Voluntary Disclosure in the UK?   More Clarity Promised Soon

Voluntary Disclosure in the UK? More Clarity Promised Soon

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May 28, 2009

Earlier this year, we tried to get the Serious Fraud Office to provide greater clarity on the benefits, if any, that would flow to companies in the UK for voluntarily disclosing anti-bribery payments.

This was the impenetrable response from the SFO’s Senior Policy Advisor:

"There is a greater role for prosecutors in corporate crime prevention and public education by actively engaging with the business community to learn from business leaders the problems they face in doing business and to remind them of their legal and ethical obligations.

Equally prosecutors should encourage companies to self report. The fact that a company has honestly, fully self reported in a timely way when combined with immediate appropriate remedial and compensatory action is a strong factor to take into account when deciding whether to prosecute or not in the wider public interest. But it must be stressed that the more serious the offending, the greater the likelihood of a prosecution.

So whilst we cannot give guarantees about non prosecution, the more a company does the above the less the need for a prosecution unless the offending is too serious.”

So, if you stay with it to the end, the answer is that the benefit, if any, is probably unknowable.

At a conference in Brussels yesterday, the same SFO representative acknowledged that benefits of voluntary disclosure are exceedingly difficult to pin down. We asked about a rumor that no credit would be given if the disclosure was not made to the SFO almost immediately upon discovery. Ideal timing, it seems, would be before briefing the Board. Less credit will be given for delay beyond that point.

Next, we asked if it was true that no credit would be given if the company first disclosed to the US authorities and only afterwards to the UK authorities. After some hesitation: “what’s the benefit to us if the information has already been reported?”

Most companies hoping to benefit from the mysterious advantages of voluntary disclosure already know that there will be no guarantees, of course, and that they’ll lose control of the process. Now, it seems, the unwritten rules are shifting to make the process even riskier.

Companies voluntarily disclosing in the UK can’t be motivated by a serious threat of enforcement. There’s no evidence of that. One has to assume, then, that they’re disclosing out of a sense of good corporate citizenship, -- of doing the right thing. Sadly, those stepping forward first are likely to regret it. The UK needs some quick wins to restore its reputation and none are quicker than voluntary disclosures.

The good news? The SFO has promised written guidelines on voluntary disclosure by next month. It seems as if we’re to get actual numbers – percentages of credit -- with which to work. “Percentages of credit” in the form of a discount off the penalty that would otherwise apply, -- a discount off the unknowable?

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Voluntary Disclosure in the UK? More Clarity Promised Soon

Comments 3

  1. Bruce Horowitz

    "Seriouser and Seriouser". If we assume that the Serious Fraud Office only handles serious offenses, and that some of those serious offenses are more serious than others,then it makes sense for them to have created the archival categories of the "not too serious offenses" and the "too serious offenses". Thank you, Louis Carroll. I was not there, but I think your follow-up question, about the effects of first disclosures to the U.S. authorities, caught your SFO representative off guard. Please keep us up to date on those "discounts off the unknowable".

  2. Bruce Horowitz

    "Seriouser and Seriouser". If we assume that the Serious Fraud Office only handles serious offenses, and that some of those serious offenses are more serious than others,then it makes sense for them to have created the archival categories of the "not too serious offenses" and the "too serious offenses". Thank you, Louis Carroll. I was not there, but I think your follow-up question, about the effects of first disclosures to the U.S. authorities, caught your SFO representative off guard. Please keep us up to date on those "discounts off the unknowable".

  3. Bruce Horowitz

    "Seriouser and Seriouser". If we assume that the Serious Fraud Office only handles serious offenses, and that some of those serious offenses are more serious than others,then it makes sense for them to have created the archival categories of the "not too serious offenses" and the "too serious offenses". Thank you, Louis Carroll. I was not there, but I think your follow-up question, about the effects of first disclosures to the U.S. authorities, caught your SFO representative off guard. Please keep us up to date on those "discounts off the unknowable".

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