With a history of high-profile failures and years of opposition from PM Theresa May, the Serious Fraud Office (SFO) had recently started to pick itself up, reporting modest growth and 12 new criminal investigations taking place, investigating the most serious and complex allegations of fraud, business crime, bribery and corruption.
To help business owners understand how the SFO work and what they can do to defend themselves from such accusations, Aziz Rahman, senior partner at serious fraud defence specialists, Rahman Ravelli illustrates how they build a case, and how it can be challenged.
1. Building the SFO case – intelligence gathering
The SFO receives information on possible criminal activity from a variety of sources. These include whistleblowers, victims, other law enforcement agencies, the media, companies self-reporting their own wrongdoing, and companies highlighting the criminality of their competitors.
This information is analysed and the potential for a full criminal investigation is then assessed by the SFO’s Intelligence Unit, which is made up of lawyers, financial intelligence officers, analysts and investigators. The Intelligence Unit carries out its own research to help determine whether or not an investigation should begin.
The SFO director will accept a case for criminal investigation if he believes that it meets his Statement of Principle. This includes whether the alleged criminality undermines the so-called ‘UK PLC’, the financial and corporate interests of the City of London.
This formal acceptance of a fraud matter for criminal investigation enables the SFO to use its own investigatory powers – known as ‘Section 2 powers’. These are set out in Section 2 of the Criminal Justice Act.
2. The ‘Roskill Model’ – the SFO prosecution process
Once a case is accepted by the director, a number of multi-skilled teams of investigators, accountants, prosecutors, experts and counsel are assigned to the case.
The director has the power under Section 2 to compel any individual or entity to provide the SFO with information or documentation which is believed to be relevant to the matter under investigation. Section 2 is a highly invasive power, so much so that other agencies usually need a Court order. The SFO may also seek warrants to search premises.
If the investigation results in the SFO finding what it believes is enough evidence to support a realistic prospect of conviction – and if a prosecution is considered to be in the public interest – charges will be normally be brought. Nowadays however, a Deferred Prosecution Agreement (DPA) is an alternative in certain corporate cases; with the SFO and the accused negotiating a settlement whereby a prosecution is suspended for a defined period, provided that the organisation meets certain specified conditions.
3. How can you challenge the SFO?
Search warrants can be challenged by way of an application for Judicial Review in the High Court, against the SFO and the Court that made the order. A High Court judge may be more inclined to take a robust approach to the principle that a search is a serious infringement of people’s private lives.
Such a challenge, however, is subject to strict time limits and can be costly. The alternative is an appeal against the grant of the warrant under Section 59 of the Criminal Justice and Police Act 2001.
For example, if a warrant is issued and searches are undertaken but schedules to the warrant are not left at the searched premises, then there may be grounds to challenge the legality of what has been carried out. Or if a warrant has not been drafted properly, there are grounds for a legal challenge.
In effect, the SFO relied too heavily on an outside agency’s report – commissioned by potential victims of the bank fraud under investigation – rather than conduct its own investigation.
4. Credibility of information
The credibility of information that the SFO relies on can be a major issue in challenging its allegations at all stages of an investigation; up to and including any trial. But such potential evidence can also prove an important battleground for the defence team looking to make sure the SFO does not exceed its authority.
Section 21 of PACE gives people the right of access to any material of theirs that has been seized by the SFO, which means a defence team can make sure that the investigators cannot withhold or refuse to return potentially relevant material. Similarly, the Attorney General’s Guidance on Disclosure laid down guidelines on how to deal with the seizure and search of digital material, which may contain terabytes of information.
In some cases, this can be of vital importance, as without the relevant material to hand it can become exceedingly difficult to answer SFO questions or challenge its assumptions.
5. Remember the law of disclosure
Similarly, a shrewd defence team can use the law of disclosure to gain access to unused material – material gathered by the SFO which does not support its case. Only by being represented by solicitors with experience and expertise in this field can over-zealous SFO investigators be stopped in their tracks.
Optimising the disclosure regime to the defence’s advantage may, alongside proper representations and/or arguments, lead to the criminal investigation remaining just that – an investigation, and not a charge. If the defence can use its available resources and expertise to cast doubt on the validity of the case, it may be that the SFO abandons it due to the lack of a realistic prospect of conviction.
But even if a case does go to trial, the challenges that were voiced pre-trial can still be used in litigation to, once again, cast doubt on the SFO’s assumptions of guilt. The calling of expert witnesses, if used correctly, can also be a tactic that damages the SFO’s case.