What we have learnt about the SFO’s approach to tackling business crime
In a succession of recent speeches, publications and pronouncements, senior members of the Serious Fraud Office (“SFO”) have been giving insight into the SFO’s current thinking on how best to deal with economic crime. A number of key themes have emerged, which businesses will find of interest.
The pace of investigations
Throughout her first year as director of the SFO, Lisa Osofsky has emphasised her desire to speed up the pace of investigations, particularly where individuals are involved. She has acknowledged that investigations can take a long time, partly because of the nature and complexity of the SFO's cases but also due to delays in scheduling court time. The time taken to progress cases was noted during the recent inspection of SFO operations by HM Crown Prosecution Service Inspectorate, (Case Progression in the Serious Fraud Office), which found that the allocation of a case controller and a suitable team to a case took too long in some instances and that the digital forensic unit was significantly behind in its processing of digital material, resulting in “key blockages” to case progression.
Ms Osofsky has suggested that the pace and efficiency of SFO investigations could be improved by enhanced technology. Indeed, the agency is already using artificial intelligence (AI) to speed up the review of electronic documents and is increasingly using forensic computer expertise in its cases. It has also strengthened its intelligence and case development functions with the appointment of John Kielty to a new role of Head of Intelligence, whose remit includes increasing the pace at which investigations take place. The use of technology is likely to become central to future SFO inquiries. Organisations under investigation may increasingly be expected to collaborate with AI processes, including providing material and data in a technologically-appropriate format.
Perhaps as an indication of its intention not to keep cases alive for any longer than necessary, in February 2019 the SFO announced the closure of its high-profile investigations into the conduct of individuals at Rolls-Royce, and both the company and individuals at GlaxoSmithKlein. In the previous month it had dropped its case against the third and final former senior manager to be prosecuted as a result of the action against Tesco for accounting misstatement. While the SFO has been criticised for failing to hold any individuals to account in cases where allegations against the company were settled by way of deferred prosecution agreement (“DPA”), it is right that the SFO discontinue an action if a conviction is looking unlikely or is no longer in the public interest. Companies will hope that Ms Osofsky remains true to her word and that the time taken to complete what are always complex investigations is not a day longer than it need be.
One way in which the SFO’s approach to investigations may change is in its use of evidence from cooperating witnesses to build up cases against companies or senior officials. Ms Osofsky raised eyebrows amongst the legal sector in April 2019 when she suggested that the SFO could introduce a US-style informant system in the UK, modelled on US plea-bargaining arrangements. She has acknowledged that historically in the UK there has been a hesitancy to offer immunity deals to individuals in white-collar crime cases. However, she has also suggested that "[o]ur juries could live with a little bit of leniency for someone who had been on the inside and has given extraordinary cooperation to the government". Ms Osofsky returned to this topic when speaking at the American Bar Association recently, suggesting that the SFO may consider working with partners such as the National Crime Agency or the police who have the power to deploy resources including wiretaps, in order to secure convictions with evidence provided by a cooperating defendant. However, she has also confirmed that the SFO has no intention to americanise the UK justice system or to offer witnesses leniency deals in every case, adding that the comparatively low sentences for white-collar crimes in the UK can make it difficult for the SFO to negotiate plea deals.
Ms Osofsky has repeatedly highlighted the challenges to law enforcement posed by the evermore transnational nature of serious economic crime, including the ease and speed with which criminals transfer money across borders. Speaking at the Cambridge Symposium on Economic Crime in September 2019, Ms Osofsky reported that international enforcers are increasingly “linking arms” in the fight against fraud and corruption. However, she has also acknowledged the difficulties in working with international authorities, such as the US Department of Justice, whose rules of engagement, national law and procedure can hinder or limit cooperation. Corporate entities simultaneously reporting wrongdoing to more than one law enforcement agency can be faced with considerable differences in what these authorities may expect. The treatment of evidence, witnesses and the right to privilege, for example, are among the significant issues that corporates will have to negotiate across jurisdictions. Any organisation facing investigations by multiple international enforcers should establish early on which is likely to be the lead agency and seek their cooperation in coordinating requests from others.
The Cambridge Symposium came hot on the heels of the publication by the SFO of its Corporate Cooperation Guidance, which sets out how the SFO will assess the cooperation with investigations provided by business entities and the good practices organisations should follow.
Enhanced guidance on co-operation had been sought by businesses for some years and particularly after DPAs became available in 2014. Provision of guidelines and concrete examples of what the SFO will expect by way of cooperation, particularly from organisations self-reporting wrongdoing in the hope of obtaining a DPA, is to be welcomed and may be indicative of a more conciliatory approach from the SFO. However, now that it has produced guidance, the SFO will expect organisations under investigation to comply with it. And much is expected. We considered the impact of the guidance in our previous blog post: The UK Serious Fraud Office Cooperation Guidance.
In its Economic Crime Plan 2019-22 the government promised additional funding of over £48 million to bolster the UK’s law enforcement capabilities. This will be spread over all relevant authorities and how much will be given specifically to the SFO for its activities is not known. However, the commitment to tackle economic crime in the UK is strong, particularly at this time of political uncertainty. The SFO is likely to want to be at the forefront of enforcement activities, both nationally and on the global stage.