A stress test for the Serious Fraud Office?

2021 was set to be the year that would be known for the Serious Fraud Office’s (SFO) decision not to proceed with a number of investigations, rather than for what the SFO had done.

British American Tobacco, KBR’s subsidiaries and individuals associated with Airbus were told they were no longer being probed by the agency, which also ended its 15-year pursuit of businessman Nisar Afzal. The SFO seemed to be continuing the spring-cleaning that started around the time its director Lisa Osofsky said her aim was to ensure the agency makes quicker decisions about investigations

And then Unaoil executive Ziad Akle’s bribery conviction was quashed, due to the SFO’s conduct, and the Attorney General announced it was launching an independent review into the agency.

The Court of Appeal had no doubt the SFO’s failure to disclose vital evidence had unfairly led to Ziad Akle being jailed. The December quashing followed criticism of the dealings Osofsky and some of her senior colleagues had with a private investigator. Appeal court judges highlighted the lack of a satisfactory explanation for how SFO chief investigator Kevin Davis came to delete data on his mobile phone regarding his dealings with the investigator – the second time in a year, the judges noted he had wiped a mobile phone of its data.

The SFO is now tasked with persuading the Attorney General, the business world and its equivalent agencies abroad that it is fit for purpose. It cannot be forgotten the prosecution of two Serco executives collapsed in 2021 because of an SFO failure to disclose evidence to defendants. The task is a stern one. The SFO has suffered a high-profile defeat accompanied by scathing criticism and the prospect of its activities being scrutinised very closely. Thus, restoring its reputation in the eyes of those it needs to work with will be a huge challenge.

In 2021, the SFO was unsuccessfully dropping cases at a time when the US Department of Justice (DOJ) was stating its intention to come down harder on corporate crime. If there is any merit in the old phrase about the world catching a cold when the US sneezes, we may see a rise in investigations in the UK.

Comparisons with the US do not put the SFO in a flattering light. This was inevitable, given its case dropping came as the DOJ was making very clear its intended targets. The DOJ made particular reference to the largest US corporations, those who violate the terms of a deferred prosecution agreement and those who are not meeting their compliance obligations being high on its list of priorities. It is a far stronger statement of intent than anything that has come from the SFO.

Ironically, one of the main tasks facing the SFO may be building bridges with the DOJ. After the turbulence of the Unaoil investigation, the SFO will need to ensure its relationships with counterparts across the Atlantic are as good as they can be, as cross-border cooperation is going to be key to any number of future investigations. The agency may also have to see how its relations with its European counterparts develop now Brexit has ensured the UK is not part of the newly-created European Public Prosecutor’s Office (EPPO), which has been hailed as ushering in a new era of EU-wide cooperation to combat fraud.