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As total white collar prosecutions rise, SFO faces questions around governance arrangements

Total prosecutions for white collar crime were up by 1% across the last year according to figures from Ministry of Justice (MoJ), marking the first increase in five years. However, the body representing the most serious and complex investigations for such prosecutions, the Serious Fraud Office (SFO), has faced criticism over both its blockbuster funding model and its governance structure.

Figures obtained by Pinsent Masons from the MoJ, released this week, reveal there were 9,401 prosecutions for white collar crime over the last year, up from 9,343 on the year before. Over 600,000 fraud offences were recorded in England and Wales, marking a 4% increase.

The increase in white collar prosecutions includes a number of high-profile cases brought by the SFO, including the agency’s first conviction of an individual for the manipulation of Libor following the Tom Hayes trial.

Pinsent Masons head of global corporate crime Barry Vitou believes any increase in prosecutions for economic crime represents a gain for the authorities and should be welcomed. He said:  ‘Organisations fighting white collar crime now need to ensure momentum does not slip – and that they build on the initial improvement.’

The figures also show cybercrime prosecutions were up by 36% last year. Vitou said: ‘Cyber-crime is a fast-growing threat and should remain a focus. The online capabilities of fraudsters are increasing and evolving all the time. The fact that prosecutions continue to rise in this area is promising and indicative of the efforts the authorities are making to get to grips with tackling what is a highly complex issue. However, these new kinds of crime require police forces to adapt quickly, and considerable time and investment is needed to ensure they deal with it effectively.’

Concurrently, the Crown Prosecution Service Inspectorate has issued a report into the effectiveness and the efficiency of the SFO’s structures, procedures, leadership, accountability and direction. The report found that ‘there has been a positive transformational change to the direction and purpose of the SFO’, but levelled criticism at an overabundance of responsibilities for its director David Green QC, a ‘weak’ business plan and its blockbuster funding model, which the report found ‘is not representing best value for money and prevents the SFO building future capability and capacity in-house’.

Although Vitou believes the SFO has been on an ‘upwards trajectory’, he agrees with the report’s findings on the SFO’s funding model. ‘My one constant refrain, which is consistent with this report, is that their funding has not been sorted out. The SFO has consistently said that blockbuster funding is the solution and that funding isn’t a problem, but this report essentially says that the blockbuster funding model doesn’t enable to deliver best value.’

White & Case white collar partner Jonathan Pickworth believes the SFO’s biggest issue has been the lack of prosecutions it has been able to deliver across the past year, but is hopeful those numbers will pick up across the coming years.

He told Legal Business: ‘The SFO only get to deal with the most serious and complex matters so they’re inevitably going to take a long time, but it is not a great thing when investigations take so long to come to a prosecution.’

‘Equally though, I think the SFO has been unfairly treated in some respects. Partly because it does the most serious and complex investigations so it doesn’t take on very many easy wins, but more importantly it has a dual role – one of investigation and the other aspect is prosecuting. It really needs to do its investigating in an objective way and make a judgement call on whether it is then appropriate to prosecute.’

While Allen & Overy works on more complex white collar prosecutions which make up a small minority of prosecutions, litigation partner Arnondo Chakrabarti believes more power and investigations could be brought to the SFO if recent discussion around a change to the law comes to fruition. The discussions revolve around a change, which would see companies’ failure to prevent criminal conduct to become a more broad ranging offence.

He said: ‘I think that will clearly lead to an uptake in prosecutions of the bigger corporates if that comes into law. That’s been the one thing the SFO can’t really bring cases against – the big companies very easily and banks.’