For those reading this blog site outside the United Kingdom, it may interest you to know that the Leveson Inquiry into culture, practice and ethics of the press rolls on and on. It is now in its second phase or “module”:
“The relationships between the press and police and the extent to which that has operated in the public interest”.
If you are interested in following the inquiry you can watch it live from your computer by clicking on the link on www.levesoninquiry.org.uk under “latest news”.
More and more evidence is emerging from the inquiry which indicates that there was wide spread corruption of the police and other public servants by representatives of the media. The evidence of corruption by the press has spread beyond the News of The World, the defunct news publication that was closed down by Rupert Murdoch last year and now it also allegedly stretches to The Sun, another of the tabloid newspapers within Mr Murdoch’s stable of UK publications.
It seems fairly certain that there will be a string of prosecutions over the coming years of members of the media and police officers and other public servants who are apparently involved in this growing scandal.
It seems likely that if these allegations are proved in court that it will demonstrate that the UK is a much more corrupt country than many of us had all previously assumed. One consequence will be that the UK will slip further down the Transparency International index, which is published annually, notwithstanding the Government’s best efforts to put in place the tough, gold plated, Bribery Act 2010 which came into force on 1 July 2011.
In fact, it is a great shame that the events which are currently being investigated by the Leveson Inquiry did not take place after 1 July 2011, for it would have given the Government and the UK courts a good opportunity to test the Bribery Act and to send out strong messages under the Bribery Act across the UK and also around the world’s business community about the UK’s determination to stamp out corruption.
As it is, the trials which will take place following the Leveson Inquiry will, we assume, be prosecuted under the old corruption laws, some of which date back to the late 19th century and early 20th century, and other related offences (e.g. misconduct in public office) will also, likely, be prosecuted.
It has been suggested in the press just this week that the Serious Fraud Office is already considering some investigations under the Bribery Act, which must, by definition, be for offences which have taken place since 1 July 2011. This is good news. The quicker the Serious Fraud Office can bring a prosecution of some large scale, high profile corruption, the better it will be for publicising the Bribery Act and its effects around the world. We believe that many companies around the world, whilst aware of the Bribery Act, are still in denial that it might apply to them. Our perception is that certainly in some countries very little is being done to comply with the Act, notwithstanding the obvious application of the Act, jurisdictionally, to those particular international companies. By analogy, it is rather like when the law was introduced many years ago compelling car passengers to wear seat belts: people didn’t wear them because they always assumed the car crash happened to someone else, and never to themselves. The enforced use of seat belts in fact prevented many injuries and saved lives. Likewise a robust compliance programme will save companies from financial and reputational damage, but, some will only spend the money on compliance when they see their competitors being prosecuted.
In the meantime, in the last week, it has been announced that the Serious Fraud Office itself is being investigated by the much larger Crown Prosecution Service which prosecutes all other crime i.e. not serious economic crimes. The CPS is the body that the Home Secretary planned to reverse the SFO into but was “persuaded” by a number of people within the legal establishment in the UK that this would not be beneficial and that the timing was poor, particularly at a time when the SFO was trying to promote and broadcast the effects of the new Bribery Act on businesses around the world.
It must be particularly galling, however, for the SFO to be investigated by the CPS. One can’t help wondering whether the CPS might make some self-serving findings in their report as to the way in which the SFO is working if the CPS believes that it would be better off having the SFO merged in with it.
One can’t help also feeling, despite the official denials, that the investigation by the CPS into the SFO is linked with, amongst other things, the news story that the SFO has had to apologise to the billionaire Tchenguiz brothers whose offices the SFO raided in a high profile operation in March 2011 for alleged fraud involving the now defunct Kaupthing Bank. The Tchenguiz brothers were both arrested although one year on neither has been charged.
The SFO has now admitted that information was put before the court (in order to obtain the search warrants) which was not accurate. The court was misled due to a number of “human errors”, according to the Director of the SFO, Richard Alderman. Human error when conducted by a professional sounds to us to be professional negligence, so it is not altogether a surprise that the Government ordered the CPS to conduct an investigation. It might suggest that Theresa May’s original plans are merely on hold.
This story will continue for a while, despite the SFO’s apology, because the Tchenguiz brothers will be pursuing the Serious Fraud Office not only for their costs, but also, we understand, for damages. Ultimately, though, that cost will not fall upon any individuals at the SFO but will have to be borne by the taxpayer which funds the SFO.
But back to News International which launched a new British newspaper this week, The Sun on Sunday. Whilst the timing of the launch of this new publication seems particularly dubious during the second module of the Leveson Inquiry, it is reported by Mr Murdoch that its first edition was very successful and that the number of copies sold beat expectations at 3.26m copies.
However, the news is not all good for News International because one of the MPs at the heart of the campaign for an investigation into the media, Chris Bryant MP, the Shadow Justice Minister, has been speaking out again. He claimed this week at a private members debate held in Westminster Hall that the phone hacking scandal will be the single largest corporate corruption case for 250 years. He has also claimed that the cover-up extended to James Murdoch, the former Chairman and Chief Executive of News Corporation, something which James Murdoch has strenuously denied when giving evidence to the House of Commons Culture, Media and Sport Committee. One can only assume that Mr Bryant’s comments are covered by parliamentary privilege. On 29 February James Murdoch resigned from any further involvement with News International’s British newspapers, perhaps fearing further criticism of his stewardship of News International.
As News Corporation, the parent company of the News of the World and The Sun, is US based, stories surface upon time to time as the whether US prosecutors will pursue an FCPA investigation. The signs seem to be, for the moment, that the US prosecutors will let the British prosecutors have the first run at it all, which makes sense as it does seem to be a British problem, even though, technically, some of the alleged offences may also constitute offences under US law.
All in all, the last week’s news has been quite hectic and disturbing, particularly under the themes of wide scale public corruption and the perceived (but unrelated) problems within the Serious Fraud Office itself, the main prosecuting body charged with pursuing corruption in the UK. Let’s hope the SFO stays focussed. The new Director, David Green, takes up his position in April.
Of course, we will continue to keep you posted on developments on these interesting stories.