By Bill Waite
We learned in June that the Serious Fraud Office will survive, bringing to an end a year of speculation and ensuring that Richard Alderman remained as its Director. Had the Home Secretary won her battle there is no doubt he would have resigned immediately, resulting in a significant loss to the SFO and to the fight against corporate fraud and corruption.
There is also no doubt that as Director, Richard has led a transformation of the SFO. Conviction rates have increased from 65% to 91% in cases where defendants pleaded not guilty and the time it takes for the SFO to investigate cases has been reduced from five years to approximately one year.
Richard of course has his critics. Ros Wright, a former Director of the SFO, recently questioned whether serious complex financial fraud was slipping under the radar because of the emphasis of investigating and prosecuting corruption cases.
A superficial analysis supports this claim. It is said that of its investigative staff, 82 are deployed on corruption cases whereas 71 are deployed on financial fraud. Furthermore in a recent response to a Freedom of Information Act request which I made the SFO reported that “bribery and corruption is suspected in approximately 50% of the cases currently under investigation by the SFO.”
However, as of March 2011 the SFO had 111 cases under active investigation. This compares with an average 65 before Richard Alderman took over. In other words whilst the percentage of bribery and corruption cases is high the through put of all cases demonstrates that more city fraud is in fact being investigated.
Can this momentum be maintained against a significant decrease in budget?
There are signs that it can. Richard Alderman recognised a long time ago that in order to process more cases he would have to leverage his resources by persuading corporates to come forward and cooperate.
Innospec, Dougall and BAE were all cases where this policy came under aggressive scrutiny from the senior Judiciary. However the Macmillan settlement announced last week must provide some comfort that the Judiciary are beginning to understand the realities of the limitations of criminal process and the need to ensure that UK plc. does not become subjugated to the Department of Justice.
Continuing success though can only really be achieved both the Judiciary and Parliament recognise the overwhelming sense of the SFO being able to negotiate binding deals.
So what other help does Richard Alderman need to maintain the momentum?
Clarity around the EU Procurement directive and debarment would be a great help. Whilst the Ministry of Justice have said at conferences automatic debarment does not apply to section 7 Bribery Act offences, most legal advisors and their clients will be looking for more than words from a podium.
Legislation formalising non prosecution and deferred prosecution agreements is also critical.
Amendments to the Attorney Generals guidelines on plea negotiations [.pdf] in the case of corporate defendants is also another significant ingredient, as are amendments to the rules on disclosure.
Without addressing these issues, the significance of the Bribery Act will be severely muted and in spite of his very best efforts and those of his colleagues momentum will be difficult to maintain.
Bill Waite is a founder of The Risk Advisory Group and an expert on anti-bribery and corruption legislation. He formerly practiced as a criminal barrister before joining the Serious Fraud Office in 1991 as a prosecutor. Bill is frequently called upon to comment in the media and is a regular speaker in Europe and the U.S.
Clarity on procurement blacklisting under Bribery Act convictions is already half-done; the UK Government has already amended the regulations that implement this bit of EU law, confirming that mandatory exclusion will only be triggered by convictions for active deliberate bribery (sections 1 & 6). The failure to prevent offence only allows discretionary exclusion, like any other criminal conviction.
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