On 26 April the SFO’s prosecution of two former directors of Serco Geografix Ltd (“SGL”) collapsed. Unsurprisingly this case has re-ignited questions as to whether the SFO is fit for purpose, but it also shines a light – again – on the contrast between the SFO’s ability to secure lucrative Deferred Prosecution Agreements (“DPAs”) with corporate suspects and its inability to secure convictions of the individuals whose conduct underlies the DPA.
In July 2019 SGL and the SFO agreed a DPA; SGL accepted criminal liability for fraud and false accounting relating to contracts with the Ministry of Justice and agreed to pay £19.2m and SFO costs of £3.7m. The two former directors were subsequently charged with fraud.
Four weeks into their trial, the SFO – in its own words – “uncovered errors made in the non-disclosure of certain materials.” The judge considered these errors to be extremely serious, refusing the SFO’s application for an adjournment to allow them to remedy the position and to facilitate a retrial. This left the SFO in the unenviable, but self-inflicted, position of having to offer no evidence. Compounding its woes, the SFO is likely to have to pay significant defence costs.
The collapse of this trial is extremely embarrassing for the SFO. It is a fundamental duty of prosecutors to disclose material which might reasonably be considered capable of undermining the prosecution’s case or assisting the defence case. The importance of a prosecutor’s disclosure obligations has also been highlighted by the recent Post Office appeals, in which historic convictions for theft, fraud and false accounting offences were set aside by the Court of Appeal.
The outcome of the SGL trial is an own-goal for the SFO and will fuel criticism of its success rate, especially in the bigger, high-profile cases it brings against individuals. It follows the acquittals of three senior executives in the Barclays Qatar case in 2020 and the collapse of the case against Tesco executives in December 2018. However, in the last 12 months it secured convictions at trial of three individuals in the Unaoil bribery case (albeit that success has been somewhat tainted by damaging revelations of the SFO Director’s direct, informal communications with an intelligence firm representing Unaoil’s owners, a matter to be the subject of an internal review at the recommendation of the judge who presided over the trials).
The SFO can however point to its success rate against corporates (including the recent guilty plea to corruption by GPT), especially in the context of the DPA regime. It has now concluded nine DPAs with corporate suspects, but has not secured a single conviction of any individual prosecuted in any follow on case (Sarclad, Guralp, Tesco and now SGL). Is there a problem in the DPA process, in the SFO’s ability to prepare and bring a case to trial, or both?
The DPA process is consensual; a company has to cooperate with the SFO’s investigation in order even to be invited to enter into DPA negotiations. Judicial approval of the DPA is required, but the judge does not assess whether the evidence is sufficient to establish the offences for which the corporate is accepting responsibility, and the DPA means the corporate avoids prosecution and a criminal conviction. It is not suggested that corporates will enter into a DPA in circumstances where the evidence of their guilt is weak, but it is hardly surprising that corporates are more likely to agree to a DPA than decline the SFO’s invitation and tell it in effect ‘see you in court’. In contrast, individuals don’t have the option of a DPA. If charged, the process is an adversarial one before a judge and jury; the SFO has to prove its case beyond reasonable doubt, and its compliance with evidential and procedural obligations will be subject to judicial scrutiny.
There is a danger that the narrative agreed between the SFO and the corporate for the purposes of the DPA is one which sets in stone the SFO’s view of the role and responsibility of individuals. The jury acquittals of individuals in the Sarclad and Güralp corruption trials, following DPAs with those companies, certainly suggests that the jury did not accept the SFO’s version of events. These apparently inconsistent outcomes may simply be the consequence of the differences between the consensual DPA process and the adversarial trial process. More concerning is where prosecutions of individuals after DPAs don’t even get to the jury, as in Tesco where the judge ruled that the evidence was “…so weak that it should not be left for a jury’s consideration”, and now again in SGL.
While the SFO continue to draw a blank in post-DPA prosecutions, there will be concern that agreeing the narrative with the corporate suspect to prioritise a DPA is resulting in the prosecution of individuals without a sufficient evidential basis. To paraphrase Oscar Wilde, to lose one case may be regarded as a misfortune; to lose four begins to look like carelessness.