Regulation  

Govt underfunding is limiting SFO success

Rachel Adamson

Rachel Adamson

The Serious Fraud Office has had a bad summer.

July saw the publication of the long-awaited Calvert-Smith probe, which lambasted the agency’s culture and management – with director Lisa Osofsky put on blast for the country to see.

The light the probe has shone on the SFO’s shortcomings has provided us with a perfect opportunity to finally identify the key problems that have prevented the SFO from combatting the meteoric rise of fraud in the UK. 

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Failures revealed 

The probe has succeeded in identifying some critical failures at the agency. While it is a long list, it took particular issue with the SFO’s leadership; a culture of sub-standard record keeping; improper prioritisation; and lack of information-sharing between case teams, senior management, and approved third parties. 

Clearly, there are some deep rooted logistical and operational problems in the day-to-day activity within the SFO, which are allowing fraudsters to operate with little concern of getting caught. Overall, the need for a cultural shift is apparent, and it must be driven by the SFO’s leadership.

The probe also recognised a number of prohibiting factors beyond the SFO’s control. The report listed several roadblocks in the Unaoil case that were deemed "unavoidable", such as the strained relationship between the SFO and US authorities, and the US authorities’ actions as a result.

However, of the key failures and problems identified, there were two critical issues that must be absolutely prioritised.

Disclosure 

At the top of the SFO’s list of woes is the way it deals with the disclosure of information. For those familiar with the proceedings of fraud prosecutions, problems with disclosure are nothing new. In the digital age, enormous volumes of complex information can be stored, and all of it must be disclosed and reviewed as it could contain crucial information or evidence. 

The report describes the disclosure process as dwarfing the actual gathering of relevant evidence and as a slow, drip-fed process.

To find a solution, the government has recommended that the SFO works with the Attorney General's Office to consider the current requirements for disclosure and calls for these requirements to be held under constant review.

While it is important that this critical issue has been identified, the recommendation is lacklustre. The answer is not necessarily obvious, and any solution must not sacrifice fastidiousness in this important stage of a prosecution.

However, reviewing requirements and keeping the process of disclosure under constant review fails to offer the type of desperately needed practical and actionable advice on how this process can be expedited. 

Under-resource 

Another issue highlighted by the report is a lack of resource faced by the SFO, which seriously hindered the agency’s ability to properly handle the Unaoil case – again, this is not a new phenomenon, as lack of resource has plagued the SFO for decades.