“The Group could also face further potential civil and criminal consequences in relation to the investigation by the SFO described above. At this time, it is not possible to make a reliable estimate of the expected financial effect that may arise in relation to the SFO’s investigation, and therefore no provision has been made for it in the financial statements.”
This statement is taken from the full year results for the year ended 31 December 2019 published on 9 March 2020 by John Wood Group Plc (‘Wood’), which acquired Amec Foster Wheeler Plc (‘AFW’) in October 2017. Since July 2017, AFW has been the subject of a Serious Fraud Office investigation into alleged bribery.
For someone divorced from the proceedings, this statement is uninformative. It tells us that Wood, despite an investigation ongoing for almost three years, still has no idea when or how it will end. For its shareholders and market analysts this prolonged uncertainty is frustrating, although presumably the related risk was fully disclosed when Wood acquired AFW and the deal priced accordingly.
By comparison, the predicament of erstwhile AFW employees potentially implicated in the SFO’s probe is unfortunately far worse. Their ordeal of having their lives and careers on hold persists and the consequence of actions that they either took or apparently authorised years ago continue to be a blight. Without a limitation period or similar check bearing down on the SFO, they are deprived of any legal means to obtain a resolution. Others have tried. In mid-2016, Soma Oil & Gas ambitiously attempted to have the SFO bound to a timetable for resolution of its then-14-month-old bribery probe. Unfortunately for Soma and those to follow, the High Court refused to intervene.
Irrespective of individual outcomes, is it right that any individual who becomes embroiled in an SFO investigation must realistically expect to be in the dark for so long?
The time being taken by the SFO to conclude its investigations has become excessive. Wood and AFW is not an exceptional case. Many other major investigations, including ENRC, Quindell, British American Tobacco and KBR appear to suffer the same meandering characteristic. It is also not valid to claim that they justifiably take so long. Tellingly, in the same set of results, Wood makes provision for settlements with the SFO’s equivalent authorities in the US, Brazil and Scotland that it believes could be resolved in the next 12 months.
In April 2019, having apparently undertaken a deep review of the SFO during her first six months, SFO Director Lisa Osofsky declared that SFO investigations would be accelerated, so that ‘cases come into court within the kind of time to have the witnesses and defendant still living’. Nearly a year later, that change has yet to materialise.
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