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Understanding Serious Fraud Office (SFO) Investigations: A Comprehensive Guide

Author: Azizur Rahman  27 February 2013
4 min read

The SFO Director has been outlining his determination to take on those doing wrong, regardless of the cost. But Aziz Rahman of Rahman Ravelli wonders if he has the money to back up his stance.

Money isn’t everything, as the old saying goes. But it is certainly a formidable something in most people’s lives. There are very few of us who can honestly say that it isn’t a factor in what we do.

Which is why it is perhaps a little surprising to hear the Serious Fraud Office’s (SFO) Director David Green stating that money would not be a factor when it comes to carrying out investigations.

As far as we know, the SFO is not rolling in money. And yet Mr Green sounded quite confident in his pronouncement. Speaking to the House of Commons Justice Committee he said: “Of course, the SFO can never refuse to conduct an investigation on the ground that we cannot afford it, nor will I do that.’’

He later added: “…If I am short of resources, I will say so. The bottom line for me is that, as I said earlier, the SFO cannot refuse to take on an investigation because we cannot afford it. That would be completely unacceptable. I believe that it would be unacceptable to Ministers; it would certainly be unacceptable to me and, I am sure, to the public…”  

As statements go, it’s pretty bold and very clear. It also contradicts what a lot of people have thought about the SFO in recent years, not least because its funding has dropped from £53M in 2008-09 ago to nearer £30M for this coming year.

According to Mr Green, the high funding figure for 2008-09 was never intended to be a permanent level. He also states that SFO has benefited from the Asset Recovery Incentivisation Scheme (ARIS), although he makes it clear that he does not want the annual £2.3M it currently provides to be considered part of “our bottom line’’. He argues this on the grounds that the SFO does a small number of cases and, therefore, does not have the rate of turnover for confiscation to make ARIS a big earner for his outfit, especially as much of the money that is recovered is paid out in compensation to victims. To his credit, he also points out that people may perceive there to be a conflict of interest when a prosecutor receives money from confiscated assets. Which is very noble. But it does not answer the question of how the SFO could afford to never turn down a case.

In addressing the Justice Committee, Mr Green added:
When I took on the job, and as of today, I am happy and content that the existing resource is sufficient for what I might call our day-to-day work. That does not mean to belittle any of our cases, all of which are extremely challenging.

“The existing resource is sufficient, as well, to maintain, as it were, a core staff of around 300. The problem comes when one or more exceptional cases come along. LIBOR is a very good example…

“We therefore need what I suppose would fashionably be called a surge capacity. LIBOR is a good example of that. I am very grateful that the Treasury has underwritten us up to £3.5 million, should we fail to absorb those costs, in order to cover LIBOR. That is in a sense, I hope, the new model—obviously, to be developed. If you like, it is a return to what used to be called blockbuster funding or something like it…

In short, it seems Mr Green is putting his faith in the ability to go calling on the Treasury for extra funding when he feels he needs it. Yes, LIBOR has been an instance where the SFO has gained the extra funding required to carry out a thorough investigation into a major issue that suddenly came into view and required immediate and in-depth attention. Yet, how many times will the Director feel he has the need to ask for such extra funding to investigate a matter? And, perhaps more to the point, what will be the response from the government each time he goes to it cap in hand?

Prior to Mr Green going before the Justice Committee, the Attorney General had made his own appearance in front of it. During his appearance, the Attorney General stated that the government had indicated that more funds would be available if they are required by the SFO. He added: “If the Director of the SFO feels that the time has come, or he needs it, he will come and see me about it.’’. However, when quizzed further on this point, the Attorney General stated that his response would be to go to see the Treasury and discuss the matter with them. In answering the Committee’s questions, he stressed London’s immense importance to the UK as a financial centre and the resulting need “to show that the regulators and the criminal justice system have teeth’’.

Noone doubts that such organisations need teeth. Mr Green has stated that he does not want people to think that the SFO does not have the stomach for prosecutions and would prefer to do deals. He admits that the SFO’s purpose had become “a bit woolly and a bit blurred over time, for all sorts of reasons’’. Now he wants to restate and demonstrate its purpose as a body set up to investigate and prosecute serious complex fraud, bribery and corruption. If the AG was talking about teeth, it seems as if Mr Green is out to bare the SFO’s fangs to anyone watching. Such impressive dental work, however, does not come cheap. And if Mr Green is hoping that he will get all the extra funding he asks for whenever the AG takes his request to the Treasury, it may not be as straightforward as he believes.

Mr Green clearly wants the SFO to be an aggressive prosecutor. But without guaranteed extra resources it could end up with a bark much worse than its actual bite.

Azizur Rahman C 09369

Azizur Rahman

Senior Partner

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Aziz Rahman is Senior Partner at Rahman Ravelli and its founder. His ability to coordinate national, international and multi-agency defences has led to success in some of the most significant corporate crime cases of this century and top rankings in international legal guides. He is recognised worldwide as one of the most capable legal experts regarding top-level, high-value commercial and financial disputes.

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