With its Director’s term extended, what can we expect from the SFO in the next two years?

Written on 10 Feb 2016

The Director of the Serious Fraud Office (SFO) David Green
CB QC has had his contract extended until 20 April 2018. 

The announcement, made on 9 February 2016, by the Attorney
General Jeremy Wright QC MP brings to an end a period of some uncertainty for
the SFO.

In noting the reappointment the Attorney General said:

In his time as
Director of the SFO David Green led a change in the organisation’s approach to
prosecuting cases and delivered the first UK Deferred Prosecution Agreement and
the first convictions under the Bribery Act 2010. I look forward to working
with him in the next phase of his leadership of the Serious Fraud Office
.”

The two year term is shorter than the standard four year
term generally taken up by an SFO Director, but we can expect Mr Green to use
his contract extension to push forward on a number of fronts.

A prosecution agency,
not an advice centre

He will be keen to re-emphasise his stance that the SFO is a
prosecution agency and that its function is not to provide advice to corporates.
He may be assisted by the sentencing of Sweett Group PLC in relation to issues
of corruption in the Middle East, which involves the first prosecution of the
section 7 Bribery Act 2010 offence of failing to prevent bribery by an
associated person. The decision, in Sweett, expected in February 2016, is
likely to set the backdrop for the next term and could further embolden the SFO
in its efforts to tackle corporate wrongdoing.

The law on corporate
criminal liability and the “controlling mind”

Mr Green will also be expected to continue his campaign for a
reform of the law on corporate criminal liability, which he argues should see the
removal of the “controlling mind” test, which has long been viewed as
thorn in the prosecution’s side, and its replacement with the US system of
vicarious liability for companies. It will be interesting to see if his
proposal receives renewed political support; in 2015 the Ministry of Justice
rejected the argument for a new offence of corporate failure to prevent
economic crime stating, at that time, that there was insufficient evidence of
corporate crime going unpunished.

Deferred Prosecution
Agreements and self-reporting

Among the SFO success stories in 2015 was the first ever Deferred
Prosecution Agreement (DPA) involving Standard Bank, the implications of which
we discuss here.
We are told that other similar disposals are in the pipeline, and DPAs are
likely to be a regular feature of the landscape during Mr Green’s new term.

What remains to be seen, however, is how willing companies
will be to come forward to self-report issues. Given the budgetary pressures
that the SFO continues to grapple with, engendering a culture in which companies
come forward may be central to the long term success, and even survival, of the
SFO. At the present time there remains considerable scepticism within the
business world as to what advantage, if any, will be secured by voluntarily
going to speak to the SFO.

Funding and
effectiveness

Funding will nevertheless continue to be the critical issue.
The SFO’s 2015-16 budget was reduced to £33.8m (from £35 million in 2014) but
in January 2016, the SFO secured a further cash injection of £21.1m, including
an advance of £15.5m to meet “an urgent
cash requirement
.” Mr Green will want more funds to be a fully effective
agency.

Privilege: a more
robust approach?

One use to which the additional money may be put is a more
robust approach to privilege in light recent of the SFO’s recent success in the
Divisional Court, which upheld the legality of SFO procedures  when dealing with material potentially subject
to legal professional privilege (LPP) (R (McKenzie) v Director of the
Serious Fraud Office [2016] EWHC 102 (Admin)).

More LIBOR

On the other side of the balance sheet the SFO suffered a
significant reversal when it failed to secure a single conviction in the second
trial brought in the aftermath of the LIBOR scandal. A third trial is shortly
to commence which no doubt will be closely followed by Mr Green.

The ultimate future
of the SFO

The SFO is an important agency and one that needs to
prosper. The National Crime Agency, which some in government may still want to
replace the SFO, is reportedly having difficulty recruiting experienced
economic crime investigators and therefore the replacement of the SFO may not
be easy in any event.

It is hoped that those who may call for the disbandment of
the SFO will not prevail;  Mr Green
should be wished well as he commences his new term and urged to ensure that the
SFO still remains a respected force when he leaves.