In the following article Richard Sallybanks and Anoushka Warlow look at how 2022 has begun for the Serious Fraud Office (“SFO”).
Earlier this year, we wrote a piece describing the SFO as “beleaguered” following a turbulent 2021 which saw the disclosure failures which led to the collapse of the Serco trial and the quashing of Ziad Akle’s conviction following the Unaoil trial, its continuing failure successfully to prosecute any individuals following the conclusion of a Deferred Prosecution Agreement (“DPA”) with the relevant corporate entity, and the low number of new investigations commenced. So, just over three months into 2022, how are things looking for the SFO?
Unaoil Part 2: Paul Bond
On 24 March 2022, the Court of Appeal quashed the conviction of Paul Bond, one of Zaid Akle’s co-defendants in the Unaoil trial (at the time of writing, the Court of Appeal’s written judgment is still awaited). Although the decision was widely reported as a ‘fresh blow’ to the SFO, and represents a further setback, the outcome cannot come as too much of a surprise insofar as it arises from the same disclosure failures that resulted in Akle’s conviction being quashed late last year.
Those failures, which have been the subject of widespread criticism, are already the subject of an ongoing independent review being carried out by the former Director of Public Prosecutions, Sir David Calvert-Smith. Much is riding on the outcome of the review. When probed last month by the Parliamentary Justice Select Committee on the disclosure and conduct failures which led to the quashing of Akle’s, and now Bond’s, convictions, the Director of the SFO, Lisa Osofsky, indicated that she was duty bound not to answer any questions on the matter until Sir David Calvert-Smith’s report had been published. The report is expected in May and may well be a painful read for the SFO. Whatever it finds and recommends, it seems likely that Ms Osofsky will be called upon again to answer those difficult questions which she has so far avoided; she has indicated to the Justice Committee she ‘gladly and willingly’ will do so.
With a separate review (conducted by Brian Altman QC) into the Serco disclosure failures also due to conclude in May, Ms Osofsky may be in for an uncomfortable next session before the Justice Committee. Indeed, an appearance by Ms Osofsky before Parliament’s Public Accounts Committee earlier this year, in which the collapse of the Serco trial featured, led to the solicitors involved in that case writing to the Committee criticising Ms Osofsky for making a number of factual misstatements and commenting that she appeared to have a fundamental misunderstanding of the factors that led to the collapse of the Serco trial.
Disclosure reforms: ‘paper rules in a digital world’?
What did come to light during Ms Osofsky’s evidence to the Justice Committee last month was that the SFO had written to the Attorney General seeking reforms to the current disclosure regime, in particular, a new Code of Practice applicable in serious and complex fraud and bribery and corruption cases.
Proper disclosure is a crucial part of ensuring that defendants receive a fair trial. At present, the Criminal Procedure and Investigations Act 1996 (“CPIA”) governs prosecution disclosure obligations and, in essence, requires that the defence is provided with copies of or access to all material which is capable of undermining the prosecution case and/or assisting the defence. Disclosure obligations are ongoing throughout the course of an investigation, and the CPIA and its accompanying Codes of Practice also require that investigators pursue all reasonable lines of inquiry, whether they point towards or away from a suspect.
Although unattractive to lay blame for the SFO’s recent disclosure failures at the door of the statutory regime or defence conduct, Ms Osofsky argued that the SFO was finding the current disclosure regime ‘especially difficult’ in circumstances where the out-dated framework not only failed to reflect the reality of investigating offences in a ‘data first’ world, but also failed to require or encourage defendants to engage with the disclosure process at an early stage. Ms Osofsky has denied that what the SFO seek is in fact a ‘watering down’ of the disclosure rules and although the precise details of the SFO’s suggestions remain unknown, any proposed changes to the disclosure regime in cases prosecuted by the SFO will no doubt be subject to intense scrutiny. Coming off the back of problems caused by their own disclosure failings, there will be a concern that this should not provide a basis for the SFO’s disclosure obligations becoming less onerous to the potential prejudice of the defence.
“The year of the trial”
In her evidence to the Justice Committee, Ms Osofsky described 2022 as the ‘the year of the trial’, highlighting that there are eight SFO trials due to be heard this year. Those include the ongoing trials of individuals in the Axiom Legal Financing Fund and Global Forestry Investments investigations, and the upcoming trials of individuals connected to the SFO’s investigations into the Harlequin Group, Balli Group, Greenergy and G4S.
If the SFO can successfully navigate those trials and discharge its disclosure obligations and duties as a prosecutor – and especially if it can secure convictions – that will go a long way to re-establishing some of its lost credibility as an effective prosecuting agency, as opposed to one which is disproportionately focussed on securing lucrative DPA resolutions with corporate suspects.
Moreover, given that the SFO concluded a DPA with G4S in July 2020, the upcoming trial of individuals in that investigation provides an opportunity for the SFO to show, for the first time, that it can in fact achieve convictions of individuals in a contested trial following a DPA with the corporate suspect; to date its record is no convictions from four trials and the SFO will no doubt be hoping to reverse this trend.
Finally, after two historically quiet years, the SFO:
- has recently announced the opening of a new investigation into collapsed broadcaster, Arena Television Ltd (accompanied by a series of raids and arrests);
- appears to be in the process of agreeing a resolution with UK insurance company, Jardine Lloyd Thompson (“JLT”). Whilst this has not been confirmed by the SFO, a publicly available letter from the US Department of Justice (“DoJ”) to JLT’s US lawyers confirms that JLT agreed to pay $29million in disgorgement of profits obtained from “corruptly obtained and retained contracts” in Ecuador, and that the DoJ “would credit the Disgorgement Amount against the amount JLT pays to the UK Serious Fraud Office… pursuant to the Company’s separate resolution with the SFO that addresses the same underlying conduct”. It therefore looks as though a DPA with JLT may soon hit the news; and
- has brought charges against a London solicitor for tipping off a client about a money laundering investigation (an offence under the Proceeds of Crime Act 2002) and for forgery (in connection with the production to the SFO of an allegedly false engagement letter); the trial in this matter is scheduled for March 2023.
While these developments, and the trials presently taking place, give a ‘business as usual’ impression, there can be no doubt that, for the time being, the SFO is operating under a shadow cast by the independent reviews being conducted by Sir Calvert-Smith and Brian Altman QC and the highly anticipated ruling in the civil proceedings brought by ENRC against the SFO (as mentioned in our previous article). Success in the current trials may only provide some short-term relief.