SFO’s “cultural difficulties” require drastic change

Buckland: Urgent and thorough examination needed

The “cultural difficulties” of the Serious Fraud Office (SFO), including “improper contacts” between officials and companies being investigated, necessitate “drastic change”, a report has argued.

The Institute of Economic Affairs (IEA) said the “depth of the problems” at the SFO meant that “serious consideration” should be given to “radical institutional change”, such as abolishing the organisation and splitting its responsibilities among other government agencies.

James Forder, research director at the IEA, said in the discussion paper Is the Serious Fraud Office Fit for Purpose? that “the most striking aspect” of the problems experienced by the SFO were the “long string of failures” in performance.

“This is not a matter of there being some cases that go wrong, or of the fact that it would no doubt be excessively cautious if prosecutors never brought cases that might fail. It is that the manner of the failure of so many cases is so striking.

“Recurrent errors over some points, major blunders in trial management, and succession of issues of improper behaviour are not the normal adverse rub of the green. Stretching as they do over such a period of time, they point to fundamental problems.”

Mr Forder cited “improper contacts” between SFO officials and other parties in the case of the Eurasian Natural Resources Company (ENRC), which the SFO has been investigating since 2010.

He said the SFO “had been in improper communication with ENRC’s lawyer who disclosed confidential and privileged information to it”.

In the Unaoil case, the “crucial point” as far as the trial was concerned was that the SFO’s failure to disclose its involvement with David Tinsley, an adviser to the company’s owners, Mr Forder went on.

“It is difficult to see how SFO discussions with a representative of some possible defendants concerning their possible pleas was not seen as a matter that should be disclosed to other defendants.”

The paper said the “persistent failures of disclosure and the apparent inability to judge how complex to make a trial” were two of the SFO’s persistent problems, with the improper contacts in the ENRC and Unaoil cases “suggestive of another pattern”.

It went on: “They are clearly suggestive of a cultural failing. But there is an aspect of cultural failing in some of the concerns of the [HM Crown Prosecution Service Inspectorate] reports; there must be that aspect to the ‘playing of practical jokes’ on lawyers and probably the making of groundless accusations against judges.”

Mr Forder recommended that changes in the law should be considered in relation to the disclosure rules and the criteria used by the Attorney General’s Office to establish corporate liability in fraud and the problem of the ‘directing mind’.

The substitution of expert panels for juries in complex fraud cases or by a specialist panel of expert judges should also be considered.

“Radical institutional change” could include abolition of the SFO, “with both its functions and special powers taken on elsewhere”, for example by the Crown Prosecution Service.

“In any case, in the circumstances of such cultural difficulties as there appear to be, drastic change is needed.”

He added: “The reform of both law and institutions requires serious consideration and it is evident that decisive action is then needed.”

In his foreword to the report, former justice secretary Robert Buckland commented: “As much-needed reforms to the criminal law of corporate and individual economic crime are imminent, then the need for a law enforcement framework that effectively policies the boundaries of a lively free market economy is more pressing than ever.

“Speaking personally, I have not yet come to a firm conclusion as to what the future architecture of that framework should be but I am strongly of the view that both Houses of Parliament should take an urgent and thorough examination of this issue in order to make sure that we stop repeating the mistakes of the past.”

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