It is almost a year since the appointment of David Green CB QC as the Director of the Serious Fraud Office (SFO). In his first year the Director made a number of announcements about his proposed reforms for the SFO.
Substance was added to the reforms when the Director addressed lawyers at a Fraud Lawyers Association seminar on 26 March 2013. After identifying ten fundamental changes at the SFO since his appointment, including new guidance on self-reporting and facilitation payments, a number of additional reforms were suggested.
On the function of the SFO, the Director reflected that the “SFO's role had become blurred giving rise to the perception that it did not have the stomach for prosecution and preferred risk-free civil settlements”. This appears to be a stark criticism of the approach of his predecessor, Richard Alderman, in particular on civil settlements.
The former Director advocated civil settlements for establishments which self-reported. Whilst the door for civil settlements is still open in “the right circumstances”, the removal of guidance on self-reporting has taken away the element of certainty that was welcomed by the commercial world. The Director’s rationale for this change is that no prosecutor should give wholesale assurances that if a corporate self-reports to the SFO it would not be prosecuted. Likewise, the guidance on facilitation payments has been removed and a “common sense” approach will now be adopted.
In order to deal with the perception that the SFO has “dumbed down” the Director emphasized that the SFO was there to “undertake the difficult and complex investigations and prosecutions that others cannot do”. The restructuring of the SFO which now consists of case teams working within four casework divisions, coupled with a new senior management team, are part of the Directors reforms to improve quality within the organisation. Enhancing intelligence gathering capabilities of the SFO and occupying new offices closer to Trafalgar Square were also suggested as reforms relating to the ability and culture of the SFO.
Furthermore, it was predicted that new funding agreements with the Treasury will enhance the SFO’s capability of handling substantial, complex cases. The Libor unit doubling in size from thirty to sixty was put forward as an example. Referring to HMCPSI’s inspection of the SFO in May 2012, the Director was confident that all eight recommendations contained in its report published in November 2012 have either been adopted or are in progress. In addition the Director has encouraged a statutory right for HMCPSI to inspect the SFO.
Other changes on the horizon include the introduction of Deferred Prosecution Agreements which will add to the SFOs armoury. In addition, the Director is keen to reignite the debate over the test for corporate criminal liability and mooted the possibility that the offence of failure of commercial organisations to prevent bribery (s7 Bribery Act 2010) could be extended to other fraud offences.
It is still too early to tell if there has been a true change in the approach of the SFO. In particular there have not yet been any prosecutions for the Bribery Act s7 corporate offence, and we are yet to see how the organisation deals with the current Libor investigation; however it is clear that the Director’s intention is to put complex criminal prosecutions firmly at the heart of the SFOs work.