Earlier this month, the Serious Fraud Office (SFO) published its new strategy for the next five years. This follows on from Nick Ephgrave’s promise of a bold new approach in his inaugural public address as director of the SFO.  However, scratch the surface and much of the content and rhetoric in these recent pronouncements has a very familiar look to it.

In recent years, the SFO has come in for stiff criticism. It has been blighted by blunders and mismanagement, resulting not only in the repeated delay and collapse of prosecutions and the overturning of convictions in several of its highest-profile cases, but also the commissioning of two independent reviews into its handling of those cases. It was therefore hoped that the arrival of Nick Ephgrave as the new director of the SFO would help to reverse the agency’s fortunes and shake it out of its malaise.

In his first public speech in his new role, Mr Ephgrave set out his plan for what he would do as director. He made clear that he was not like his predecessors – he is not a lawyer, after all, but rather a “law enforcer”. He also emphasised that he wants the SFO to be “bolder” and to “explore new ways of doing things” under his leadership and that if the SFO is to be serious about being quicker and more efficient in handling its biggest cases, it needs to focus on intelligence.

Following on from this, the SFO has recently published its five-year strategy for 2024-2029 and appended Business Plan for 2024-2025 (together, the “strategy”). This strategy sets out at a very high level the agency’s direction, values, approach, and goals for the next five years.

In his foreword, Mr Ephgrave writes: “The SFO needs to be seen as a strong, dynamic, confident and pragmatic organisation. This means playing a greater role in the national effort to tackle fraud, ensuring that SFO cases progress at a faster rate, taking bold and pragmatic decisions on our casework and, finally, being seen as the partner of choice domestically and internationally.”

A brave new world?

So, how bold, dynamic, and revolutionary are these proposals?

Given that the challenges facing the SFO today are broadly similar to those the agency has faced in recent years, it is perhaps unsurprising that many of the overarching aims set out in both Mr Ephgrave’s inaugural public speech and the SFO’s strategy are consistent with those of the previous SFO regime, including:

– improving the pace of its investigations;

– developing its use of technology;

– deepening the agency’s use of intelligence;

– maximising the use of the tools the SFO already has at its disposal; and

– building “strong and trusting” relationships with both its domestic and international partner.

The strategy also focuses on the development and engagement of the SFO’s workforce and highlights the fact that, in order to meet its ambitions, “the SFO needs to attract and retain the brightest and best from a range of professions” – something which the agency has historically had difficulty in doing.

What is perhaps more surprising is that while some of the specific ideas detailed in Mr Ephgrave’s speech and in the strategy are genuinely new (such as testing new crime prevention methods through a pilot programme), or even an evolution of existing policies (such as helping corporates to self-report more easily), many of the solutions proposed to address the challenges facing the SFO, and the rhetoric surrounding them, appear strikingly similar to those that the agency has been pushing for years.

These familiar proposals include incentivising whistleblowers, making better use of co-operating witnesses, and calling for changes to the disclosure regime. Far from being new ways of doing things, each of these ideas was part of the previous regime’s vision for how to improve the SFO’s fortunes.

Given these ideas failed to solve the SFO’s problems previously, it is therefore worth exploring whether they might work better now, or whether, despite all the promises of a bold new dawn for the agency, the SFO is simply out of ideas.

Co-operating witnesses

Nearly five years ago, Nick Ephgrave’s predecessor, Lisa Osofsky, made headlines as she suggested that the SFO’s fight against financial crime in the UK would be enhanced by the use of US-style plea bargaining and co-operating witnesses.

At the time, experienced criminal practitioners were quick to question whether methods used in the USA could be easily transposed to the UK’s criminal justice system.

Five years down the line, after anything but a successful track record during Ms Osofsky’s tenure in the use of cooperating witnesses (including the Unaoil case, which saw the SFO engage what the Court of Appeal described as an “American fixer” in an attempt to encourage defendants to abandon their not-guilty pleas), it is not immediately apparent why the SFO appears to be interested in exploring this idea again.

While the use of co-operating witnesses is nothing new in the UK, they have tended to be used mainly in drugs and organised crime cases. The SFO has to date made very little use of the relevant provisions under the Serious Organised Crime and Police Act 2005 (SOCPA), whereby an offender can be granted a reduced sentence or even immunity from prosecution in return for assisting in an investigation or prosecution.

The reason for this is likely, at least in part, due to the fact that British juries are considered to have a cultural distaste for such “supergrass” evidence, and because, in practice, it can be relatively easy for defence lawyers to undermine the integrity of such evidence at trial.  Perhaps the more telling reason that the SFO has not used the provisions under SOCPA more frequently to date, however, is that persuading an individual to plead guilty requires powerful incentives and, unlike its counterparts in the USA, the SFO’s impotence is well known.

A defendant charged in the USA faces a very high likelihood of being found guilty and receiving a very high sentence if they go to trial, whereas prosecutors can offer large, guaranteed sentencing discounts for co-operation. In the UK, by contrast, the sentencing regime is less harsh than in the USA and the available discounts both smaller and less certain.

Added to that, the SFO’s performance in recent years, with numerous high-profile failures in the prosecutions it has brought against individuals, means that it is perhaps even less intimidating when compared to its American cousins than it was five years ago.

In short, little has changed in the past five years to mean that the SFO is any more likely to entice defendants to become co-operating witnesses. If anything, the prospect may be less enticing to a potential co-operator. It is therefore surprising that the Mr Ephgrave is choosing to fish this particular proposal out of Ms Osofsky’s recycling bin.

