GlaxoSmithKline’s problems are multiplying fast.
In China authorities have identified 46 individuals connected to the company they claim were involved in “massive and systemic bribery”.
In the UK the Serious Fraud Office (SFO) marked out its pitch this week, revealing it has opened an official investigation into allegations of bribery; and an internal GSK probe is looking at potential wrongdoing in Jordan and Lebanon.
Given the slew of allegations so far it seems a fair assumption that other international law enforcement agencies, notably the US Department of Justice, will be taking a long, close look at the allegations.
The GSK bribery bus has barely left the terminus.
The interest from international authorities flows almost directly from the extraterritorial reach of the UK Bribery Act and US Foreign and Corrupt Practices Act. The legislation allows prosecutors from the two jurisdictions to press charges as long as they can firstly prove wrongdoing and, secondly, show that the company, in this case GSK, has operations within its territory.
In the case of GSK none of these conditions should be difficult to meet. The company is headquartered in UK and has the bulk of its sales in the US.
On top of this, in a statement in July last year the company all but admitted to wrongdoing when it said “certain senior executives … appear to have acted outside of our processes and controls which breaches Chinese law”. At first glance this one shouldn’t be too difficult to prosecute.
But then you look again. Buried in the SFO’s Operational Handbook is a detailed explanation of double jeopardy and how it affects criminal investigation and prosecutions.
The guidance states: “The double jeopardy rule, that no person should be put in jeopardy of being convicted and punished for the same offence, is an established common law principle.”
It goes further, detailing that investigations carried out overseas have the power to invoke double jeopardy in the UK just as easily as those carried out domestically. “Double jeopardy is likely to arise whether there is, or has been, an investigation into the defendant’s conduct by another authority in England and Wales or overseas jurisdiction.”
As ever with the law there are exceptions to the principle. However they are limited in scope and rare in number. It may also be the case that the principle of double jeopardy may not be invoked in this case if the alleged offences the SFO is investigating are separate to those under investigation in China. They could relate to matters that took place in Jordan or Lebanon.
But that in itself raises concerns. If there is real cause for concern about those jurisdictions, won’t the local authorities want to investigate? If so, how will that impact the principle of double jeopardy?
These matters will really only be resolved, and quite properly so, through successful prosecutions, leading to decisions taken in court, establishing legal precedent. However, until that happens we are faced with worrying prospects.
The first is the potential for jurisdiction shopping. If a party facing investigation is confident that the principle of double jeopardy will be respected internationally there is little to stop that party cutting a deal with the country likely to offer them the most lenient treatment.
The second issue is the rather unedifying sight, witnessed previously in a number of investigations, of international prosecutors carving up parts of prosecutions so they can all have their pound of flesh. A very painful prospect for GSK.
The third, and potentially most worrying is the prospect of the US prosecutors getting involved. As set out in the SFO handbook, the UK has historically respected the principal of double jeopardy even in grey areas such as international fraud investigations. The US has not always been so amenable. Rumours of clashes between UK and US investigators working on high profile banking, fraud and corruption cases are now fairly commonplace among the white collar crime community.
If the US authorities get involved they are unlikely to look at any consideration other than a high profile settlement involving a very large cheque – just look how US prosecutors have treated the banking sector.
If that happens the jeopardy GSK is facing could be more than doubled.
• Jonathan Russell is a senior associate at due diligence and business intelligence company Alaco