The Serious Fraud Office (SFO) has dropped two investigations and spent millions on an unsuccessful prosecution. Neil Williams of business crime solicitors Rahman Ravelli looks at the pressures on the agency.
The SFO dropped investigations into Rolls-Royce and drugs manufacturer GlaxoSmithKline days after it was revealed that its unsuccessful prosecution of three Tesco executives cost £6.2M.
The agency's dropping of these investigations would indicate that the SFO is set to be more careful when choosing prosecutions. The Tesco saga saw the SFO agree a deferred prosecution agreement (DPA) with the company over its 2014 accounting scandal. That saw the supermarket giant pay £129M and admit false accounting – only for all three executives charged with false accounting to be cleared. Roll-Royce also entered into a DPA with the SFO – and the agency would not want a repeat of its Tesco embarrassment.
Alternatively, this could just be new SFO Director Lisa Osofsky looking to be rid of cases that she inherited, having weighed up the chances of success.
But the dropping of investigations may make companies think twice before offering wholehearted cooperation to the SFO - and affect the credibility of DPAs. After all, in his 2017 Rolls-Royce DPA judgement, Sir Brian Leveson, President of the Queen's Bench Division, stated that the investigation revealed serious breaches of the criminal law regarding bribery and corruption, some of which implicated senior management – and yet there will now be no prosecution.
The DPA process needs fine tuning so they don't become a way of senior executives escaping liability. And it would arguably be better if a company's individuals were prosecuted before the SFO decides whether to prosecute – or offer a DPA to - the company. Then there would be no Tesco-style anomaly where a DPA is granted based on evidence of supposed wrongdoing that then proves too weak to secure any conviction of an individual.
Lisa Osofsky has talked of making greater use of informers. Having worked for the FBI, she is familiar with offering lighter punishment in exchange for cooperation. In the UK, the Serious Organised Crime and Police Act 2005 provides the opportunity to offer more lenient penalties or immunity from prosecution in exchange for such cooperation. This could be the cost-effective future for the SFO.
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.
