David Green CB QC, the Director of the Serious Fraud Office (“the SFO”) recently published his annual report (2015-2016), which can be found here: https://www.sfo.gov.uk/download/annual-report-2015-2016/
The SFO acts as an independent governmental authority tasked with investigating and prosecuting the most serious or complex fraud and domestic and overseas corruption under the UK Bribery Act 2010. Domestic bribery cases at the lower end of the scale are handled by the UK’s Crown Prosecution Service and we have previously reported on their activities in this field here:
We reported the last two years on the previous SFO annual reports here: http://www.corderycompliance.com/uk-serious-fraud-office-annual-report-2014-2015-video-updates/, and here: http://www.corderycompliance.com/blog-sfo-annual-report-shows-progress/
Highlights of the latest annual report are as follows:
- 12 new criminal investigations and 3 civil recovery investigations were opened. The Director indicated in his statement that he did not publicise everything saying “we only announce an investigation if the company concerned needs to inform the market or there is some other good reason to do so”.;
- Ongoing investigations include those into the following businesses: Tesco, Libor, Rolls Royce, GlaxoSmithKline, Barclays Bank, ENRC, and GPT;
- The SFO secured its first Deferred Prosecution Agreement (“DPA”) where Standard Bank accepted responsibility for having failed to prevent bribery in connection with operations in Tanzania, and, under the conditions of the DPA, the bank paid £4.7m ($7m) in compensation to the government of Tanzania and a fine and disgorgement of £16.8m ($25.2m), which we reported on here: http://www.corderycompliance.com/uks-first-dpa/. A second DPA was also agreed in early July 2016 (into unnamed businesses as the matters are ongoing) but was presumably too late to make it into the report, which we reported on here: http://www.corderycompliance.com/recent-developments-in-bribery-and-corruption/;
- The SFO secured its first prosecution and guilty plea, of the Sweett group, of failing to prevent bribery, which we reported on here: http://www.corderycompliance.com/first-uk-failure-to-prevent-bribery-conviction/;
- 6 defendants in 4 cases were convicted, giving an unusually low conviction rate of 32% by defendant and 57% by case. Between 2012 and 2016, the conviction rate was 65% by defendant and 81% by case, with 75 defendants in 25 cases convicted;
- 31 defendants have been charged and are awaiting trial in 7 cases, including 10 individuals in the Alstom investigation and which has lasted over 4 years;
- Confiscation orders were made totalling £3.4m and the SFO recovered £19.6m, the latter figure representing 11% of the total recovered in the UK over the reporting period;
- A project is underway to replace the SFO’s current eDiscovery platform, which is the tool that its investigative staff use to review evidence electronically. The new system is expected to be introduced before the end of the 2016-17 financial year, which should allow a more targeted and intelligent approach to the review process and ultimately reduce the time it takes to bring cases to trial;
- There were no protected personal data related incidents formally reported by the SFO to the Information Commissioner’s Office. There were nine other protected personal data related incidents which have to be recorded by the SFO but which are deemed by the Data Controller not to fall within the criteria for report to the ICO.; and,
- The SFO has no further liability in respect of the civil damages claims brought by the Tchenguiz brothers. Four payments amounting to a total of £6.75m were made this financial year in full and final settlement of the SFO’s outstanding costs’ liability to the Tchenguiz brothers following the settlement of civil damages claims in July 2014. Since July 2014 the SFO has paid out, in total, £4.5m in full and final settlement of the damages claims and £9.75m in full and final settlement of its costs liability in respect of those claims. Defending the damages claims has cost the SFO a total of £14.3m (plus VAT where non-recoverable) in legal fees and associated expenditure.
A taste of things to come
Another element of the Report is the SFO’s continued investment in technology. There have been a number of announcements from Regulators recently about the use of “Big Data” to assist in enforcement. The SFO say that they are introducing a new system which they expect to be live before the end of the next financial year to sweat more data. They say that the amount of data that they have brought into their existing platform has increased by 1000% over the last five years. The SFO intend to use their new system to increase their search capabilities saying “once the new system is in place, the SFO plans to invest further in its data analysis capability, where it will seek to utilise Artificial Intelligence and machine learning techniques to help make the review process more efficient”.
As with the last two years’ prosecution and conviction figures, the numbers remain small, but set against the size and scope of the SFO’s remit (bribery and fraud) this work can be regarded as continued modest success. Of particular significance is the start of the use of DPAs and it will be interesting to see continued development of this tool.
It was no secret that when the Prime Minister Theresa May was Home Secretary she was keen to see the SFO merge with the UK’s National Crime Agency. We shall have to see whether either her or her successor as Home Secretary Amber Rudd pushes that forward or not.
In February 2016 David Green’s contract was extended by another 2 years (to end on 20 April 2018), so how he will steer progress as he ends his mandate will be closely watched.
We can help
Cordery are experienced in investigating and advising on bribery and corruption matters and our work includes providing training and preparing policies and procedures for businesses in order to help them comply with the 2010 UK Bribery Act. More details on this can be found here: http://www.corderycompliance.com/bribery-corruption/
Please also see our UK Bribery Act 2010 FAQs which can be found here: http://www.corderycompliance.com/uk-bribery-act-2010-faqs/.
For more information please contact André Bywater or Jonathan Armstrong who are lawyers with Cordery in London where their focus is on compliance issues.
For more information please contact Jonathan Armstrong or André Bywater who are lawyers with Cordery in London where their focus is on compliance issues.
Office: +44 (0)207 075 1785
Office: +44 (0)207 075 1784