SFO Investigation Defence Strategies

It is important to respond to a Serious Fraud Office (SFO) investigation in the right way. This can involve using all available legal expertise and experience to challenge the assumptions on which the SFO is basing its case.

Such challenges can be the difference between the SFO proceeding with a case and dropping it. But it can also be important to recognise - and take - any opportunities to negotiate with the SFO.

A successful response to SFO allegations – and charges, if the SFO decides to prosecute – requires contesting SFO allegations. This will mean examining the evidence the SFO intends to use and the assumptions it is making about the subject of an investigation.

Any defence to SFO allegations requires a carefully thought-out, well-executed approach that involves speed of thought, careful analysis of the main issues, expert witnesses and intelligent challenges on matters such as the conduct and legality of a raid or the admissibility and credibility of evidence.

Search Warrants

If the SFO believes an offence has been committed, it may apply to the courts for a search warrant for a company’s premises and / or the residential addresses of those individuals it suspects of involvement in the wrongdoing.

Most SFO warrants are issued under the Criminal Justice Act 1987. They can be challenged by making an application for Judicial Review in the High Court, against the SFO and the court that granted the warrant. If the court believes that the rules have not been followed by the SFO when applying for a search warrant or in carrying out a raid, it can quash a search warrant and order that any property seized during the raid is returned.

In what was possibly the most high-profile example of this, in Tchenguiz v Serious Fraud Office & Others [2012], the SFO was shown to have failed to check the credibility of information it presented to the court when applying for the search warrants and had to apologise to the two brothers who were raided and pay them a total of £4.5 million.

It was a case that emphasised that challenges can be made at any stage of the raid process – and that courts will penalise the SFO if it misleads a judge when seeking a warrant or if its investigators do not follow the rules during a raid.

Evidence

Section 21 of the Police and Criminal Evidence Act 1984 (“PACE”) (and PACE Code B) gives people the right of access to any material of theirs that has been seized during an SFO search, unless doing so may prejudice the investigation of an offence or criminal proceedings, or lead to the commission of an offence. Similarly, the Attorney General’s Guidance on Disclosure laid down guidelines on how to deal with the search and seizure of digital material.

Ensuring access to all the relevant, available information is a crucial part of any defence response to an SFO investigation. It is important, therefore, that the defence exercises its legal right to access all information. Without having this material, it can often be difficult to answer SFO questions or argue against the assumptions it is making.

A defence team can also use the law of disclosure to gain access to material obtained by the SFO that it does not intend to use as evidence. Such material may be useful to those looking to build a defence.

Disclosure can be of use in preventing the SFO being over-zealous in making allegations. Along with factual information and informed legal argument, disclosure can play an important role in preventing an SFO investigation going as far as charges being brought. Even if that happens, it can still lead to the SFO dropping the case before it goes to trial.

The credibility of information that the SFO relies on can be a major issue for a company or individual defending themselves against allegations. Such challenges can be made at any stage of an investigation; up to and including any trial.

Such potential evidence can also be important for the defence team when it is looking to make sure the SFO does not exceed its authority.

Negotiation

In summary, any defence to an SFO investigation will involve identifying weak points in its case and developing methods to exploit them. But it can be just as important to identify chances to negotiate with the SFO to obtain the best possible outcome.

Whether negotiating with the SFO or challenging its allegations, the subject of an investigation must know everything that investigators already know or may find out if they continue investigating. To do this can require conducting an internal investigation as early as possible.

A carefully-planned, properly-conducted internal investigation will be the best way to determine if there is any truth in the allegations that have been made – and the most appropriate response.

Internal investigations can play a large part in a company’s attempt to secure a deferred prosecution agreement (DPA). Under a DPA, the SFO will not prosecute a company if it admits the wrongdoing and agrees to meet certain conditions, such as paying a fine or introducing compliance measures to prevent the illegal activity happening again.

Carrying out an internal investigation and sharing its findings with the SFO may be viewed as cooperation by the agency. This can increase the chances of the SFO being more lenient than it might have been otherwise and may make it more willing to negotiate.

Negotiating with the SFO involves recognising the most favourable outcome, devising a strategy to obtain it and identifying what needs to be done to execute that strategy. The scope for negotiation will depend on how cooperative the SFO thinks the subject of an investigation has been and whether there is a genuine desire to put right the wrongs that led to the investigation. It is important, therefore, to do everything to convince the SFO that this is the case.