Increasingly Cooperative World Of Cross-Border Investigations

D
Dechert
Contributor
We reported last year that the rise in multi-jurisdictional criminal and regulatory investigations over the past few years has led to improvements in cross-border cooperation between enforcement authorities in corporate investigations, ...
UK Criminal Law
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We reported last year that the rise in multi-jurisdictional criminal and regulatory investigations over the past few years has led to improvements in cross-border cooperation between enforcement authorities in corporate investigations, resulting in an increased number of global settlements. This year's article seeks to expand on that theme, providing a more focused insight into how increased cooperation works in practice, and examining some of the trickier issues to be navigated by companies under investigation in more than one country.

Cross-border investigations: a jurisdictional overview

Fraud, bribery and other complex economic crime frequently crosses borders, creating potential liability in more than one jurisdiction. The geographical location of the conduct is not necessarily determinative of jurisdiction; in recent years the UK has legislated to create a number of corporate offences with extraterritorial effect, including failing to prevent bribery under section 7 of the Bribery Act 2010, and failing to prevent the facilitation of tax evasion under sections 45 and 46 of the Criminal Finances Act 2017. These offences have broad jurisdictional reach and may be prosecuted by UK authorities even if the offending took place entirely overseas – so long as the defendant company is incorporated or carries on a business or part of a business in the UK.

Such extraterritoriality is set to increase. In January 2017, the government issued a call for evidence on the issue of whether to extend the 'failure to prevent' model offences to other economic crimes. The results have not yet been published, but may be imminent following the comments of the House of Lords Select Committee on the Bribery Act in their paper dated 14 March 2019, which expressed the hope that the government would 'delay no more' in delivering its conclusions.1 It is likely that such an offence would already be on the statute book if not for the distraction of Brexit.

Trends towards international cooperation and global settlements

As a consequence of the proliferation of offences with an international aspect, law enforcement agencies are making increasingly frequent use of formal and informal channels to exchange information. Multilateral and bilateral mutual legal assistance (MLA) treaties between countries enable authorities to obtain evidence from overseas, but there can be significant delay in their execution. Memoranda of understanding (MOUs) or data-sharing agreements between countries can create a framework for efficiently sharing information and a number of UK agencies can receive information directly through these instruments without the need for an MLA request.2 Informal informational exchanges can accelerate the progress of an investigation and encourage a coordinated strategy between agencies. Such intelligence sharing can subsequently be supplemented with corresponding evidence produced by way of MLA, which can be relied upon as evidence in court.

Public policy statements from UK and US prosecuting authorities underline how vital they consider international cooperation to be. In the UK, the new Director of the Serious Fraud Office (SFO) Lisa Osofsky has publicly affirmed her intention to leverage international contacts she made through her previous roles as a federal prosecutor for the US Department of Justice (DOJ) and Deputy Counsel at the Federal Bureau of Investigations (FBI), to strengthen the SFO's investigational capacities. In oral evidence to the House of Commons Justice Committee in December 2018, Osofsky anticipated that the 'shared use of important intelligence information' would help 'crack open' cases.3 In the US, the DOJ has recently adopted a 'no piling on' policy regarding penalties, which explicitly includes cooperation with foreign agencies within its framework. Deputy Attorney General Rod Rosenstein explained that the policy 'discourages disproportionate enforcement of law by multiple agencies', through 'instructing Department components to appropriately coordinate with one another and other enforcement agencies in imposing multiple penalties on a company in relation to investigations of the same misconduct.'4

Globalised teams across agencies foster international cooperation and further signal their intentions in this regard. The DOJ has a lawyer seconded to the SFO specifically to work on US cases5 and Osofsky recently recruited Peter Pope, the US-qualified co-head of Jenner and Block's London investigations practice, to 'assist with building and consolidating relationships with authorities in jurisdictions and to act as an adviser in case reviews on compliance issues'.6 These initiatives particularly assist with informal intelligence sharing and are set to continue along the same trajectory.

