UK Quarterly Review: Business Crime, Investigations And Regulatory Enforcement

• Published date: 25 September 2020
• Subject Matter: Government, Public Sector, Criminal Law, Money Laundering, White Collar Crime, Anti-Corruption & Fraud
• Law Firm: Morrison & Foerster LLP
• Author: Mr Gareth Rees, Annabel Gillham, Saqib Alam and Hayley Ichilcik

In our Quarterly Review, we bring you important UK developments relating to business crime, investigations and regulatory enforcement from the last three months. Please contact us if you would like to discuss any of these issues.

We commented last month that the scale of the impact of the COVID-19 pandemic on the white collar arena will only be understood in the months to come; that remains the case. In the UK, Her Majesty's Revenue and Customs ("HMRC") has said that up to '3.5 billion may have been claimed fraudulently or paid in error under the furlough scheme introduced by the Treasury - if that is right, then it will require substantial resource at HMRC to investigate if employers at fault do not take advantage of an amnesty period to self-report. Other leading government enforcement authorities, including the Serious Fraud Office ("SFO") and the Financial Conduct Authority ("FCA"), continue to achieve some results on historical investigations, as well as making positive noises about their future plans to combat serious breaches. That, of course, includes money laundering although a successful regulatory prosecution for money laundering beyond systems and controls breaches remains a gap which has not been narrowed after decades of enforcement. Meanwhile, the Financial Reporting Council ("FRC") continues to bare its teeth with a record '15 million fine imposed on Deloitte for misconduct in its audit of Autonomy.

Two Unaoil executives convicted in SFO bribery trial: A jury found Ziad Akle, Unaoil's territory manager for Iraq, and Stephen Whiteley, former vice president at SBM Offshore and subsequently Unaoil's territory manager for Iraq, both guilty of making corrupt payments to secure contracts in Iraq. Ziad Akle was sentenced to five years' imprisonment, while Stephen Whiteley was sentenced to three years' imprisonment. The jury was unable to reach a verdict on a third defendant, Paul Bond, who will be retried in 2021.

Despite the SFO's much-needed win in securing the two individuals' convictions, the SFO did not come out of this process completely unscathed. In an application to dismiss the case for abuse of process, Ziad Akle claimed that a retired U.S. Drug Enforcement Administration agent, engaged by the Unaoil owners, approached him and tried to convince him to plead guilty, while he was also in communication with SFO Director and others at the SFO claiming he could secure Ziad Akle's guilty plea.

Despite dismissing Ziad Akle's application for dismissal, Judge Martin Beddoe noted that he "upheld some of the criticism which has been advanced at a very senior level within the SFO", mainly that the SFO Director allowed the private investigator with no recognised legal role in the case to contact the defendants. The SFO later announced that a review will be conducted into this matter, and a protocol covering contact with non-legal representatives has already been put in place.

SFO charges Airbus subsidiary with corruption: On 30 July 2020, the SFO announced that it had charged a subsidiary of Airbus and three individuals as part of its investigation into allegations of corruption in Saudi Arabia. In January this year, Airbus itself paid a total of '3.6 billion to the UK, U.S., and French regulatory authorities in settlement for potential bribery charges for conduct in multiple jurisdictions. GPT Special Project Management Ltd ("GPT"), the Airbus subsidiary in question, was subsequently charged with corruption relating to a UK government contract worth '2 billion for the provision of communications services to the Saudi Arabian National Guard. The SFO has also charged the former managing director of GPT, the financial officer of two subcontractors to GPT, and an employee of a government contractor in relation to the same probe. The conduct in question was not addressed under the Deferred Prosecution Agreement entered into by Airbus with the SFO in January, and therefore, the company could face additional penalties for corruption. GPT...