The Complinet interview: Richard Alderman, director of the Serious Fraud Office

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The Serious Fraud Office has said that it will increasingly make use of the Money Laundering Regulations to prosecute rogue directors whose companies persist in bribery and corruption. Richard Alderman, director of the SFO, told Complinet that the UK's anti-money laundering regime was a "tough" system that had some "fierce" offences and he would not hesitate to use its powers to prosecute offenders. Alderman, who has been head of the SFO since 2008, was speaking following the release of the long-awaited guidance to accompany the Bribery Act 2010, as well as its own prosecutorial guidance. Alderman said that he was "delighted" with the revised guidance and said that it had helped to reduce many anxieties for businesses. "The debate got very excitable on this and I can understand that companies got very nervous when they thought the SFO might be interested in that extra bottle of wine or tickets to Twickenham," he said Alderman said that despite the negative press coverage the SFO was never interested in pursuing "decent" companies trying to conduct business under difficult circumstances. The SFO is only interested in the "mavericks" that use corruption to pursue profits, he explained. The SFO chief dismissed suggestions that the remodelled guidance had in some way softened the legislation and insisted that the changes instead addressed some of the concerns of UK companies. He said that the draft guidance did not provide answers to plenty of questions businesses had. Alderman said that the SFO would be there to help companies navigate their way through the legislation and said that the new rules, which take effect on July 1, would hopefully create a "ripple" effect through the economy and lead to better corporate behaviour. He said the SFO understood that companies would occasionally run into trouble but that the SFO would try and help businesses resolve issues with the minimum of fuss. "We will put as much of our resource as possible into tracking down and finding the individuals and the companies that want to continue using corruption and get them before the criminal courts. Those bad cases are the ones we need to get before the courts. This will enable us to support the good ethical companies that are disadvantaged by those activities," he stressed. Turning to the thorny issue of facilitation payments, an issue that has unsettled many firms, Alderman is clear. He believes that once firms start making the payments they will forever be "hassled" by people looking to make money. He said that a number of companies had taken a strict approach and have decided that they would never handover money. These companies are not hassled, Alderman said. Being realistic "I recognise that business life is challenging. Let's be real about this. Facilitation payments are not going to stop on the July 1. There will be payments that are going to be made after that date. What I want to know though is that that the corporation has set itself zero tolerance as an objective over a reasonable period of time. If they are going to do that and they come and tell me about it then I will let them get on with it," he said. He added that the SFO will target those firms that continue to make the payments to gain an advantage over competitors. The release of the guidance to the Bribery Act also led to fears that UK firms would not be able to operate on a level playing field in respect of their foreign peers. Foreign companies with a UK listing but no discernable business presence here are unlikely to be touched by the tough new legislation which sweeps away the hotchpotch of dated regulations. Alderman is unambiguous that the SFO will take a keen interest in foreign firms that are engaged in the UK economy in some way. Foreign companies that raise finance in this country or have corporate functions in the UK would be enough to spark SFO interest, Alderman said. "Don't rely on a very technical approach to the Bribery Act to try and persuade yourself that you're outside the scope of the Act. The safe working assumption is that if you have got a UK presence in one way or another then you are within the scope of the Bribery Act. Don't take the risk of thinking we have this clever interpretation by clever lawyers that tells us we are outside and therefore we are free to carry on bribing. That's very unsafe." Turning to the use of the money laundering legislation, and in particular the Proceeds of Crime Act 2002, to prosecute bribery offences, Alderman said it had been something that the SFO had been looking at for a while. He said that the SFO had previously tended to prosecute fraud and corruption through the mainstream legislature. He said that in corporate corruption cases large sums of money tended to be moved through companies, which opened up the possibility for money laundering charges. He said that directors in companies without adequate procedures that discovered corruption and ignored it while retaining the benefit of a crooked contract needed to be aware. He pointed out that these directors risked a 14-year prison sentence. "If you discover corruption then you have got a corporate issue, if you decide to cover it up in one way or another you have got a personal criminal issue which could involve you going to jail. I don't want you to see you in that position," he explained. It has been argued that the SFO lacks the muscle to prosecute bribery cases properly and a number of high-profile failures have led firms to ponder whether it is worth self-reporting graft issues to the organisation. There is a feeling that they would be better off sweeping issues under the carpet as they are unlikely to be uncovered. Alderman said that this is not the approach to take. He said that the first question a firm will be asked when it is hauled before the SFO on a corruption issue is whether the situation has occurred previously. If a previous instance is discovered then the situation becomes very serious, Alderman said. He said that firms needed to look towards the SFO's self-reporting regime to ensure they have as much control over a situation as possible. He said that global outfits that discover isolated lapses might be asked to do one or two spot checks in high-risk areas in their organisation. They would not be forced to do an enormous compliance investigation into every transaction over the past years, Alderman insisted. He said the SFO needed to be proportionate. "I want to see us behaving in the right sort of pragmatic proportionate way so if a company comes to see us and the case isn't a big deal then we won't make a big deal out of it we will just deal with it simply. If there is more in it then we will find the right way of dealing with it and we draw a line under the past because the faster the company can do that and move on the better. And I want to help them with that." SFO attempts to broker settlements with UK firms were dealt a blow last year with the Innospec case which saw the UK arm of the chemical company fined $12.7m as part of a wider $40.2m settlement with US authorities. The company was found guilty of bribing Indonesian officials to enable the company to prolong the use of harmful chemicals in petrol. Judge Lord Justice Thomas said that the SFO had acted beyond its remit in striking the deal and that the fine was "inadequate". He said that the SFO director had no power to enter into such arrangements and that no such arrangements should be made again. Alderman said that he would not be deterred and called for a change in legislation to enable judges to be involved in plea discussions at an earlier stage of the process. "We have to carry on. In my view when we have got a case where there is a simultaneous investigation by the US Department of Justice and the Serious Fraud Office we have to continue with that. We have to negotiate. If the company wants a global resolution then I think that it is everybody's interest that there is a global resolution. We just have to try our best to get the right resolution and put that to before the courts. So it is not going to hold us back," he said. Cut budgets Another potential issue for concern has been the reduction in the crime fighting body's budget. When Alderman arrived at the SFO he had £55m to play around with. Last year he had £36m, next year he will have even less. Despite this, Alderman is optimistic, he said the organisation has doubled the number of cases it is handling per year and has greatly reduced the time it takes to investigate cases. The conviction rate has also increased to 84 per cent from 62 per cent. "We have got a lot better and a lot smarter at doing these cases. So we are producing a lot more for a lot less," he said. There is also much speculation about the role of the organisation. A leaked government document earlier this month said that plans were afoot to hand responsibility for the prosecution of serious economic crimes to the Crown Prosecution Service and away from the SFO. The SFO's investigatory arm will also be folded into the new Economic Crime Agency. Alderman said that he supported the government's focus in this area but said there was no evidence for splitting up investigation and prosecution powers in a crime fighting body. "Best practice internationally in this very specialised area is to have this integrated approach. Ultimately these things are for ministers."