Pinsent Masons Regulatory Conference 2014
23 Hydref, 2014 | Areithiau
David Green CB QC, Director, at the Pinsent Masons Regulatory Conference.
This is an important, if not a pivotal time for the SFO.
From my perspective, it is as if the oil tanker has completed its turn, and is now on the right course and making headway. The seas, of course, are always choppy if not rough for this particular tanker, and the rocks treacherous.
That’s quite enough of the nautical metaphor.
Let me illustrate my claim:-
- We have had some solid results in cases since the summer: convictions in the largest boiler room fraud, in the final episode of the Innospec case, and the sentencing of Bruce Hall who had pleaded guilty to conspiracy to corrupt as Victor Dahdaleh’s co-defendant.
- We have seen the first convictions following guilty pleas in the Libor prosecutions both here and in the USA.
- Whilst the SFO continues to progress inherited prosecutions, such as the JJB sports trial currently underway at Southwark, we are also breaking through to prosecutions arising out of investigations initiated since I took up post in April 2012, such as the Weavering trial currently underway, and the first Libor trials next year. These are examples only, and by no means an exhaustive list in either category.
- We are working on the cases for which the SFO’s unique Roskill model was designed: all are top end fraud or bribery investigations. These include: Libor, Forex, Rolls Royce, GSK, Barclays, G4S and Serco, GPT, Alstom, ENRC, Sweett Group, and significant money laundering activity through London. This list is by no means exhaustive. It embraces the conduct of both corporates and individuals. It undoubtedly constitutes a critical mass for the SFO as a specialist crime fighting organisation. It represents the most demanding caseload the SFO has ever shouldered and we do so with ambition, focus and determination.
- We have blockbuster or ring-fenced funding to protect our most expensive investigations. The arrangement recognises that the SFO is demand-led and honours the pledge that on my watch the SFO will never turn down any investigation simply on grounds of cost. The mechanism is not perfect, but it does the job.
- We have invested considerable blood and treasure in expanding our intelligence capability and our Proceeds of Crime (POC) division. Our intelligence section acts as a portal for self-reporting, for those who wish to supply information and whistle blowers, and a screening and research facility, able to work up reports, information and intelligence received from a wide range of external sources. Lawyers work closely with analysts. Our POC division has recovered £9m in confiscated assets so far this financial year, and has frozen funds connected to the old regime in Ukraine.
- Over 2 years we have built a solid and fruitful relationship with the Department of Justice in Washington. I have just returned from there with a number of SFO colleagues. We have mutual interest in a number of investigations: Libor and Forex are obvious examples; there are others. We work closely and cooperatively. Secondments both ways are under active preparation. Everybody appreciates that there are plenty of foxes for the hounds to chase down, and that really close cooperation shuts off opportunities for forum shopping and tactical play by suspects and their advisors.
- We are already playing our part in investigative activity coordinated by the National Crime Agency: the area of pension liberation fraud being a prominent example. We are ready, willing and well able to act in concert with other players in the economic crime landscape.
- We have set out very clearly the SFO’s stance around Deferred Prosecution Agreements (DPAs). We have explained the vital and central importance of cooperation by the corporate which hopes for a DPA. When asked to approve a proposed DPA, the judge has to decide whether a DPA would be in the interests of justice. The prosecution and the corporate will be advocating for the same result. Inevitably, this will place an onus on the judge to determine the precise degree and extent of culpable behaviour by the corporate and the conduct of the corporate during the investigation. No cooperation, no DPA.
- We confront and if necessary will litigate what we see as over-expansive claims of privilege. Legal routes available to us include declaratory relief in the High Court or prosecution for failure to comply with a Section 2 notice.
- I am delighted that the suggestion that a relatively simple amendment to Section 7 of the Bribery Act, creating the corporate offence of failing to prevent acts of financial crime by associated persons, has steadily gained traction amongst interested parties. Such a change would greatly increase the SFO’s reach over corporates in appropriate cases.
The reason the tanker has turned, I suggest, is that the SFO has the cases, the people and the funding assembled on deck. Put another way, as I said at the Cambridge Symposium in September, the SFO has recovered its mojo.
In a statement to the House of Commons in June 2011, repeated in a speech to Royal United Services Institute in July of this year, the Secretary of State for the Home Department made clear that she wished to keep relationships between institutions in the economic crime landscape under review. That this has come up again as part of the ongoing review of law enforcement around bribery and corruption therefore comes as no surprise to me. The SFO welcomes and is engaged in such a debate. We also recognise that ultimately any decision as the future of the SFO is a matter for the government of the day.
Obviously, I am asked what the view of the SFO is. I have said that, from my perspective, any thoughts of putting the SFO into the NCA are just not sensible.
Firstly, there is no evidence that abandoning the Roskill model for some other arrangement would lead to any better results. The Roskill model came about because there was widespread agreement that the traditional model was not the best for tackling top end fraud.
Secondly, any such move would create really significant upheaval and uncertainty directly affecting current operational activity. It would undermine staff morale, impact upon investigations and provide encouragement to the less cooperative suspects with whom we may deal. And this just as the SFO is making real headway.
Thirdly. There is, in the very particular context of top end fraud and bribery, the need for visible and demonstrable independence. Many of our cases concern blue chip companies. They may be household names whose performance is of great importance to the UK economy and every citizen would wish them well: they are, as it were, the good guys. SFO investigations involving iconic British enterprises do not enhance our popularity, and some people may feel a certain tension between wanting the law enforced but also wanting our companies to prosper. And of course, these corporates have real clout and influence in Westminster and the City. Some corporates of interest to the SFO imagine it helpful to use the media to influence and shape public opinion, hoping to move the SFO into a position more advantageous to the corporate. These 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 in London as a level playing field, and to public confidence in the investigation and prosecution of major economic crime involving our flagship enterprises.
Fourthly. The most respected NGOs around Bribery and Corruption have together said (and I paraphrase) that any agency charged with the investigation of such matters must have the following characteristics. It should contain both prosecutors and investigators working together in specialist teams; it should be adequately funded for the activity, and (crucially) it should have bribery and corruption as its top priority, not merely one priority amongst many others. The SFO has those characteristics and that guaranteed, ring-fenced priority.
We submit that the real problem in the counter fraud landscape is not the SFO. The SFO has clearly staked out its ground, dealing with large scale investigations into top end fraud including bribery. The real problem lies elsewhere, and it is this: are sufficient resources being directed at the lower tiers of fraud, which together with cyber fraud have mushroomed in recent years?
A recent File on 4 programme was instructive in this regard. In the 12 months to April 2014, 211,000 frauds were recorded by police in England and Wales, up 17% on the previous year. In addition, industry bodies reported 333,000 frauds over the same period, a rise of 2%. Total frauds recorded by police 2011-2014 rose by 40%. And against this background, information provided by 29 out of 45 UK police forces reported that they had a total of 448 specialist fraud officers and 289 civilian financial investigators between them.
Undoubtedly, the excellent and pioneering work of City of London Police in Action Fraud and the hugely valuable coordinating role of the NCA Economic Crime Command are making some headway with this problem. But at present the prospects of conviction remain vanishingly small in these lower tiers of fraud: Prof Mark Button of Portsmouth University has described this area as “cinderella crime” with only 0.27% of police personnel specialising in it, and a 1 in 500 chance of a suspect being prosecuted.
As I said, the SFO welcomes this debate and firmly believes that the Roskill model and an independent SFO are well worth defending.
Thank you for your kind attention.