Bambos Tsiattalou, founder and Partner at Stokoe Partnership Solicitors, discusses the future of the SFO for Criminal Law & Justice Weekly.

This article has been published in Criminal Law & Justice Weekly, June 11th 2016.

Download a PDF version of this article here.

The Future of the SFO

The first four years of David Green’s tenure as Director of the Serious Fraud Office (SFO) were partly a time of reputational rebuilding following the disastrous Tchenguiz case in 2011 that culminated in a massive settlement being paid to brothers Vincent and Robert Tchenguiz. His tenure was extended until 2018, providing a degree of stability to the perpetually embattled agency.

Three months prior to this extension, the SFO finalised the first UK Deferred Prosecution Agreement (DPA), with Standard Bank, which was put forward as a success but harshly criticised by many in Tanzania, whose government is still suffering the financial ramifications of the bribery case. Domestically, anti-bribery campaigners have accused DPAs of failing to deter bribery and corruption, a key aim of any white collar crime agency. Even following a successfully concluded investigation, the SFO remains a target for opprobrium.

With a string of recent high profile failures returning the SFO to much more uncertain waters, it comes as no surprise that Home Secretary Theresa May has revived her plans to give the National Crime Agency (NCA) “power of direction” over the SFO.

The NCA, given its brief two-year operational lifespan, is in its infancy compared to the SFO, which is coming on to 30 years of existence. Dubbed the ‘British FBI’, it operates with a much broader remit than the SFO and on a larger scale. As such, the NCA has over eight times the financial resources of the SFO, reflecting the sheer number of investigations it handles.

In 2014-15 the NCA was involved in over 3300 arrests, both domestically and abroad, achieving a 91% conviction rate of cases going to court in the UK. In contrast, the SFO has only achieved a conviction rate similar to the NCA’s once in the past 15 years: in 2009-10, when it oversaw a total of 22 successful convictions.

In the past two years, however, the SFO has secured only 29 UK convictions compared to a total of 681 for the NCA. The rate of successful convictions has also dropped from 85% to 78% in spite of an increase in spending. A comparison in combined resource outturn from 2013-15 shows that a UK conviction was almost three times as expensive for the SFO across this period.

Furthermore, figures released this month have seen the SFO’s conviction rate plummet to an atrocious 31.4% – the lowest it has ever been. Whatever has been said about the SFO existing to investigate, rather than successfully prosecute, complex fraud it is hard to argue that ‘value for money’ – part of the SFO’s Statement of Principle – is being achieved with such low numbers. The budget for the past year, including ‘blockbuster’ funding, rose to over £60m, and with only six successful prosecutions that level of expenditure is almost inexcusable.

Both agencies operate across multiple jurisdictions, with the SFO receiving 84 Mutual Legal Assistance requests from 2013 to 2015, and many of their UK operations involving various countries. Comparatively, the NCA was involved in 1952 arrests internationally, including paedophile rings in the Philippines, a drug smuggling operation in the Caribbean and a people-trafficking operation in Greece.

This year has already seen the SFO fail to secure convictions of six ex-brokers in the Libor trials in January, and in March two men accused of taking part in a boiler room scam were acquitted. The second of these was the culmination of a nine-year international investigation in which the defence labelled the SFO ‘incompetent’, a term that is applied to the SFO with startling regularity given the unique level of independence the agency operates under.

The termination of the Forex inquiry with no charges being brought has also been noted as another major failure on the SFO’s part. A total of over $9.4bn of fines were paid by six banks in relation to this scandal, however the SFO was unable to put together a strong enough case to take to trial in spite of close cooperation with US authorities. Alongside this, twelve other investigations in the past three years have been closed without charges being brought. This raises clear questions as to the judgement of those involved in choosing which cases to investigate.

Although it could be argued that the SFO deals with more complex cases, the organisation is intended specifically to deal with “the top level of serious or complex fraud, bribery and corruption”, and should be able to successfully manage cases within its mandate. Even with the ‘blockbuster’ funding the SFO has access to, it seems to be unable to consistently provide ‘blockbuster’ – or even positive – results. If it is unable to achieve convictions in high-profile cases with its ample funding and independence from ministerial oversight, it raises the question of whether or not the organisation as a whole is fit for purpose.