Another Bad Day For The Serious Fraud Office ' But What Are The Broader Implications?

• Published date: 21 July 2021
• Subject Matter: Corporate/Commercial Law, Criminal Law, Corporate and Company Law, Contracts and Commercial Law, White Collar Crime, Anti-Corruption & Fraud
• Law Firm: BCL Solicitors LLP
• Author: Mr Richard Sallybanks and Alex Swan

On 26 April the SFO's prosecution of two former directors of Serco Geografix Ltd ("SGL") collapsed. Unsurprisingly this case has re-ignited questions as to whether the SFO is fit for purpose, but it also shines a light - again - on the contrast between the SFO's ability to secure lucrative Deferred Prosecution Agreements ("DPAs") with corporate suspects and its inability to secure convictions of the individuals whose conduct underlies the DPA.

In July 2019 SGL and the SFO agreed a DPA; SGL accepted criminal liability for fraud and false accounting relating to contracts with the Ministry of Justice and agreed to pay '19.2m and SFO costs of '3.7m. The two former directors were subsequently charged with fraud.

Four weeks into their trial, the SFO - in its own words - "uncovered errors made in the non-disclosure of certain materials." The judge considered these errors to be extremely serious, refusing the SFO's application for an adjournment to allow them to remedy the position and to facilitate a retrial. This left the SFO in the unenviable, but self-inflicted, position of having to offer no evidence. Compounding its woes, the SFO is likely to have to pay significant defence costs.

The collapse of this trial is extremely embarrassing for the SFO. It is a fundamental duty of prosecutors to disclose material which might reasonably be considered capable of undermining the prosecution's case or assisting the defence case. The importance of a prosecutor's disclosure obligations has also been highlighted by the recent Post Office appeals, in which historic convictions for theft, fraud and false accounting offences were set aside by the Court of Appeal.

The outcome of the SGL trial is an own-goal for the SFO and will fuel criticism of its success rate, especially in the bigger, high-profile cases it brings against individuals. It follows the acquittals of three senior executives in the Barclays Qatar case in 2020 and the collapse of the case against Tesco executives in December 2018. However, in the last 12 months it secured convictions at trial of three individuals in the Unaoil bribery case (albeit that success has been somewhat tainted by damaging revelations of the SFO Director's direct, informal communications with an intelligence firm representing Unaoil's owners, a matter to be the subject of an internal review at the recommendation of the judge who presided over the trials).

The SFO can however point to its success rate against corporates (including the...