SFO investigations - D&O insurers counting the cost - DAC Beachcroft

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SFO investigations - D&O insurers counting the cost

Published 29 May 2018

In October 2016 we reported the charges that the SFO had brought against three former Directors of Tesco in response to Tesco's £250m accounting scandal. Tesco accepted a £129m Deferred Prosecution Agreement (DPA) which was approved in April 2017.

The prosecution against the Directors finally came to trial in March 2018, however, due to the illness of one the Directors the judge dismissed the jury and ordered a retrial. The March 2018 trial was some four years after the Directors were suspended and nearly two years after the charges were brought. The length of the investigation will be a concern for Directors, and their Insurers, alike.

There are already concerns in the market about the costs of regulatory investigations and the defence costs that can be incurred by Insurers when defending such matters.

In Soma Oil & Gas Ltd v Director of the SFO [2016] EWHC 2471, Soma sought, by way of judicial review, to require the SFO to halt its long running investigation into concerns about corruption and bribery. Whilst Soma's judicial review ultimately failed, as the court was reluctant to intervene in the SFO's investigation, the SFO closed its investigation shortly after the unsuccessful judicial review on grounds that there was insufficient evidence.

Whilst the outcome of the criminal proceedings against the Tesco Directors is still unknown, what is for certain is the significant amount of defence costs incurred. Indeed, we are aware of concerns in the market about the length of SFO investigations and it may be that we will see more attempts by judicial review to halt investigations. We will continue to watch this space.

Authors

William Naylor

William Naylor

London - Walbrook

+44(0)20 7894 6507

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