Having closed its investigation earlier this year due to ‘lack of evidence’, it has emerged that the Serious Fraud Office (SFO) spent £2.1m investigating alleged rigging of the foreign exchange (forex) market in less than two years.
The revelation comes as the fraud agency has been criticised by the Crown Prosecution Service Inspectorate, which said the SFO’s blockbuster funding model is not representing best value for money.
Following a Freedom of Information request submitted by Legal Business, the SFO provided figures revealing the total monetary spend on its investigation, dating from July 2014 to its close in March 2016.
During this period, recorded expenditure totalled £2.1m – specifically, £1.8m in the 2015/16 financial year and £292,000 for 2014/15.
This included £330,035 in fees for external legal counsel, which again broken down amounted to £58,000 for lawyers in the 2014/15 financial year and a further £273,000 in 2015/16.
For the 2015/16 financial year, costs for permanent staff amounted to £458,000 while ‘non-permanent staff’ cost a significantly higher sum of £785,000.
While Slaughter and May is recognised as the watchdog’s go-to adviser, having recently advised on its litigation against Robert Tchenguiz, a number of barristers chambers were drafted in during the course of the forex investigation. Those listed include Red Lion Chambers, 23 Essex Street, 1 Grays Inn Square, 4-5 Gray’s Inn Square, 33 Bedford Row, 5KBW, One Inner Temple Lane, 9 Gough Square, Three Raymond Buildings, QEB Hollis Whiteman, 15 New Bridge Street and 9 Bedford Row.
The SFO was criticised for shutting down its investigation into forex after failing to find sufficient evidence to prosecute. Despite some of the world’s largest banks facing billions in sanctions for rate manipulation, the agency dropped the probe in March this year without bringing any charges.
Shortly before shutting down the investigation, in January the SFO asked the Treasury for extra funding amounting to 60% of its budget to pay for major investigations, including a cash advance of £15.5m from the contingencies fund to meet ‘an urgent cash requirement for existing services’.
One City partner told Legal Business the problem is the SFO doesn’t have the quality of people for such investigations.
‘It’s too complicated… the SFO can deal with simple stuff and sure-fire winners…it is just not up to it. Forex needs serious experts. It’s not for the lay person, you’ve got to understand the subject matter – it’s the people who deal in forex and the day to day running of it – you need external people, even just for civil proceedings.’
Spend on Forex investigation 2015/16
Permanent staff £457,884
Non-permanent staff £784,643
All other miscellaneous costs £8,747
Fees to counsel £272,309
IT services and consumables £95,566
Other investigation costs £86,667
Travel and subsistence £20,206
Figures provided by the SFO