Cambridge Symposium 2014
2 Medi, 2014 | Areithiau
David Green CB QC, Director, at the Cambridge Symposium on Economic Crime 2014, Jesus College, Cambridge.
This is my third report to the Symposium as Director of the SFO.
Let me give you a cross section of the SFO’s current caseload, because that cross section says a lot about what the SFO is for and where it is now.
Libor: is an ongoing investigation into the manipulation of the London Interbank Offered Rate, a measure used in the setting of interest rates around the world. 12 individuals have been charged so far.
Forex: this concerns the alleged manipulation of the foreign exchange market.
Barclays/Qatar: is an investigation, begun in 2012, into the circumstances surrounding Barclays’ £8bn recapitalisation in 2008.
Rolls Royce: concerns allegations of bribery carried out by local agents in return for orders in various markets, touching several divisions of Rolls Royce business activity.
GlaxoSmithKline: this is an investigation into allegations that bribes were paid in order to increase business in several jurisdictions.
G4S and Serco: concerns allegations of fraudulent claims for payment under contracts for the provision of services to the UK government.
GPT: this investigation concerns a subsidiary’s business relationship with the Saudi National Guard.
Alstom: this is an ongoing investigation into the use of British subsidiaries of a major French multinational to dispense bribes in several jurisdictions in order to secure large infrastructure contracts. Charges have already been laid against a subsidiary.
The Sweett Group: this investigation concerns allegations of bribes paid in return for building contracts in North Africa.
An ongoing money laundering investigation concerning an old regime Ukrainian politician; ($23m funds restrained in London)
So that is a representative cross section comprising 10 of our current investigations. The point is what does it say about today’s SFO?
1. Firstly, all these cases are from the top tier of fraud and bribery work. That is what the SFO does, and that is what it is for. Their complexity demands the use of the SFO’s unique Roskill model, in which investigators, prosecutors, sector specialists, forensic accountants, computer experts and trial counsel work together from the outset in dedicated case teams under a case controller, shaping and driving the investigation. And of course top level fraud (including bribery) is the singular priority to which the SFO is dedicated: we have no competing priorities.
2. Many of our cases concern blue chip UK companies. Such companies may be household names whose performance is of great importance to the UK economy and every citizen would wish them well: they are the good guys. SFO investigations involving iconic British enterprises do not enhance our popularity, and some may feel a certain tension between wanting the law enforced and wanting our companies to prosper. These corporates have real clout amongst politicians and in the City. Some use the media to influence and shape public opinion. Those facts alone underline the need for a visibly independent investigator and prosecutor to have the conduct of these cases. That is what the SFO is for. Visible and demonstrable independence is crucial to judicial confidence, to business confidence and to public confidence in the investigation and prosecution of major economic crime involving even our flagship enterprises.
3. These cases require above all else resilience and focus on the part of the investigating team. Vast quantities of digital data have to be obtained, uploaded, searched and assessed. Witnesses need to be identified and traced. Often, we will need to obtain evidence from jurisdictions where that exercise can be problematic. Those we investigate are well resourced and lawyered-up. Claims of privilege can transcend extravagance and amount to a strategy of deliberate obstruction, a strategy we will always challenge. But individuals, corporates and their lawyers need to understand that we will make progress and we will not go away. These cases illustrate that determination.
4. Some of these investigations are very large indeed. On Libor, for instance, we have some 70 staff engaged. Like any other government department, we must have budgetary discipline and take our place in line with other priorities. In fact, we have had a 10% increase in our budget this year. Yet we are demand-led and we cannot always anticipate what is around the corner. Hence our arrangement with the Treasury known as “blockbuster funding”, by which any case likely to cost more than a certain percentage of our budget is paid for from the reserve. Whilst not a perfect arrangement, it does the job.
5. All these cases underwent scrutiny before their adoption by the SFO. Understandably, whenever the media or those in politics pick up a suggestion of suspected significant financial wrongdoing, they want to know what the SFO is doing about it and where is the fabled dawn raid? On reflection they will of course remember that as Director of the SFO I cannot open a criminal investigation unless I am satisfied on reasonable grounds that the conduct may involve serious or complex fraud or bribery.
The SFO is focused on the top strata of economic crime and is clear as to its mission. What is less clear is how the lower tiers of fraud are tackled. Enforcement can be patchy; police forces have other competing priorities, and nationally, Fraud Squads have withered on the vine. Action Fraud (where the City of London Police identifies and packages reported fraud susceptible of investigation and passes that package on to other forces) is a very promising start. But nobody disputes that there is a long way to go. The National Crime Agency recognises its hugely important coordinating role in this area, and the professional relationships its Economic Crime Command has built thus far are exactly what is needed.
The fraud initiative launched in 2008 began by mapping and counting the problem nationally. I suggest the same must now be done with bribery and corruption, so that we know the scale of the problem we must address. The SFO will always cooperate (and is doing so) in joint investigations, joint projects and analytical exercises across this landscape.
So what of the future?
With the settlement of the Tchenguiz litigation for £4.5m plus reasonable costs rather than the £300m claimed, the SFO has dealt with the last of those debilitating legacy issues, bag and baggage.
Recent results are encouraging: convictions in the last Innospec trial, and in Operational Steamroller, the largest boiler room fraud; and following his guilty plea, the sentencing of Victor Dahdaleh’s co-defendant Bruce Hall, whose £3m confiscation order was paid within a week.
From this autumn, we will start to see cases adopted by us, under our recalibrated focus on top tier work, coming to trial. Weavering Capital is scheduled for October and the first Libor trial in January. The delay between charge and trial is a frustrating fact of life.
We have much in the pipeline: as of today some 37 defendants await trail in 12 cases.
The size of the white collar criminal legal sector serving the City of London is, I suggest, evidence in itself that there is a lot more work out there for the SFO.
We have greatly enhanced our intelligence capability, enabling sectoral analysis, project development, links with our national intelligence agencies, and, in cooperation with the NCA, the investigation of crime as it is happening, rather than just of historic events. We are also fully equipped to deal with whistle blowers and those who wish to supply information.
We have investigations which might prove suitable for our first Deferred Prosecution Agreement. SFO personnel will be leading discussions on this topic in the workshops this week. We have emphasized that a DPA will only happen where the SFO can properly persuade a Judge that such a disposal is in the interests of justice. We could not embark on that course without having had maximum cooperation from the corporate defendant.
I will also continue to speak in favour of amendment of S7 of the Bribery Act to create the offence of a company failing to prevent acts of financial crime by its associated persons. That would significantly increase our reach on corporate criminality, and is an idea that appears to be gaining traction.
So the SFO has the cases, the people and the resources in place. It knows its mission and it has recovered its mojo.