The Serious Fraud Office (SFO) is the principal regulator dealing with complex business crime, fraud, bribery and corruption. It takes on complex, high value cases, often with a significant international dimension, and requiring highly specialist knowledge. The SFO works with specialist police fraud squads, the Serious Organised Crime Agency and the Crown Prosecution Service.
Recently, the SFO has had its image severely tarnished following the botched Tchenguiz investigation and criticism for its working practices and severance payouts.
The Tchenguiz investigation
The SFO investigation into Vincent Tchenguiz’s dealings with an Icelandic bank fell apart in 2012; he has accused the SFO of malicious prosecution and false imprisonment and seeks damages of £200m.
The High Court ruled that the SFO, under former director Richard Alderman had misrepresented key facts in the case and directed it to pay Tchenguiz’s £3m legal bill. This has tarnished the SFO’s reputation.
This failure, likely to cost the taxpayer tens of millions of pounds in damages, was due to “a litany of circular buck-passing and deficient record-keeping”. The central error was the SFO claim that Tchenguiz lied about the true value of his £2bn property empire, and hid high borrowing against these assets; in fact all the loans were fully declared in bank paperwork, which the SFO had in its possession.
Severance payments to employees
The SFO’s morale and reputation have also been hurt by criticism of its alleged sanctioning of £1m in severance payments to three senior staff without the necessary approval. The SFO was berated by a parliamentary committee for presiding over a “catalogue of errors and poor judgement”, and its director for acting within a culture of secrecy where external advice and scrutiny was “to be avoided wherever possible”. The committee witheringly concluded that, “This catalogue of errors amounts to a case study in how not to run a public body”. The SFO was told to ask its former executives to return their severance packages.
Down but not out
However, under new director David Green, the work of the SFO continues. Two brokers were charged in July with conspiracy to defraud following the charging of Tom Hayes in June with eight counts of conspiracy to defraud; all part of the SFO’s ongoing investigation into the rigging of Libor.
The investigations were sparked by the £290m fine paid by Barclays last year. The SFO is investigating four more financial firms, and has fined Royal Bank of Scotland £390m and UBS $1.5bn.
Comment
The SFO has undoubtedly experienced considerable difficulties and embarrassments recently, and the reverberations are likely to be costly to the taxpayer and especially to the reputation of the SFO. However, much of the responsibility for these problems appears to lie with the former director, and notwithstanding the ongoing court cases, the SFO is clearly directing its attention to serious business fraud and aggressively pursuing its remit.
It would be foolhardy for anyone undergoing investigation for alleged fraud to assume that the SFO has been rendered ineffectual by these recent problems; anyone facing investigation or prosecution should seek expert legal advice immediately. For more information call today on 01616 966 229 to speak to our serious fraud solicitors or complete an online enquiry form and a member of the team will contact you directly.