Corruption Act 1906 and Section 1 of the Criminal Law Act 1977 were recently brought against the UK subsidiary of German logistics company FH Bertling and a number of its former employees and other individuals associated with the company. The offences are said to have primarily enabled FH Bertling to retain or win contracts for the supply of freight forwarding services to a North Sea oil exploration project.
The much-debated Criminal Finances Bill recently received royal assent, becoming the Criminal Finances Act 2017. When it comes into force, the act will introduce significant amendments to the Proceeds of Crime Act 2002. From a corporate crime perspective, the most noteworthy of these changes are the introduction of the new corporate offence of failure to prevent the facilitation of tax evasion, revisions to the suspicious activity reporting regime and the creation of unexplained wealth orders.
The long-awaited Criminal Finances Bill recently received royal assent, creating the new wide-reaching offence of corporate failure to prevent the facilitation of tax evasion. In other news, given the outcome of the general election, it is unclear whether the prime minister will continue with plans to abolish the Serious Fraud Office. Further, the Financial Conduct Authority recently obtained a decision which limits the identification principle in respect of its statutory notices.
Following a six-week retrial, Stylianos Contogoulas and Ryan Reich, both former traders at Barclays, were recently acquitted of charges of conspiracy to defraud in relation to their involvement in London Interbank Offered Rate manipulation. The pair had first been tried alongside four others in April 2016. While their co-defendants had been convicted, the jury was unable to reach verdicts in relation to Contogoulas and Reich.
The High Court recently dismissed the judicial review claim brought by Unaoil and a number of its executives against the Serious Fraud Office, in respect of the lawfulness of a letter of request issued to the Monegasque authorities to provide assistance with the ongoing investigation in the United Kingdom. In its judgment, the court rejected the claimant's submissions regarding mutual legal assistance and the letter of request.
In a recent decision, the Supreme Court provided an interpretation of the identification principle under Section 393 of the Financial Services and Markets Act 2000. In doing so, the Supreme Court has raised the threshold for identification in Financial Conduct Authority notices and reversed the wider approach taken by the Upper Tribunal and the Court of Appeal.
Businesses should by now be compliant with the Modern Slavery Act 2015's reporting provisions, which require reporting businesses to provide a statement setting out the measures that they have taken to eliminate slavery and human trafficking. However, even a cursory examination of many business websites demonstrates that full compliance remains scarce.
According to records released to Parliament by Defence Minister Harriett Baldwin, the Ministry of Defence has referred 44 cases of corruption in relation to defence contracts to law enforcement agencies since 2011. Of the allegations, four related to bribery of foreign public officials and 29 related to UK companies.
As part of sweeping changes proposed in the Criminal Finances Bill 2016, the government plans to enable law enforcement, regulatory and prosecutorial bodies to apply to the High Court for unexplained wealth orders. If obtained, these will require individuals to explain their interest in, and ownership of, property valued at more than £100,000, where their income alone cannot provide sufficient explanation for their ownership of the property.
The Serious Fraud Office (SFO) recently announced that it would cease its investigation of the Soma Oil & Gas Group relating to allegations of corruption in Somalia. The SFO stated that while there were reasonable grounds to open the investigation, "a detailed review of the available evidence led… to the conclusion that the alleged conduct, even if proven and taken at its highest, would not meet the evidential test required to mount a prosecution".
The chief executive of the Financial Conduct Authority (FCA) recently stated that a shift in social attitudes to financial conduct regulations, whereby "everyone knows the rules of the game, and then everyone sticks to them", is essential to combating financial crime – as is the more meaningful and effective use of technology. While directly applicable to entities regulated by the FCA, these messages have relevance to many corporates.