The writer is executive director of the UK charity Spotlight on Corruption
It has not been a good eighteen months for the Serious Fraud Office. The agency, set up to combat complex cases of fraud and corruption, is already battered after a string of collapsed prosecutions, two reviews and several instances of adverse judicial comment. The hunt for a new director couldn’t come at a more critical time.
Calls for a rethink of its very existence have been growing, with recent interventions from one of the country’s top financial crime barristers, Clare Montgomery KC, and former justice secretary Robert Buckland who called for parliament to take an urgent look at the framework for prosecuting economic crime. This week the Institute of Economic Affairs think-tank argued that the SFO “must be held to have failed”.
This is not the first time the future of the agency has been cast into doubt. Five years ago, then prime minister Theresa May committed to merging the SFO into the National Crime Agency. The SFO weathered that storm, but it must be demoralising to be working under a perpetual cloud of criticism and uncertainty.
For all the agency’s problems, merging it into the Crown Prosecution Service or National Crime Agency would be a grave error. UK enforcement would lose hundreds of experienced lawyers and investigators — most of whom would be likely to defect to the private sector. Neither the CPS nor the NCA have the skills or risk appetite to pursue the high-profile cases, such as past SFO investigations of defence and aerospace giants, Rolls-Royce and Airbus. It is hard to see how they would do a better job.
But the agency’s troubles have coincided with a marked rise in the threat. With 64 per cent of UK businesses having experienced fraud, corruption or economic crime last year — the second-highest level in the world after South Africa — now is the time to beef up the SFO and transform it into a super-prosecutor for serious economic crime.
As the IEA acknowledges, a lot of the SFO’s problems relate to underlying issues (corporate liability laws, disclosure rules and inconsistency in judicial management) that make the successful prosecution of complex fraud extremely difficult. Many were identified in an inspection report over 15 years ago. The good news is that the new director of the SFO will take over at a moment when there is finally a commitment in Whitehall to tackling them.
The government will imminently, after seven years of dithering, introduce a new corporate offence of failure to prevent fraud. It has even promised to “make it easier to prosecute corporates for crimes committed by senior managers” by changing the underlying “controlling mind” test that governs criminal prosecution of companies.
Even the antiquated disclosure rules which contributed to the collapse of several high-profile SFO trials, including most recently the case against G4S, will be reviewed. These rules, made for a pre-digital age, have not caught up with the sheer quantity of online evidence. The documents needed for a standard SFO case would, if printed out, now fill up to 22 London buses.
The new director will inherit a significant workload. The SFO last year opened a record 43 investigations, after the number had fallen drastically in 2019. And with the right person in post, the agency has the potential to make a comeback. But identifying suitable candidates is tricky.
As former director Sir David Green KC put it recently, the new head needs to be someone with a clear mission, who can make the agency “an attractive place to work, who has the courage to take on difficult cases and the experience to know how they might play out in court, and who can wrestle a credible budget with the Treasury”.
The SFO has always been at its strongest when it is led by a silk. Commanding the respect of the legal profession when the agency is up against the most powerful and deep-pocketed suspects in the land is essential.
So the fact that legal expertise is not a requirement in the advertisement for the director is short-sighted. And the £183,618 salary is nearly half that of the head of enforcement at the Financial Conduct Authority (at £316,000) and well below that of the head of the National Crime Agency (at £223,441).
If the government is really serious about securing the future of the SFO (and it should be), it must urgently look at increasing the agency’s budget, and allowing the agency to set attractive salaries to lure the country’s best legal and investigative talent.
The SFO has brought in over £1bn to the Treasury over the past five years, yet it has a staff vacancy rate of 20-25 per cent. Allowing the SFO to reinvest the fines and recovered money back into technology and personnel is the best investment the government could make in keeping UK plc on the straight and narrow during turbulent economic times ahead.