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LENGTHY SFO INVESTIGATIONS Aziz Rahman considers whether SFO investigations could be concluded quicker.

31 October 2016

The Serious Fraud Office (SFO) has managed to defeat a company’s legal bid to have a bribery investigation into it ended because it was damaging its business prospects. But while the SFO has seen off this challenge, the issues that the case focused on remain relevant for many who are subject to such investigations.

In its legal action, Soma Oil & Gas Holdings Ltd attempted to have the SFO end its bribery investigation into the company; arguing that the firm could become insolvent if the probe continued. Soma’s lawyers had sought a judicial review, claiming that the SFO had not considered the risks to the company’s future posed by the continuing investigation; which began in August 2015 with offices raided, 50,000 documents and 20,000 emails examined and three directors interviewed as suspects.

Judicial Review

The application for a judicial review – a court review of the SFO’s actions - was denied by judges at London’s High Court of Justice, Queen’s Bench Division as they did not see it having any "prospect of success." But in the judgment, Lord Justice Gross acknowledged that “The Court nonetheless had some sympathy with the position in which Soma found itself and exhorted the SFO to proceed as expeditiously as possible’’.

In simple terms, Soma was told it wasn’t gaining its wish to end the investigation but the SFO was being told to be quick about it. Which may be a dilemma familiar to many under investigation by the SFO.

The SFO had opened an investigation into Soma regarding possible illegal payments to Somali officials under a programme to explore the region for oil and gas. Soma had argued that it would be insolvent within weeks if the SFO investigation continued; as it would prevent vital contracts being signed. SFO lawyers denied this; adding that it was still looking into another strand of the investigation.

Length of Investigation

At present, there is no power to stop an investigation in its tracks due to the length of time it is taking. It is likely that the SFO covertly began building its Soma case before the raids; for example, seeking disclosure orders against banks. This means that the case may have already been going on for more than a year and a half.

Every Director of the SFO has expressed a willingness to cut the length of time it takes to complete investigations. Yet some take more than five years while the average gestation for an SFO investigation seems to be around two years. This has to be considered unacceptable.

Many have suffered a similar fate to Soma. As well as disruption to their daily life caused by restrictions on their movement, they may also be subject to a restraint order; which means restricted access to their assets. Assets are often frozen under the terms of a restraint order imposed when an investigation begins – before any guilt has been proven.

Restraint Order

In cases where a restraint order is in place, one solution to such problems would be to discharge it after a set amount of time if no charges have been brought. If there is a restraint order, the investigation does at least have to be the subject of judicial scrutiny.

With the right legal advice, there is usually scope to have the order discharged or at least amended so a person can access some of their assets. But this does not mean that the investigation would end, meaning many would still suffer the problems Soma was alleging. And it certainly is of no benefit or relevance to those who are the subject of a lengthy investigation without a restraint order.

A point that is worth noting from the Soma case is that although the SFO was determined to carry on its investigations, it did at least confirm in a letter to the oil and gas company that it had concluded the first strand of its investigation and found no need to take it further. This could at least provide some comfort to Soma – and give the company some reassurance to pass on to potential investors and business partners.

If Soma had not brought its legal action, it is very unlikely it would have received such detail from the SFO: a possible indicator of the value of having a legal team that thinks “outside of the box’’ to pursue a client’s interests during an investigation.

It still, however, remains unclear about the extent of the second strand of investigation that the SFO is continuing. Which again prompts the question, how long should a serious and complex fraud investigation be allowed to go on for?

The SFO may choose to relax bail conditions. But does that mean that an investigation is over? When a person’s business and personal life is still being disrupted, we would clearly say no.

Judicial Scrutiny

My belief is that we live in an era in which the police and / or the SFO are under resourced. This means that it can take a long time for an investigation to be completed.

One way to solve this could be for there to be a time limit imposed on investigating authorities: if they have not completed their investigations by a set time they should have to justify to a court why they should be granted extra time to continue.

This way would mean that the conduct and speed of the inquiry would be subject to judicial scrutiny. Perhaps in this way, those under investigation would at least have some idea of how long their ordeal may last – and their legal representatives would have a better chance of gauging the likelihood of charges being brought against their client.

Legislation

Could or should legislation be introduced to remove the problem? It is possible. The Policing and Crime Bill may have a profound effect on such situations.

Five years ago, the High Court upheld a ruling by a district judge that police must question and charge a suspect within four days of detention. It led to fears that suspected murderers and rapists could walk free if police couldn’t build up a case in time and contradicted 25 years of police practice. It also led to then Home Secretary Theresa May rushing through an emergency bill to restore the police power to bail. The resulting Police (Detention and Bail) Act 2011 was retrospective, meaning that police forces were protected from any possible compensation claims.

The change in the law made it clear that time spent on police bail does not count towards those 96 hours and the “clock” only runs while suspects are detained. It was an emergency piece of legislation that swiftly corrected a problem.

Now, however, there is the Policing and Crime Bill, which is currently being considered by Parliament. This Bill proposes a 28-day maximum period of time for people to be kept on bail before a decision is made on whether to charge them. A decision to extend this bail by a further three months can then be taken by a police superintendent; with any further bail extensions only granted by application to the magistrates court or if the case is considered to have “exceptionally complex’’ provisions.

The government has also indicated that especially serious cases could be subject to a different bail timescale.

The Bill is not yet law. If it becomes law, it remains to be seen how many SFO investigations may be considered exceptionally complex or especially serious for the purposes of bail. But it is at least a cause for optimism that the current problems could be reduced.


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