Businesses must know how to respond to changes at Serious Fraud Office
With the Serious Fraud Office (SFO) undergoing changes, Aziz Rahman of award-winning business crime solicitors Rahman Ravelli explains how those in business should deal with the agency.
It is just over a year since the Serious Fraud Office (SFO) announced that Lisa Osofsky was to become its new Director. And now business needs to heed the changes that the Osofsky-era SFO is ushering in.
Osofksy has brought a raft of new senior personnel into the SFO and emphasised the need for her agency to work with greater speed and efficiency. This has seen some long-running investigations dropped while others have finally been concluded.
Osofsky has talked of making the SFO more proactive. She also wants it to work more closely with other national and international enforcement agencies and make greater use of technology in order to get results.
Crucially, the new Director also wants greater co-operation with the business world. But the SFO has repeatedly warned that the co-operation has to be more than going through the motions in the hope of being treated leniently.
Osofsky has made it clear that reduced sentences or even immunity could be available for informants and has even floated the idea of such informants “wearing a wire’’ to secure evidence.
The Right Response
The way Osofsky is shaping the SFO arguably makes it more important than ever that any company or individual it investigates knows exactly how to respond: they need to know how it functions and use this to construct the strongest defence.
The SFO has teams of skilled experts. Section 2 of the Criminal Justice Act 1987 – the Act that created the SFO – gives it the power to compel any individual or organisation to provide it with information or documents that it believes are relevant to an investigation.
The SFO can also offer a deferred prosecution agreement (DPA), which involves a prosecution being suspended if the accused admits the wrongdoing and agrees to meet certain conditions.
Earlier this month, the SFO concluded a DPA with Serco Geografix, that saw the company pay £19.2M plus SFO costs in order to avoid prosecution for fraud and false accounting.
There have been just five DPAs since they became part of UK law under the Crime and Courts Act 2013. The SFO has made it clear it will not give them out to everyone, which means negotiating skills are important when seeking a DPA.
The SFO under Lisa Osofsky may be looking to do things differently. But it is still the case that a defence lawyer with business crime expertise can make representations and challenge SFO allegations. This can mean that the SFO begins to doubt the strength of its case and maybe even drop its investigation.
Challenging the SFO
Successful challenges to the SFO’s accusations and activities are more likely the earlier legal help is sought.
Legal challenges to the obtaining of search warrants, how searches are conducted or what material is seized are best made at the first available opportunity. And while the SFO does have considerable powers it can always be challenged about its conduct and the information and material it intends to use as evidence.
Section 21 of the Police and Criminal Evidence Act (PACE) gives people access to their material that has been seized by the SFO. The Attorney General’s Guidance on Disclosure (December 2013) laid down guidelines on dealing with the seizure and search of digital material.
These are both measures designed to prevent those being investigated being put at an unfair disadvantage.
It should also be remembered that the SFO can and does make mistakes. One high-profile example was when it investigated the brothers, Robert and Vincent Tchenguiz, searched their premises and made arrests.
But the brothers’ lawyers proved the SFO had not properly checked the information it presented to court when applying for search warrants. The result was the SFO paying £4.5m to the brothers and apologising.
Yet while challenges can be of value, negotiation should also not be ruled out as a means of obtaining the best outcome to an SFO investigation.
This may now be more true given that the SFO’s current Director is one who wants investigations concluded quicker and is open to making a deal. This could mean there is more scope to obtain an outcome that may have been less likely under previous SFO regimes.
But it is equally true that any negotiation can only be of value if you know exactly what wrongdoing has been committed. As mentioned earlier, the SFO expects co-operation to be genuine. It will take a dim view of attempts at negotiation if information about wrongdoing that was not previously disclosed comes to light.
Those investigated by the Osofsky-era SFO cannot afford to make such mistakes.