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Serious Fraud Office and Abuse of Process

Author: Syedur Rahman  29 April 2014
4 min read

In 2014, a court case shed a less than flattering light on the way the Serious Fraud Office (SFO) had operated in recent years. But away from the headlines, the case also raised serious questions about abuse of process.

Nobody likes to have their dirty laundry aired in public. Especially when you are the people who are supposed to sort out the wrongdoing committed by other people. Unfortunately for the SFO, its own unwashed linen attracted plenty of attention.

A court hearing was considering whether the SFO was guilty of an abuse of process when it issued fraud charges against the head of Weavering Capital, a $600M hedge fund that collapsed in 2009. It was a case that the SFO could have done without. But it became even worse with the comments about the way the SFO has functioned – or not functioned, as some would claim.

The court heard that former SFO head Richard Alderman was running a chaotic agency that could not keep records or documents in order. A central point in the hearing was whether Alderman acted unlawfully when he delegated power to begin the Weavering  investigation in 2008 to Philippa Williamson, his then chief operating officer.

This hearing was initiated by Weavering’s founder Magnus Peterson, who was facing 16 fraud-related offences. Its outcome depended in no small part on whether Alderman had the power to delegate power to launch investigations, whether delegation was to the most appropriate person and made with appropriate care – and whether there was serious misconduct.

Peterson’s lawyer called Alderman’s responses “deeply disturbing’’ and talked of “an element of almost chaos in the way the office is run’’. These comments were probably the last thing the SFO needs to hear. This was the second case in which Alderman’s right to delegate the authority to launch investigations had been called into question. The previous year, a parliamentary committee accused him of running a “sloppy and slovenly’’ operation; agreeing to large packages and pay-offs for senior staff with little or no regard to taxpayer funds or proper procedure.

The SFO investigation into Weavering had been dropped after two and a half years in 2011, only to be reopened by Alderman’s successor as SFO Director, David Green. It was a U-turn that showed the new man’s determination to prosecute more top-level fraud. But in taking such a bold course, Green certainly exposed the SFO to criticism about the way in which it has failed to function properly in the past.  And abuse of process is far more serious than being left with egg on your face in court.

Abuse of Process

Abuse of process – three words that can scare a prosecutor. The SFO will not have been happy about the unflattering picture the case has painted of its activities. But it will have been more worried about the abuse of process allegation being accepted by the court. 

An abuse of process can be brought on a number of grounds.  Delays in bringing proceedings, manipulation of court procedure, entrapment or loss of evidence are just some of the reasons why a defence team may bring an abuse of process application. If one is brought, then the defence has to prove that the police or prosecution acted with “bad faith or at the very least some serious fault’’ (R (Ebrahim) V Feltham Magistrates’ Court (2001)).

As regards the issue of serious fault, a defence has to be able to prove that the abuse of process will make it impossible for the defendant to receive a fair trial (Category 1) or make it unfair for the defendant to be tried (Category 2). So if the case involves evidence that should have been seized by the police but can no longer be obtained this would a Category 1. If, however, the police had had the material but maliciously destroyed it, this would be a Category 2 case, as in R V Mullen (1999) – the integrity of the justice system has been put at risk. In Category 2 cases, a case will not necessarily be stayed if a defendant’s right to legal professional privilege is breached. The court will weigh up the nature of the breach and the exact impact on the fairness of any trial before making any decision. Similarly, the role of undercover police and the possibility they may have entrapped a defendant or encouraged an offence to take place requires careful consideration by a judge to see if the officers may have overstepped the mark. R V Loosely; Attorney General’s Ref (No 3 of 2000) (2001).

Disclosure and Abuse of Process

Such instances provide opportunities for an alert defence team to seek a stay on the grounds of there having been an abuse of process. But the most fertile grounds for such an application are to be found around the issue of disclosure. Disclosure has been the area in which many great miscarriages of justice have turned. The House of Lords issued guidance on the issue of disclosure and public interest immunity applications in R V H and C (2004) – a case in which we represented H – but prosecutors are still proving either reluctant or ignorant of the need to fully disclose information.

Any worthwhile defence team has to, from the outset, make sure that they gain access to all possible materials that the prosecution may hold. It is not enough to assume everything has been passed to the defence. A defendant’s solicitor must make sure he or she is able to see everything the prosecution possesses, regardless of whether the prosecution intends to use it in evidence. By taking such an approach, the defence can then be sure that they are able to examine possible grounds for an abuse of process application. But the defence is also ensuring it has the greatest possible scope for using all relevant available materials to compile the strongest case for the client.

An abuse of process application is only as strong as the evidence that supports it and the ability of the defence solicitor to recognise the opportunity it presents for success. It takes a fully aware defence team to identify and act upon the potential that any case offers for a successful abuse of process application.

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Syedur Rahman is known for his in-depth experience of serious fraud, white-collar crime and serious crime cases, as well as his expertise in worldwide asset tracing and recovery, civil recovery, cryptocurrency and high-stakes commercial disputes.

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