The Institute of Economic Affairs (‘IEA’) has published a damning report into the performance of the Serious Fraud Office (‘SFO’) and argues that it should be reformed into a Serious Economic Crime Office (SECO) with a wider remit covering prevention, the capacity to use more regulatory sanctions and the ability to build a stronger relationship with the private sector.
The IEA identifies the following failings:
- Failure to secure convictions.
- Systematic failure in ethical leadership.
- Inefficiency and sluggish pace thwart SFO’s (and other authorities’) capacity to take on more cases.
A cursory analysis of the poor prosecution performance of the SFO, HMRC, DWP, FCA, CPS and the police suggests that there is a common factor: the criminal courts and the Criminal Procedure Rules are not fit for purpose in complex economic crime cases. The Roskill Report (Fraud Trials Committee 1986) recognised this fundamental problem nearly 40 years ago. Attempts to introduce trials without juries in complex fraud cases spiked after the Fraud (Trials without a Jury) Bill 2007 was blocked in the House of Lords. As well as calling for plea bargaining, which offends the sensibilities of British jurisprudence, the Attorney General’s Fraud Review in 2006 criticised the disclosure laws as unfit for purpose in serious fraud cases (Attorney General 2006).
The IEA suggests that a new SECO should:
embrace the holistic use of alternative justice mechanisms, using deferred prosecution agreements more widely, establishing a leniency programme, creating a register of serious economic crime offenders and using larger fines.
undertake a much more significant role in the advancement of economic crime prevention through the development and promotion of good practices and, in the most extreme cases, ‘Ethics orders’, which can be targeted at corporations to implement ethics and compliance programmes.
work much more closely with private actors – who are already the most significant in tackling economic crime – to enhance its and the private sector’s capabilities through accreditation and standards, staff exchanges and some contracting out of investigations through approved structures to maintain separation of powers.
This is not the first time that the SFO has come under criticism and it will be interesting to see whether the new Labour government has any appetite for a fundamental reform of the way we deal with complex economic crime.