Incentivising whistleblowers

Much fanfare has surrounded the proposal that the SFO should explore incentivisation options for whistleblowers, including paying them.

Like the use of co-operating witnesses, although more commonplace in the USA, the concept of rewarding whistleblowers is not new to the UK; both the Competition and Markets Authority and HM Revenue & Customs offer financial incentives to whistleblowers.

The SFO, however, does not have any similar powers and is a long way behind the curve compared to its counterparts in the USA. For example, under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, whistleblowers in the USA can be awarded up to 30% of any penalty imposed following successful enforcement action resulting from the information provided. The UK whistleblower regime is therefore arguably ripe for reform.

It is worth noting, however, that the idea of paying whistleblowers was also a notion floated by Ms Osofsky early on in her tenure as director of the SFO¹. It is notable too that neither Mr Ephgrave’s speech nor the strategy contain any details as to how this aim of incentivising whistleblowers might be put into practice. Whether reforms in this area are brought about and, if so, whether they do in fact assist in speeding up the SFO’s investigations remains to be seen. However, such reforms are not in the SFO’s gift and therefore, as in the past, the plans for reform in this area may come unstuck if the SFO fails to find sufficient legislative support.

Disclosure reforms

Amid the string of acquittals linked to SFO disclosure shortcomings during her tenure, Ms Osofsky sought to deflect blame for those failings on the state of the current disclosure system. She increasingly cited disclosure as one of the SFO’s biggest challenges and stated that the current disclosure framework was no longer fit for purpose.

She argued that given the proliferation of data, the SFO’s disclosure obligations had become too onerous in large and complex cases and that this was the reason that the SFO had come unstuck on numerous occasions. Ms Osofsky talked of defendants being able to use one mistake on the part of the SFO “to mount tactical challenges to our cases”, which could bring about the collapse of a case. She therefore described it as a big priority to “rebalance the system for victims and justice”.

However, this explanation for the SFO’s recent disclosure shortcomings simply does not hold water.

While it is true that many SFO cases do now involve millions of documents, it is far too simplistic to argue that the current disclosure system is the problem, as opposed to the SFO’s inability to operate it properly. None of the high-profile SFO disclosure failings that brought about the acquittals in the Serco, Unaoil, or G4S cases arose due to the volume of material the agency was required to review – instead, they occurred due to the agency’s own failings.

The answer to the SFO’s problems with disclosure should not be to push for wholesale changes to the disclosure system in the SFO’s favour, potentially to the disadvantage of defendants. Instead, it is surely that the SFO should learn to apply the disclosure system properly.

It is therefore disappointing, though perhaps unsurprising, that in the wake of Ms Osofsky’s departure the SFO has continued to adopt her rhetoric with respect to the disclosure system. Indeed, the strategy states that the SFO will “suggest new powers or changes to the wider system that will allow us to drive cases swiftly and efficiently” and that it will “continue to push for a disclosure regime that is fit for today’s challenges”. This kind of language gives more oxygen to the idea that the SFO’s recent shortcomings have been due to the system rather than its own systemic shortcomings.

While no further details as to what reforms the SFO might wish for are included in the strategy, this language is no doubt a nod to the ongoing independent review of disclosure and fraud offences being chaired by Jonathan Fisher KC.

The preliminary findings of that review were published on 24 April 2024, ahead of the final recommendations being delivered to the Home Secretary in the summer of this year. Intriguingly, those findings indicate that there is a consensus that the problems with disclosure occur largely in the practical application of the disclosure system, rather than in the structure and architecture of the system itself. Mr Fisher KC states: “Whilst I currently see there to be no compelling case for radical reform of the [Criminal Procedure and Investigations Act 1996], I would like to consider where there may be scope for the legislation to be modernised to simplify some of its provisions to support greater consistency of application and to enable better use of technology.” What that means in terms of the scale of any reforms that may ultimately be recommended following the conclusion of the review is unclear.

Perhaps most interesting for those with recent experience of dealing with the SFO on disclosure issues is that Mr Fisher KC’s preliminary findings go on to describe cultural issues with respect to disclosure that need to be addressed: “All my engagement has pointed to a need for better training and resources for disclosure across all parts of the criminal justice system… Many of those with whom I have spoken have referred to a poor culture around disclosure and the insufficient value placed upon this work in different parts of the system…The importance of disclosure must be embedded as an inextricable part of the criminal trial process.”

Instead of continuing to lambast the current system, therefore, the SFO might do better to focus on how it approaches disclosure and the emphasis it places on it if it wants to avoid repeating its recent failings. 

Stuck on repeat?

Many practitioners warned that Ms Osofsky’s proposals for shaking up the fortunes of the SFO would not work and, indeed, her tenure ultimately came unstuck partly due to the way in which she mishandled her attempts to implement those proposals.

Despite this, and promises of a bold new approach, it appears that the new SFO Director is unafraid of adopting not just some of his predecessor’s unsuccessful ideas but her rhetoric concerning the challenges facing the organisation.

It will be interesting to monitor how the new Director and the SFO go about implementing the “bold” proposals in its strategy. Time will tell whether the agency has learnt its lessons from past mistakes or is simply stuck on repeat.

Footnote

¹ See Lisa Osofsky’s speech to the American Bar Association’s London White Collar Crime conference on 8 October 2018.