The Serious Fraud Office (SFO) is an organisation under pressure. Pressure from MPs over the severance packages of former executives, pressure after its annual report this week revealed that it has taken on and won fewer trials, and pressure to redefine itself within a highly politicised arena where it is an easy scapegoat for any number of financial ills.
First, the Public Accounts Committee (PAC) on Wednesday published its 10th report in relation to the SFO’s redundancy and severance arrangements, finding that former director Richard Alderman had undermined the reputation of the SFO while he was director between 2008-2012.
The report found that Alderman used around £100,000 of taxpayers’ money to cover the travel and hotel costs of former chief executive officer Phillippa Williamson. A further £407,000 was paid towards her pension without approval from the Cabinet Office. Alderman also signed off a special severance payment of £15,000 to Williamson and the former chief operating officer (COO) Christian Bailes to ‘avoid grievance action’ without taking Treasury approval.
Richard Bacon, MP of the Public Accounts Committee, said: ‘The reputation of the Serious Fraud Office has been undermined by a catalogue of errors and poor judgement and the morale of its staff has suffered as a result.’
Bacon welcomed the appointment of David Green as director in April 2012 and MPs have urged Green to request that the recipients of severance payments repay the money.
However, the SFO has already come under further scrutiny after its annual report this week showed the organisation spent more money on trials, recovered less, and won fewer of them over the past year.
According to the report the average cost of all cases rose to £839,000 from £669,000 in 2012 with just 12 trials taking place this year, down from 19 the year before. Twenty defendants were tried this year compared to 54 last year, from which 14 or 70% were convicted. However, the average sentence length increased to 71.3 months from 50.6 in 2012.
The results come in a year of major change for the SFO as it refocuses its efforts on bigger fry – higher profile, higher risk complex fraud, bribery and corruption cases – and its new investigations including those into Libor rigging (the organisation charged two brokers this week), Barclays and the collapse of London hedge fund Weavering Capital. Completed prosecutions so far include Asil Nadir, Achilleas Kallakis, Alexander Williams and Nicholas Levene.
Green said: ‘Much has been achieved during the year, and we believe that the SFO is firmly set on an upward trajectory.’
Berwin Leighton Paisner financial crime and investigations partner Aaron Stephens agrees. ‘The SFO is undergoing a huge period of transformation. They have some big cases – LIBOR, multiple bribery cases from the ENRC case to the Rolls Royce case – there’s a lot going on. I don’t think they deserve any criticism, they are doing the best they can with limited budget in a period where they have to rebuild. Their work will begin to payoff in the next years.’
There is a lot to be said for now giving the SFO the space to get on with its knitting, but in the current political climate that may be viewed as more of a luxury than a necessity.