Included in this issue: SFO wins landmark legal privilege ruling against ENRC in the High Court; FRC has opened an investigation into KPMG’s audit of Rolls-Royce; JMLSG consults on revisions to Parts II and III of its AML and CTF guidance and more...
General
SFO wins landmark legal privilege ruling against ENRC in the High Court
On 8 May 2017, Mrs Justice Geraldine Andrews DBE handed down a landmark judgment in the High Court. This judgment followed the SFO's application for declaratory relief regarding ENRC’s assertion that various documents created during the course of their internal investigation and self-reporting processes were covered by legal advice and/or litigation privilege. The judgment addresses the scope of legal advice privilege and the point at which litigation privilege can properly be claimed in circumstances where a company is concerned that they may be the subject of action by law enforcement.
The case tackles, in the context of a criminal investigation, issues raised by the Court of Appeal’s decision in Three Rivers No. 5 and the recently considered decision in the High Court in the RBS Rights Issue Litigation. In particular, a distinction was drawn between a company anticipating being investigated and a company being concerned that they are going to be the subject of a prosecution. It is only in the latter circumstances that litigation privilege can be claimed.
This decision (understood to be the subject of an application to appeal) has far-reaching consequences regarding the practice of corporate internal investigations in a civil and criminal context.
Click here to read the full judgement
Global Legal Post, 10 May 2017
Bribery and Corruption
FRC has opened an investigation into KPMG’s audit of Rolls-Royce
KPMG is being investigated by the Financial Reporting Council (FRC), Britain's accountancy watchdog, in relation to the audit of Rolls-Royce's financial statements for 2010, 2011 and 2013.
The decision to investigate follows the SFO announcement on 17 January 2017 of a Deferred Prosecution Agreement between Rolls-Royce and the SFO and a settlement of £671 million with the SFO over corruption allegations and offences including conspiracy to corrupt and a failure to prevent bribery.
The FRC said in a statement: "The FRC has commenced an investigation under the Audit Enforcement Procedure into the conduct of KPMG Audit Plc, in relation to the audit of the financial statements of Rolls-Royce Group plc for the year ended 31 December 2010 and of Rolls-Royce Holdings plc for the years ended 31 December 2011 to 31 December 2013".
KPMG said it was co-operating and was "confident in the quality" of its work, stating "It is important that regulators acting in the public interest should review high profile issues. We will co-operate fully with the FRC's investigation, which follows the SFO's investigations into Rolls-Royce."
India anti-corruption party denies bribery allegation
Arvind Kejriwal, the leader of India's anti-corruption Aam Aadmi Party (AAP), has rejected recent allegations made by a colleague that he took bribes.
Kapil Mishra, the colleague in question, has said that Mr Kejriwal misused his powers as Delhi's chief minister. Mr Mishra has recently been fired from the party and the cabinet, Mr Mishra has alleged that the chief minister had "forgotten the founding values of the party".
The massive anti-corruption movement that swept India in 2013 resulted in the creation of the AAP.
Money Laundering
JMLSG consults on revisions to Parts II and III of its AML and CTF guidance
The Joint Money Laundering Steering Group (JMLSG) has published revised versions of Parts II and III of its anti-money laundering (AML) and counter-terrorist financing (CTF) guidance for consultation.
On a related webpage, the JMLSG explains that it has revised the guidance in line with the proposed Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. The proposed 2017 Regulations are designed to transpose the Fourth Money Laundering Directive and the revised Wire Transfer Regulation in the UK.
The revised version of Part II of the JMLSG guidance dated 10 May 2017 is available here. This part consists of industry-specific chapters dealing with particular issues faced by a range of sub-sectors of the financial services sector.
The revised version of Part III of the JMLSG guidance dated 10 May 2017 is available here. This part sets out specialist guidance on a number of topics.
The consultation period ends on 26 May 2017.
Cyber Crime
Switzerland to Overhaul its Data Protection Framework
In the wake of the upcoming General Data Protection Regulation (GDPR), the Swiss government has issued an initial draft of a new Data Protection Act that aims to update Swiss data protection law.
The draft Act proposes new concepts and obligations in Swiss data protection law, such as 'privacy by design', 'privacy by default', 'data protection impact assessments' and 'data breach notifications'.
The proposed fines are considerably lower than provided for under the GDPR. Fines would be imposed on the employee that has infringed specified obligations set out in the Act, although a lesser fine could also be imposed on the company.
The Act was open for consultation until April. The Swiss government is now considering the results of this consultation and intend to issue a final draft and then submit it to the Swiss parliament for consideration.
Global Compliance News, 10 May 2017
Health and Safety
Solar panel company fined following fall from height
A solar panel company have has been fined after a worker fell through a void in a roof.
The worker was one of several contractors completing roof work at Fairlawn school in Bristol. He fell 3.5 metres through a void in the roof and suffered serious injuries including bleeding on the brain, a fractured spleen and fractured ribs.
Solarjen Limited pleaded guilty to breaching Regulation 4(1) of the Work at Height Regulations 2005, has been fined £250,000 and ordered to pay costs of £12,073.14.
Repeated asbestos failings result in fine of £770,000
A construction company has been fined after repeated asbestos failings following incidents in 2013 and 2014 during a flat conversion project.
The HSE carried out two investigations of working practices at the site while the conversions were in progress. In 2013, they found that 40 workers had been exposed to asbestos during the early stages of the demolition work. In 2014 the HSE received a number of complaints about health and safety practices at the site and found that despite engaging asbestos contractors to remove materials, dangerous practices continued.
Barroerock Construction Limited pleaded guilty to two offences of breaching Regulation 22 (1) (a) of the Construction Design and Management Regulations 2007 at an earlier hearing, and has been fined £750,000 and ordered to pay costs of £14,874.68.
Companies fined after employee seriously injured by falling machinery
Two companies have been fined after a worker was seriously injured by a trolley carrying hydraulic rams.
An employee of DHL Services Limited was auditing incoming deliveries in a yard at JCB World Headquarters when he was struck by falling machinery weighing 770kg. The trolley toppled and trapped the DHL employee underneath it. The employee suffered multiple serious injuries including fractures and internal injuries.
The HSE investigation also found that employees of JC Bamford Excavators Ltd also accessed the area as pedestrians when vehicles were operating.
DHL Services Limited pleaded guilty to breaching Section 2(1) of the Health and Safety at Work etc. Act 1974, and was fined £266,000 and ordered to pay costs of £23,370.22.
J C Bamford Excavators Limited pleaded guilty to breaching Section 2(1) and Section 3(1) of the Health and Safety at Work etc. Act 1974, and has been fined £375,000 and ordered to pay costs of £37,235.42.
