I do not subscribe to the gloomy prognostications of the relentlessly hostile judiciary and media when it comes to their rebukes of the UK’s Serious Fraud Office.
Admittedly, the SFO’s prosecution of Victor Dahdaleh on charges of corruption in connection with aluminum contracts collapsed in December.
A judge at Southwark Crown Court last week blamed the SFO. The court said by relying on a third party to carry out a significant part of the investigation, the SFO had taken the risk that the third party would not be reliable.
The SFO has also faced complaints about excessive payments to departing senior staff, mis-accounting for VAT payments, and the Tchenguiz arrest warrants.
The British press, including Private Eye, has dubbed the SFO ‘The Serious Farce Office.’
But the SFO is not fully to blame. The main reason it was established in 1988 was because complex fraud cases had not been tackled effectively, if at all, by prosecutors.
Since then, the SFO has taken on a number of cases that other agencies would not have been able to prosecute.
When defending SFO cases throughout the 1990s to 2006, I was always impressed by the care and professionalism with which they were prepared.
The current director, general counsel and senior advisor are all highly skilled and with usefully diverse experience, and the same goes for the rest of the senior management team.
The picture painted by high-profile results is mixed. Looking back to the SFO’s earliest days, it can be said that it was successful in the Guinness prosecution (Ernest Saunders and others). It took on the ‘Blue Arrow’ case in 1989, following a DTI enquiry, and although convictions were overturned on appeal, the fact of the allegations being investigated at all had a significant impact on City conduct at the time.
SFO cases are almost always defended by top barristers and legal firms, and there are huge problems with trial management.
During the course of 2013, according to the SFO’s press releases, five cases resulted in convictions against six defendants.
None of these was headline-grabbing, ranging from boiler rooms, making false statements, theft of about £1 million, and bank fraud, and all were started by the previous administration.
When David Green CB QC became the Director of the Serious Fraud Office in April 2012, he said he intended to take the SFO back to where it began. That is, tackling serious and complex City crime, at the same time as taking on large-scale, international corruption.
He has turned his back on the alternative dispute resolution approach, saying the SFO is a prosecutor, and the public expects individuals and corporations to be prosecuted in the criminal courts rather than reach cozy financial settlements.
Deferred Prosecution Agreements will be deployed in appropriate cases, but will not be routine.
The cases Director Green is staking the SFO’s reputation on include the Libor prosecutions, Weavering Capital, and the allegations against senior management at Barclays in connection with the Qatar refinancing deal.
It is, of course, possible, likely even, that none of these cases will reach trial before Green’s tenure as Director is up, but I believe he has adopted the right course. With a fair wind — and perhaps some support from the government and the press — he will succeed.
A full version of this post can be found on McGuireWoods LLP’s Bribery Library here.
David N. Kirk is a partner at McGuireWoods in London who advises clients on all aspects of financial crime investigations. Prior to joining the firm in early 2014, David was chief criminal counsel at the UK Financial Conduct Authority (FCA), overseeing financial crime investigations and prosecutions.