UK: An Eerie Silence

Last Updated: 18 May 2015
Article by David N. Kirk

There's an eerie silence in the world of fraud prosecutions in the UK. A Libor trial is about to start, a FCA land banking prosecution is on trial at Southwark, but with reporting restrictions, and a couple of weeks ago David Dixon, author of a Ponzi Scheme, pleaded guilty; and Julian Rifat, having entered a guilty plea in the long-running Operation Tabernula case, was sentenced to 19 months in prison for insider dealing. But the City Slicker pages of Private Eye have not been full of critical comment about the 'Serious Farce Office' for some weeks – no doubt to the hearty relief of SFO Director, David Green QC – and apart from the odd reference to continuing enquiries, and the recent embarrassing fine by the Information Commissioner, there is indeed little to report in the Spring of 2015.

The 2014 year end produced a slew of good results for the SFO: there were convictions in JJB Sports, Arck LLP, Smith and Ouzman Ltd and Sustainable Growth Group in November and December. Although these were comparatively minor cases by SFO standards, and did not receive much media coverage, they were undoubtedly complex and serious cases which required skillful and determined preparation and presentation. Less welcome was the dismissal in February of a savagely criticized application for a Voluntary Bill of Indictment in the case against six directors of Celtic Energy.

In the pipeline are some challenging cases. Decisions are awaited about the Qatari refinancing of Barclays in 2008, which might involve some senior Barclays executives, corporate prosecutions arising out of the Libor scandals, not to mention Tesco and FOREX. The Rolls Royce corruption enquiry and a number of other Bribery Act enquiries are being pursued. No doubt consideration is being given to disposing of some of these cases by way of Deferred Prosecution Agreements. Although this form of Alternative Dispute Resolution, imported from the US, was originally touted as an economic way of sanctioning large corporations, without running the risk of causing the kind of collateral damage that saw the demise of Arthur Andersen in the wake of the Enron scandal, in practice it appears that the process is neither quicker nor cheaper than simply bringing a prosecution.

It is now nearly a year since DPAs were made available to some UK prosecutors, but none has so far been deployed. Part of the reason for this might be the level of judicial supervision, from a very early stage, that has been seen as a vital part of the UK version of DPAs (sections 7 and 8 of Schedule 17 of the Crime and Courts Act 2013). The US version has much more limited judicial input, and therefore there has been no handy precedent to provide guidance and 'lessons learned'.

It is assumed that very senior judges will oversee the first few UK DPAs, and will set the standards, and this will probably lead to some hasty cutting and pasting of the 25 page 'DPA Code' issued by the DPP and the Director of the SFO under Schedule 17. Prosecutors therefore, not surprisingly, are feeling their way carefully in the build up to their first DPA. They will be conscious that negotiated agreements between prosecutor and defence have never found favour with the UK judiciary, and the disapproving words of Thomas LJ will be ringing in their ears from the 2010 judgement in Innospec.

The first concluded DPA will be crawled over by all commentators, not to mention those lawyers acting for large corporations who are feeling their way towards a settlement. Meanwhile, the waiting game, and lots of speculation, continues. One outcome that will be eagerly awaited is the public and media reaction to a concluded DPA. Will such a case be reported as a victory for justice, or as an example of big business buying its way out of trouble?

Meanwhile, there are rumours that the plans hatched in 2010, but discarded in early 2012, to gather all the fraud prosecutors under one roof are in the process of being revived. Out with the alphabet soup of authorities responsible for this work; in with a team of prosecutors run by the Crown Prosecution Service, prosecuting cases brought to them by law enforcement, mainly the City of London Police Economic Fraud Department, but also including the newly formed Economic Crime Command. This would mark the end of the SFO, and with it the unified investigating and prosecuting system advocated by Lord Roskill in 1985. It might also lead to the demise of the FCA's criminal prosecution powers, under which the financial regulator prosecutes a narrow range of economic crime, including insider dealing.

Whether this plan gathers sufficient support in the right quarters to be brought, blinking, into some form of reality probably depends to a significant extent on whether the SFO can bring its current crop of difficult investigations to a successful conclusion. Those at the SFO will be aware of this pressure, and will want to prove the naysayers (including City Slicker) wrong by securing convictions in high profile cases. However, the outcomes of all the Libor cases, and the current crop of corruption investigations, not to mention Barclays, are unlikely to be evident much before mid-2016, which will coincide with the end of Mr Green's contract. So if performance based judgements are to be made, they will need to be deferred.

There is of course another area of uncertainty – the Election. What cunning plan will a new government, post-election, hatch for the future of the SFO? Even if the Conservatives remain in office, it is likely that Mrs May, the progenitor of the 2010 plan to bring all fraud prosecutors under one roof, will move on to a new post. Will a new Home Secretary, with many other pressing priorities, have space in the legislative programme to create a new structure? A Labour administration, while wanting to show that it has plans to be tough on corporate law-breakers, particularly those at the helm of big banks, will probably have better things to do than plan a wholesale revamp of the existing counter-fraud landscape.

There are undoubtedly some compelling arguments for unifying fraud prosecutions, including that there would be no turf wars about who should be responsible for a fraud prosecution. Where contention would remain is in agreeing the acceptance criteria and priorities for the super prosecutor. It could not possibly handle all fraud complaints, any more than that the police could investigate them, so there would need to be a cut-off point, and that would probably mean that any case with a financial loss of less than £250,000 would not be taken on.

There would also inevitably be a divide between the various fraud 'typologies': City fraud, boiler rooms and consumer offences, bribery, market abuse and cyber crime are likely to be dealt with by separate teams with very different specialisations. The intelligence requirements for each are radically diverse, and the divide between allegations of senior boardroom misconduct in major UK banks on the one hand, and the activities of career criminals committing boiler room frauds on the other, is immense. Market abuse requires a degree of experience, in terms of both the legal and factual elements of the offence, that must rely significantly on market specialists. Such knowledge can of course be acquired, but it is not cheap, and successive governments have shown a marked reluctance to spend the kind of money on counter fraud measures that is desperately needed.

So, for Fraud watchers, this feels like the calm before the storm for both prosecution and defence.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.