With such networks in place, companies under investigation in more than one jurisdiction can expect that information and evidence pertaining to one country's investigation may be shared with overseas law enforcement and prosecuting agencies that have concurrent jurisdiction. With this in mind, companies need to ensure that they liaise closely with the authorities and provide consistent information across the same subject matters. However, corporates and their advisers should aim to achieve coordination between the relevant enforcement agencies as far as possible, and clear agreements between them as to relevant subject matter disclosures. This is particularly acute where there are national laws preventing disclosure such as Chinese state secrets or the French blocking statute.

The increase in international cooperation is set to feed the upturn in agencies working together to coordinate sanctions against companies where criminal activity has been committed in multiple jurisdictions. Recently:

  • Rolls-Royce reached settlements with the SFO, DOJ and Brazilian authorities.7
  • Société Générale8 entered into a coordinated resolution by US and French authorities. The respective agencies worked together for the first time and announced settlements in one day.
  • The Brazilian construction company Oderbrecht agreed to pay the US, Swiss and Brazilian authorities the largest corruption fine ever imposed, totalling at least US$3.5 billion.9

There are a number of compelling advantages for both prosecuting authorities and companies in pursuing a global settlement. Theoretically the time and costs of any investigation are reduced, any settlement figure will be assessed holistically and therefore be fairer, and the risk of further prosecutions is greatly diminished. None of these are guaranteed, however. The proposition that a global settlement achieves finality needs to be treated with particular caution, as other countries not covered by the settlement but with potential jurisdictional claims may use the information already gathered to mount their own proceedings. In the Odebrecht case,10 the global settlement spawned investigations and further settlements in other countries including Colombia, Peru, Panama and the Dominican Republic, among many others. The deferred prosecution agreement (DPA) in Rolls-Royce required the company to assist domestic and foreign law enforcement agencies in the future and acknowledged that Rolls-Royce may face further proceedings in countries not covered by the settlement.11

Read 'United Kingdom: The Increasingly Cooperative World of Cross-Border Investigations'.

Footnotes

1. https://publications.parliament.U.K./pa/ld201719/ldselect/ldbribact/303/303.pdf.

2. UK Liaison Bureau at Europol via the National Crime Agency, Interpol via the National Crime Agency, UK Visas & Immigration, HMRC; Police Services; Financial Intelligence Units; Asset Recovery.

3. Lisa Osofsky, evidence to House of Commons Justice Committee, 18 December 2018.

4. www.justice.gov/opa/speech/deputy-attorney-general-rod-rosenstein-delivers-remarks-new-york-city-bar-white-collar.

5. https://wp.nyu.edu/compliance_enforcement/2018/10/16/director-of-the-serious-fraud-office-lisa-osofskykeynote-on-future-sfo-enforcement/.

6. www.sfo.gov.uk/2018/09/27/new-senior-roles-at-the-sfo/.

7. www.sfo.gov.uk/2017/01/17/sfo-completes-497-25m-deferred-prosecution-agreement-rolls-royce-plc/.

8. Convention judiciaire d'intérêt public between the National Financial Prosecutor of the Paris first instance court and Société Générale SA, 24 May 2018 www.economie.gouv.fr/files/files/directions_services/afa/24.05.18_-_CJIP.pdf.

9. www.justice.gov/opa/pr/odebrecht-and-braskem-plead-guilty-and-agree-pay-least-35-billion-global-penalties-resolve.

10. ibid.

11. Rolls-Royce, Crown Court (Southwark), 17 January 2017 at paras 61 and 68, www.sfo.gov.uk/cases/rolls-royce-plc/.

Accreditation: An extract from GIR's The European, Middle Eastern and African Investigations Review 2019, first published in July 2019.

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.

Increasingly Cooperative World Of Cross-Border Investigations

UK Criminal Law
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