I do not like criticizing the UK Serious Fraud Office. Its staff are exceptionally committed, and it has a very tough mandate. But my experience of building a global consultancy over 20 years is that hard messages sometimes need to be given, and a failure to deliver the message is demonstrative of personal as well as organizational failure and risks greater harm.
In that spirit, I wrote a post for the FCPA Blog on March 24, 2020 about the SFO’s current conviction rate, 53 percent in 2018/2019, and 60 percent in the period 2015-2019, and about the findings of a Crown Prosecution Service Inspectorate Review into its leadership. I proposed that the SFO should use its intelligence unit proactively to seek out abuses of the Covid-19 financial support being provided by the Government and to prosecute those seeking dishonestly to manipulate that support determinedly, aggressively, and quickly.
This, I suggested, might restore the SFO’s mojo and have a significant deterrent effect on prospective fraudsters, preserving billions of pounds of state aid for those who need and deserve that financial support.
The following day, the SFO press office provided me feedback very efficiently or, as they put it, “guidance” on the content of my piece. I have been through the SFO’s employee appraisal process several times. It appears that even now, my ratings continue to decline.
First, I was reminded that the SFO only prosecutes the most serious cases of fraud and that thus far no cases which had been seen relating to Covid-19 matched these criteria (but) “if it becomes apparent that such frauds are part of a more complex and serious criminal activity, it would be possible for the SFO to investigate.”
Second, they said, the conviction rate reflects the fact that “cases we take on are acknowledged to be extremely challenging: a 100 percent conviction rate would suggest we are not taking on the most serious complex cases…. Plus, because of our caseload (small number of large cases, with multiple defendants) our conviction rate can and does vary significantly…”
Third, if I needed help in the future, I was told that “guidance” was there.
I reflected for some time on how I should respond to my guidance. Conscious of the need to analyze and absorb before responding, I did some research.
I was assisted by a post on the FCPA Blog by Nicola Bonucci, reporting that the OECD Working Group on Bribery had made a unique public statement on the increased bribery and corruption risks associated with Covid-19. Following that, on May 5, the Wall Street Journal reported that the Department of Justice was undertaking a broad search for fraud in the $660 billion paycheck support package, focusing on both the claimants and the banks charged with distributing the funds. I was not alone in recognizing risk of abuse of massive state intervention and the need for a proactive response to deter criminal conduct.
I then turned my attention to the two other central points on which I had received guidance — the SFO’s conviction rate and, more significantly, the types of cases that lay behind it.
In relation to the former, I accept the proposition that 100 percent is not a goal that should be set or one that is desirable. But neither should one dismiss as unfair the criticism of a running conviction rate of 60 percent by defendant over five years. The SFO has a unique structure, additional powers, and resources precisely to enable it to secure more convictions in such cases. It should do better.
Testing the proposition that the SFO secures convictions in the most complex of cases has proved difficult. Although all cases must, by definition, meet the SFO’s criteria to be prosecuted by it, as we all know, some complex cases are more complex than others. I struggled to remember a recent case where the SFO had secured a conviction after a jury trial in a case that could have gone to the integrity of the UK financial system – which the SFO’s mandate is intended to be. The recent mega trials of Barclays (against corporate and individuals), Tesco, and Libor, for example, have all resulted in failure.
Analyzing the SFOs annual reports proved to be of little help. It is impossible to track cases through year to year. In the report for 2018/9, the SFO reported a “significant success” in a $20 million fraud relating to the installation of solar panels, which had no less than 1500 hundred victims. No doubt, this case was serious and complex, but it is difficult to suggest that it has the same characteristics and implications as Barclays.
To try and ensure that I was not taking a bad point and properly to analyze the cases prosecuted and the results obtained, I sought to rely on the guidance offered by the Serious Fraud Office.
On March 26, I emailed the SFO and requested: copies of the indictments in all cases prosecuted in the period 2014-2019; copies of prosecution openings in these cases; results and sentences in each case; and whether the case was resolved by plea, jury determination, order of the Judge or prosecution offering no evidence in each case, by each count on the indictment.
On April 22, my request was refused. The grounds for the refusal were that it would take more than 24 hours to comply with the request and that it would cost more than £600 ($730), which was more than the appropriate cost limit.
The reason for the amount of time required to comply with my request was said to be twofold:
First, “The SFO does not hold a central record of indictments or prosecution openings for cases…..enquiries would have to be made of multiple staff associated with each case to locate these documents and also to check the outcomes against each count on the relevant indictments…”
Second, “Furthermore, the SFO would likely have to seek the views of the Courts and the relevant defendants (or their legal representatives) regarding the provision of the documents prior to any disclosure.”
So, it would appear that my attempt to be fair and objective in my analysis is handicapped from the outset.
In the spirit of 360 feedback, or guidance for the SFO, I have the following observations:
- As the Department of Justice, the OECD, and no doubt others have recognized, it is important to get ahead of the curve as a prosecutor. It demonstrates intent and has a deterrent effect. Waiting for cases to “become apparent,” which may be “possible” to investigate, is a missed opportunity.
- It important in any organization, but particularly in a public prosecutorial body, to challenge the narrative, both as to conviction rates and as to the type of case where one succeeds and where one fails. Failure to do so risks “group think” and institutional failure.
- An institutionalized corporate memory is essential to all successful organizations – particularly one where there is a significant staff turnover at senior levels and where one’s legal adversaries have long memories, great experience and are exceptional lawyers. A central repository of all previous cases with all relevant materials and a summary of lessons learned – both positive and negative – should be established.
- For an organization that reported in its July 2018 annual report that its Digital Forensic Unit was processing 10 million documents a month, it does not appear credible that it cannot find six years of key material relating to no more than 40 cases without a huge effort.
- If you advance any legal proposition that is other than straightforward, e.g., that you might have to seek Court and Defendants’ consent to disclose material which was fully in the public domain, make sure you can justify it. Two weeks on, I am still waiting for the authority for that particularly unique legal proposition.
And finally, if one works for an organization that is continually being criticized, it is demotivating. Reflecting on and adopting some of the above suggestions may help.
The thoughts in this post are my own and should not be attributed to any organization with which I am associated.