UK: 2022 – Will It Be A Happy New Year For The SFO?

BCL's Richard Sallybanks and Alex Swan look at how 2021 played out for the SFO and what lies ahead for the SFO in 2022.

How will the UK's Serious Fraud Office ("SFO") look back on 2021 and what can it look forward to in 2022? While it secured three Deferred Prosecution Agreements ("DPAs"), and convictions against two corporate defendants, that success has arguably been overshadowed by serious criticism by the Court of Appeal in the Unaoil case and by the judge who presided over the collapse of its Serco prosecution, and allegations made against it in collateral litigation arising out of its ENRC investigation. Nevertheless, with multiple trials scheduled in 2022, the possibility of a recommendation (strongly supported by the SFO) that the law on corporate criminal liability ("CCL") be reformed, and presumably further DPAs or corporate resolutions in prospect, the SFO may conclude 2022 with more optimism than it might presently be feeling.

Contrasting success: DPAs with corporates versus prosecution of individuals

The SFO concluded three DPAs in 2021, two with unnamed UK entities and the other with Amec Foster Wheeler Energy Ltd ("Amec"). The Amec DPA was the first time that it was made explicit that the DPA solely dealt with the culpability of the corporate entity and not any individual suspects, with the judge emphasising that the court does not make any findings of fact in the DPA process. This development stems from increasing comment about the SFO's failure to secure the conviction of a single individual in any of the trials which have followed DPAs and questions as to the apparent inconsistency between companies admitting guilt to secure a DPA and individuals then being acquitted.

The most recent example of this was when the 2021 trial of two individuals in the Serco investigation (in which Serco had entered into a DPA) collapsed with the SFO recognising that there were major failings with its disclosure process. This means that in the four prosecutions of individual suspects following the corporate suspect entering into a DPA, the SFO has yet to secure a single conviction (and two of the four cases have been stopped by the judge without the jury even being asked to return a verdict).

The financial penalties imposed in its 12 DPAs to date (including 2021's) led the SFO to declare that it has contributed over £1.3 billion to the Treasury since 2016, four times greater than its cost to the taxpayer. Whilst laudable, the question remains whether this is a useful barometer of the SFO's overall success, particularly when set against its track record against individuals.

Prosecuting individuals - an opportunity to put 2021 behind it and move forward in 2022

As well as the collapse of its Serco prosecution, the SFO was robustly criticised by the Court of Appeal in the Unaoil case. The Court overturned the conviction of Ziad Akle due to the SFO's failure to disclose the full extent of its dealings with a third party's non-legal representative who had been instrumental in causing one of the defendants to plead guilty and where the SFO had then relied upon that guilty plea as evidence against Akle. The SFO has ordered an independent review into the relationship of its senior officials, including its Director, with the third party's non-legal representative, and following the Court of Appeal's judgment, the Attorney General has also announced that her office will conduct an independent review into the issues highlighted in the appeal.

The SFO's conduct also came under scrutiny in 2021 during the High Court hearing of ENRC's civil claim against the SFO and ENRC's former legal advisors, in which ENRC alleged that they had conspired to ensure that an investigation into ENRC was opened. Judgment in this case is due in 2022 and there exists the obvious risk of further embarrassing findings against the SFO; equally, a positive conclusion of the civil case for the SFO may trigger developments in its long-running investigation into ENRC.

Against this background, the SFO may be hoping that in 2022 it can take the focus away from its historic conduct. With six trials against 15 individuals scheduled this year, the SFO has ample opportunity to put these criticisms and failures behind it, not only if it secures convictions but also by demonstrating that, in high profile cases, it is able to properly discharge its disclosure obligations.

One of its 2022 trials is against individuals connected to GPT Special Project Management Ltd which, in 2021, pleaded guilty to corruption and was made subject to financial penalties totalling £30 million. The SFO also had success against another corporate, Petrofac Ltd, which pleaded guilty to seven offences of failing to prevent bribery under section 7 of the Bribery Act 2010 and was ordered to pay financial penalties totalling £77 million. The Petrofac case also featured a guilty plea from a former executive who had co-operated in the SFO's investigation, providing over 300 pages of witness statements, and who received a substantially reduced sentence as a consequence and avoided going to prison. The SFO will no doubt hope that this outcome will encourage other suspects to co-operate in its investigations, but it remains a fact that a co-operating defendant is very rare.

Reform of the law on corporate criminal liability

The SFO has long complained about the difficulties it faces trying to hold corporate suspects to account due to the state of the law; in the words of its Director, she can go after Main Street but she cannot go after Wall Street. The debate on changes to the law on CCL moved forward in 2021 when the Law Commission launched its consultation paper. Responses to the consultation paper have closed and the Law Commission was due to provide the Government with an options paper towards the end of 2021; presumably there has been some slippage with this.

A new year, and a change in fortune

No doubt the reason for the SFO pointing to the amounts it has generated for the Treasury through its DPAs is intended, in part at least, to deflect criticism of its conduct in other areas as described above. With the potential broadening of CCL if the Law Commission recommends an expansion of the circumstances in which a corporate can be held criminally liable, the future is likely to see a greater number of DPAs and prosecutions of corporates and the SFO can point to its successful track record, which it enhanced in 2021, of holding corporates to account.

What it would surely like to do is to be able to point to a similar track record of success in its prosecutions of individuals as this is the area which has long dogged the SFO's reputation, and which was further damaged in 2021. The SFO will hope that by the end of 2022 it can look back on the six cases it currently has pending for trial and point to an improvement, not just in its conviction rate but in its overall performance, so as to try to move away from its reputation as accident-prone and which is so often mired in controversy.

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