Cracking down on financial crime

The SFO has sat back and watched during a golden age for fraudsters, who often use simple techniques to steal identities and empty the bank accounts of ordinary people. Up and down the country countless thousands of consumers have seen their lives destroyed by fraud, committed on an industrial scale.

In this unprecedented period of expansion, for the criminals, we might have expected an explosion of enforcement activity from the agency whose name suggests that serious fraud is its target.

For most people, serious means affecting the most people and doing the most harm. If you lose your life savings or cannot pay your rent because someone emptied your bank account, that is about as serious as it gets.

Instead, the SFO has chosen to open countless sprawling investigations that either went nowhere or, worse, landed them in court for unlawful activity and abuse of power.

The fiasco over the illegal raids of Vincent and Robert Tchenguiz, which lost the taxpayer millions in costs and damages, is but one of many examples of poor SFO decision-making in cases with high-profile targets.

In recent weeks, the prosecution of Barclays, for conspiracy to commit fraud over the Qatar funding round in 2008, collapsed after a judge ruled that the bank had no case to answer before the case even reached trial.

A merger would not only mean more efficiency, in investigating the most serious offences, but would for the first time lead to a joined up approach to organised and financial crime.

With an operating budget of well over £50m and access to an almost limitless further pot of money for special “blockbuster” cases, you might think the prisons would be full of white-collar crooks stripped of their assets and acting as a real deterrent to anyone thinking of taking that path.

In fact the SFO’s annual contribution to the prison population barely reaches double figures and, in many cases, those locked up serve months rather than years. and pay back little or nothing from the proceeds of their crimes.

With the news that Lisa Osofsky, a former FBI prosecutor, is to take over as director of the SFO in September 2018, will there be a sea change in the organisation’s approach to serious fraud investigations? Will the SFO finally wake up to the reality of what serious fraud means to ordinary people and the untold misery it creates?

Early signs are not encouraging, not least Ms Osofsky backpedalling on her previous position of support for the merger of the SFO with the National Crime Agency. That proposal, which featured in the last Conservative election manifesto, is long overdue for implementation.

A merger would not only mean more efficiency, in investigating the most serious offences, but would for the first time lead to a joined up approach to organised and financial crime.

Defending herself against suggestions of inexperience in the UK context, Ms Osofsky apparently pointed to a secondment at the SFO in 1993 to support her position.

Reliance by Ms Osofsky on working practices from that era, when institutional corporate fraud was rife and largely unchecked, will not give the organisation the fresh direction it so desperately needs.

That said, though, US federal prosecutors have historically been much more aggressive in their pursuit of fraudsters whose activities affect the general public directly and on a large scale.

The FBI often conducts sting and undercover operations, uses whistleblowers and offers immunity for cooperation in order to convict the operators of Ponzi schemes and other major investment scams.

Hopefully the government, with Ms Osofsky’s support, will revive the wise plan to merge the SFO with the National Crime Agency and finally create a joined up national enforcement strategy to tackle the most serious crimes of all kinds.

If Ms Osofsky is given the authority to pursue and lock up those who cause the most misery through fraud, using aggressive US-style tactics where necessary, there might finally be effective enforcement and deterrence for these incredibly damaging crimes.

Chris Daw QC practises at Serjeants’ Inn Chambers in London, specialising in serious crime, fraud, regulatory law and professional discipline

Opinions expressed in this article are his own and do not necessarily reflect the views of other barristers at Serjeants' Inn Chambers