SFO raids fall by a half as budgetary constraints bite

The number of raids carried out by the Serious Fraud Office (SFO) to investigate suspected white collar crime has fallen by 50 per cent in the last year, with budgetary constraints and fear of failure blamed for paralysing the agency.

Lawyers at Pinsent Masons suggest that figures based on the year ending 31 March - down to 13 in 2014/15 from 26 the year before - indicate the adverse impacts that a lack of funding is having upon the SFO's ability to undertake investigatory work.

Barry Vitou, a partner and head of global corporate crime at the international law firm, commented: 'A sharp fall in the number of raids executed by the SFO does not, unfortunately, signal lower white collar crime rates. The figure simply reflects the fact that the organisation is no shape financially to deal with its caseload and effectively pursue new leads.'

Vitou explained that raids are a key way the SFO collects evidence on which to build its case against businesses or individuals suspected of wrongdoing.

'It is vital, therefore, that the resources are there to carry them out. Fraud, bribery and corruption are notoriously difficult to prove; raids allow the seizure of material which often proves central to securing a conviction,' he added.

The SFO's most recent annual report projects further cuts to its budget, with spending set to be reduced by around 34 per cent, from £69.1m in 2014/15 to £45.1m for the 2015/16 financial year.

Reputational risk

The fall in the number of raids might also reflect concerns over reputational risk. A series of failed investigations and bad publicity, such as raids carried out on the premises of Robert and Vincent Tchenguiz in March 2011, has led to accusations the SFO is overly cautious when taking action.

As if to highlight the issue, the number of prosecutions for white collar crime has slumped over the last four years, falling by almost a fifth from 11,261 in 2011 to 9,343 in 2014.

This decline, alongside the fall in raids, comes despite an increase in the number of tip-offs of suspected wrongdoing made to the City of London Police, SFO, and other organisations involved with tackling fraud, bribery, and corruption.

Action Fraud, the national fraud and cyber-crime reporting centre, recorded 227,726 crime reports in the 2013/14 financial year, a 46 per cent increase on 2012/13. The SFO, meanwhile, received over 2,000 reports of suspected fraud or corruption via its whistleblower service over the last year.

'A fall in the number of raids and prosecutions, despite the high volume of tip-offs, should be a cause for concern,' added Vitou. 'The SFO needs to pour efforts and resources into following up credible leads and gathering evidence- to ensure it is able to secure as many convictions as possible.'

 

John van der Luit-Drummond is deputy editor for Solicitors Journal
john.vanderluit@solicitorsjournal.co.uk | @JvdLD