UK: Adequate Procedures And The Watchful Eye Of The Prosecutor

Last Updated: 19 October 2018
Article by Katherine Hardcastle

In a recent speech to the Cambridge International Symposium on Economic Crime (see here), Lisa Osofsky, the new Director of the Serious Fraud Office, concluded a general survey of her background and initial approach to the role by making a few remarks on Deferred Prosecution Agreements ("DPAs"). The comments will undoubtedly be of interest to companies and law firms keen to learn about the new regime at the SFO and how this may impact on their businesses.

Whilst some general comments on DPAs were to be expected, notably, Ms Osofsky's comments focussed not on DPAs per se, but on the availability of DPAs in the context of a defence of 'adequate procedures'. The new Director observed:

'When considering resolutions short of trial (for example, DPAs), we must analyse whether the company has a credible and colourable defence under Section 7 (Adequate Procedures). Has the company engaged in proactive efforts to clean house and to reform?

Has the company instilled the right controls?

Are these backed by demonstrable commitment at the appropriate level?

The SFO will want assurance that companies are doing everything they can to ensure the crimes of the past won't be repeated long after the watchful eye of the prosecutor moves on to another target.'

Considered in context the remarks might be considered surprising: adequate procedures have – to date – played no formal role in the DPA process, other than in an indirect sense.

What might these comments then tell us about the new regime at the SFO?

Adequate Procedures

The defence of 'adequate procedures' is contained in section 7(2) of the Bribery Act 2010. It provides a complete defence to the offence contained in section 7(1) of that Act: namely a failure by a commercial organisation to prevent bribery. The relevant sections provide:

'(1) A relevant commercial organisation ("C") is guilty of an offence under this section if a person ("A") associated with C bribes another person intending –

(a) to obtain or retain business for C, or

(b) to obtain or retain an advantage in the conduct of business for C.

(2) But it is a defence for C to prove that C had in place adequate procedures designed to prevent persons associated with C from undertaking such conduct.'

Where 'adequate procedures' are in place for the purposes of section 7(2), no offence contrary to section 7(1) is committed. If a company is confident that it has a 'credible and colourable defence' available under section 7(2), such as would persuade a jury, it is unlikely to wish to engage in DPA discussions at all.

Nor do 'adequate procedures' feature in the legislative regime governing DPAs. The statutory test of whether a DPA may be approved by a Court is provided by paragraphs 7 and 8 of Schedule 17 to the Crime and Courts Act 2013, namely whether the DPA is 'in the interests of justice' and its terms are 'fair, reasonable and proportionate'.

The Deferred Prosecution Agreements Code of Practice provides guidance on the circumstances in which a prosecuting agency (the SFO or the Crown Prosecution Service) may invite a commercial organisation into DPA discussions and subsequently may make an offer of a DPA. The adequacy of a commercial organisation's procedures in place to prevent bribery plays no express role here either. What does feature in numerous guises, however, is the role of a commercial organisation's compliance history as a factor in considering whether it is in the public interest to make an offer of a DPA to a commercial organisation. The essential question is to what extent the failure of a commercial organisation's compliance measures aggravate, or mitigate, its culpability. In determining whether a DPA may be considered an appropriate resolution in any case, a company rife with corruption, lacking an adequate compliance department or possessing a complicit and corrupt one is to be distinguished from an otherwise well-governed corporate entity which has suffered at the hands of a rogue individual.

Doubtless, Ms Osofsky is not ignorant of this legal landscape and the difference between 'adequate procedures' in the sense the term features in the Bribery Act 2010 and the somewhat different considerations arising in relation to the public interest in making an offer of a DPA. So what (if anything) is to be made of these recent remarks?

Compliance Focus

One clue may be found in Ms Osofsky's curriculum vitae. Unlike previous Directors of the SFO, whose careers were spent in prosecuting agencies, the greater part of Ms Osofsky's background is in compliance. She has worked variously as a Regulatory Advisor at Control Risks; the Money Laundering Reporting Officer at Goldman Sachs International; and as Deputy General Counsel and Ethics Officer (an internal compliance role) at the FBI. Immediately before her appointment to the SFO, Ms Osofsky was EMEA Regional Chair and Head of Investigations at Exiger and played a central role in monitoring the anti-money laundering and sanctions programme at HSBC Bank. This depth and breadth of experience in compliance matters would seem to mean that she is well placed to assess whether a company has 'instilled the right controls', backed by 'commitment at the appropriate level', and engaged in efforts to 'clean house and reform'. It may also foreshadow a genuinely new approach at the agency and one which places compliance at the heart of future DPA negotiations.

It is possible to identify many good reasons why a greater emphasis on compliance would be a welcome change in the DPA regime: not least that a DPA is a form of resolution which is essentially 'forward looking' (that is to say, it is concerned with assurances about future good conduct as opposed to focusing on past performance).

The likelihood of a company successfully adhering to the conditions of a DPA will invariably depend on the quality of its compliance framework. To use the Director's phrase, it is entirely sensible that a DPA may only be used in circumstances where the SFO (and a Court) may be assured 'that companies are doing everything they can to ensure the crimes of the past won't be repeated long after the watchful eye of the prosecutor moves on'.

However, if the 'adequacy' of procedures is likely to become a litmus test for the quality of a company's compliance department in this context, caution is required. The use of the phrase 'adequate' in the context of section 7(2) has a long and somewhat involved, if not controversial, history. It would be a source of potential confusion for the phrase to be applied in both a statutory and wider sense. It is already well established that where a commercial organisation has in place procedures which fall short of a section 7 defence (by definition inadequate for that purpose), the procedures might nevertheless form part of the consideration of whether a DPA should be offered (viz. adequate for a different purpose).

It is important that the nature of the section 7(1) offence should not become clouded in this discussion. There is a critical distinction to be drawn between compliance procedures at the time of the alleged offending (which goes to the commission of an offence), and those in place at the time of an SFO investigation (which goes to the availability of a DPA).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions