U.K.’s Financial Crimes Agency Wants Companies to Invest in Compliance
The U.K.’s major economic crimes investigative agency has taken steps to emphasize the need for companies to invest in programs and procedures designed to prevent wrongdoing, its director said on Tuesday.
The focus on the strength of companies’ compliance programs is a new one for the Serious Fraud Office. “The emphasis we place on it today is significantly stronger than it was when the agency was born” in the late 1980s, SFO Director Lisa Osofsky said at a Society of Corporate Compliance & Ethics conference.
Under Ms. Osofsky, who began her tenure in 2018, the SFO has offered additional guidance on how it handles corporate cases, including how it evaluates compliance programs.
“Are they part of the company’s DNA?” Ms. Osofsky asked compliance practitioners during an online speech. “Or do they just adorn a very nice couple of binders that are held on a bookshelf that don’t really do much more than provide window-dressing?”
The agency can credit companies with strong compliance programs by negotiating more lenient settlements with them. Ms. Osofsky pointed to two cases with divergent outcomes that she said showed the SFO’s commitment to doing so.
The SFO in July 2019 struck a £19.2 million ($24 million) deal with a subsidiary of public contractor Serco Group PLC. A year later, it reached a similar settlement with security-services company G4S PLC, which agreed to pay £38.5 million ($48.6 million).
Both cases involved allegations of fraud in connection with contracts to provide electronic-monitoring services to the U.K.’s Ministry of Justice. The offenses occurred between 2010 and 2013, according to the agreements.
Serco reported the misconduct and began cooperating with the SFO early, and was rewarded with a faster and less expensive resolution, Ms. Osofsky said. G4S took substantially longer to cooperate and received a smaller discount, she said.
The state of each companies’ compliance programs played a role in the outcomes, Ms. Osofsky said. “G4S was in a different place in its compliance journey,” she said. “It hadn’t yet embedded and thought through its compliance obligations in a way that Serco could demonstrate to us it had.”
Spokespersons for G4S and Serco declined to comment on Ms. Osofsky’s remarks.
In a first for the SFO, the G4S settlement also contained a provision requiring the appointment of a reviewer to ensure the company adhered to its agreement with the agency. “It is the first time we use such a construct to oversight the compliance development and compliance markers,” Ms. Osofsky said.
Under U.K. law, the arrangement is distinct from the so-called independent monitors used in the U.S. to ensure compliance with settlement agreements, she added.
Under Ms. Osofsky, who began her tenure in 2018, the SFO has offered additional guidance on how it handles corporate cases, including how it evaluates compliance programs.
“Are they part of the company’s DNA?” Ms. Osofsky asked compliance practitioners during an online speech. “Or do they just adorn a very nice couple of binders that are held on a bookshelf that don’t really do much more than provide window-dressing?”
The agency can credit companies with strong compliance programs by negotiating more lenient settlements with them. Ms. Osofsky pointed to two cases with divergent outcomes that she said showed the SFO’s commitment to doing so.
The SFO in July 2019 struck a £19.2 million ($24 million) deal with a subsidiary of public contractor Serco Group PLC. A year later, it reached a similar settlement with security-services company G4S PLC, which agreed to pay £38.5 million ($48.6 million).
Both cases involved allegations of fraud in connection with contracts to provide electronic-monitoring services to the U.K.’s Ministry of Justice. The offenses occurred between 2010 and 2013, according to the agreements.
Serco reported the misconduct and began cooperating with the SFO early, and was rewarded with a faster and less expensive resolution, Ms. Osofsky said. G4S took substantially longer to cooperate and received a smaller discount, she said.
The state of each companies’ compliance programs played a role in the outcomes, Ms. Osofsky said. “G4S was in a different place in its compliance journey,” she said. “It hadn’t yet embedded and thought through its compliance obligations in a way that Serco could demonstrate to us it had.”
Spokespersons for G4S and Serco declined to comment on Ms. Osofsky’s remarks.
In a first for the SFO, the G4S settlement also contained a provision requiring the appointment of a reviewer to ensure the company adhered to its agreement with the agency. “It is the first time we use such a construct to oversight the compliance development and compliance markers,” Ms. Osofsky said.
Under U.K. law, the arrangement is distinct from the so-called independent monitors used in the U.S. to ensure compliance with settlement agreements, she added.