Lisa Osofsky, the new Director of the Serious Fraud Office (SFO), began her five year term of office a little earlier than had been expected on 28 August 2018, and within her first week gave a keynote address to the Cambridge International Symposium on Economic Crime 2018. The full text of here speech can be found here.
Charting her career in both the USA and the UK, Ms Osofsky opened by making it clear that she would be “a different kind of Director“. She also confirmed her commitment to the independence of the SFO throughout her tenure, a statement that should be welcomed by all.
Building on success
The new Director’s overarching objective is to build on the SFO’s record of cracking the most complex cases, either through a successful prosecution at trial or, where appropriate, pursuing alternative resolutions, in particular Deferred Prosecution Agreements (DPAs)
To achieve that end, Ms Osofsky envisages increased co-operation, both internationally and nationally. It appears that within the law enforcement context, the SFO might be expected to reach out to other jurisdictions operating a DPA system, most obviously the USA, but also Argentina, Australia, Canada and France.
The co-operation that the Director intends to promote will not stop with the law enforcement community but will extend to regulators, Non-Governmental Organisations and the private sector. In this latter regard, Ms Osofsky made specific mention of utilising the expertise available in the legal sector to help in building strong cases.
Technology, including machine learning and Artificial Intelligence (AI), will form an increasingly important part of the SFO’s toolbox, which it is hoped will lead to charging decisions being made more quickly and so enable the time it takes to get matters to trial to be shortened. SFO investigations have historically often taken too long to proceed, to the detriment of both the prosecution itself and the defendants involved. Any improvement in this respect is therefore to be encouraged. The use of AI will be increasingly important to ensure effective and timely case progression, not least in an era where, as the Director noted, one its current pipeline matters involves over 100 million electronic documents.
Intelligence gathering and profiling will increase under the new Director’s watch and we can reasonably expect a more US-style approach, bearing in mind Ms Osofsky’s previous work with the FBI. Specific mention was made of the use of human intelligence sources, internet intelligence and the need to work with international partners to counter the difficulties caused by encryption.
Emphasis appears likely to be given to working with whistle-blowers and co-operating witnesses in building cases that can succeed at trial, again reflecting the US law enforcement model.
As has been reported in the press, there will be a focus on recovering the proceeds of crime post-conviction, and also in targeting the flow of illicit funds through the UK In this respect, we should anticipate the SFO making use of Unexplained Wealth Orders that have the ability to target tainted assets through a civil rather than criminal process.
DPAs are now well established in the UK, and it appears inevitable the Director will wish to build on the four UK DPAs secured to date. However, in a clear message to the corporate sector, Ms Osofsky made it plain that DPAs should not be assumed, and that the SFO will look carefully at both the systems that were in place at the time any offence was committed, particularly whether they might be viewed as representing adequate procedures, and also the efforts made to cleans and reform. As the Director noted, the SFO will want assurance that the crimes of the past will not be repeated after the watchful eye of the prosecutor moves on.
The new Director concluded her speech by stating her goal of making the UK a high risk jurisdiction for sophisticated criminals.
Osborne Clarke comment
The SFO now has increased annual funding and what appears to be a guarantee of its future at least during Ms Osofsky’s term. The UK is embarking on a critical period in its economic history and a strong and effective SFO will do much to promote the UK as place to do business. The Director has a challenging agenda ahead of her, but a clear pathway of where she wants to go.
In our view, the Director will need to promote an environment where responsible companies feel confident of being able to engage constructively with the SFO, whilst at the same time demonstrating that less responsible companies, particularly those that are larger corporates, can be successfully prosecuted. The carrot with the stick. She deserves every support.