Opinion: UK SFO under the new director

UK SFO director Nick Ephgrave is making all the right noises in his quest to repurpose the organization says Tony McClements.

When Nick Ephgrave was unveiled as the new director of the Serious Fraud Office (SFO) in September last year, I welcomed the appointment of this former high-ranking police detective.

For too long the SFO had lumbered from one debacle to another, most of them of its own making. As its credibility waned, its professional reputation was also called into question.

When former director Lisa Osofsky announced she was leaving the SFO, I believed that the organization needed a total rebuild and a shakeup of seismic proportions, such was its critical condition. Absent this remedial act, I said that the SFO needed to be disbanded or absorbed under the National Crime Agency (NCA) umbrella.

One of my main criticisms was the organization’s lack of pragmatism. Its case selection and assessment processes were clearly flawed. Cases ran on for far too long, were constantly beset by problems, and often appeared to have a political angle to them.

Most police forces, especially those with fraud squads, targeted low-hanging fruit that could generate comparatively quick results. But they also took on cases they knew would be challenging. These could provide a deterrent powerful enough to dissuade other fraudsters.

Whistleblowing and disclosure

So, how about the SFO today? Well, since Ephgrave commenced his tenure, he has made all the right noises. For example, he has committed the SFO to targeting and prosecuting the well-resourced and powerful who believe they can act with impunity.

He has identified the need to speed up investigations, recognising the risk prolonged investigations have on resources and victims, promising to use the latest technology to manage the large volumes of data that complex fraud cases generate.

In addition, and to his credit, he has advocated that UK whistleblowers should be financially rewarded. I have supported this notion for several years, primarily because once a whistleblower sticks their head above the parapet, their careers will inevitably be affected.

Of course, there is always the potential for malicious reporting, but I suspect that threat will be offset by the possibility of litigation from the targets of any malicious reporting. Whistleblowing, in my view, is the ultimate deterrent to those who would manipulate the regulated sector.

Likewise, those who prosecute fraud in the UK have agreed with Ephgrave that the issue of disclosure under the Criminal Procedure and Investigations Act 1996 (CPIA) requires streamlining. This Act has been an albatross for far too long, costing the taxpayer millions of pounds, shifting the focus from actual wrongdoing to the ability of the prosecution to meet what many consider to be the draconian demands set by the Act.

The CIPA is outdated and cannot cope with the technological demands it creates and places on the prosecution. There has to be a better way of safeguarding the interests of the accused, other than to create loopholes that can lead to good cases falling by the wayside due to human error.

UK crime

Ephgrave has promised to focus SFO attention on UK crime. This is how it should be. If the SFO is funded by the UK taxpayer, then their interests should come first. Where appropriate, the SFO should assist foreign law enforcement, but it should prioritise its resources here first.

The SFO should be able to make better use of new legislation such as the Economic Crime and Corporate Transparency Act, which passed into law late last year. This is where the SFO must take a lead. Such legislation needs to be pressure-tested by the SFO and, where necessary, amendments suggested to law makers if elements are not fit for purpose or are not working.

SFO 2024-2029 strategy

The SFO’s 2024-2029 strategy indicates Ephgrave’s desire to cultivate a more highly-skilled workforce, capable of meeting the demands placed upon it when faced with investigating and prosecuting complex frauds. I suspect that he will set about meeting this target by injecting a law enforcement ethos into an organization that is culturally-reliant on lawyers. The mix has to be right: there is a place for both approaches to work side-by-side.

The strategy also pushes the need to embrace new technology, including artificial intelligence, to allow human expertise to be focused on the more complex aspects of financial crime. Ephgrave has already recognized the need for the SFO to dramatically improve its decision-making processes.

To conclude: fraud investigation is a dynamic process. If success looks unlikely, bin the case. Better to cease than continue to flog a dead horse and run the risk of being sued. Ephgrave appears to be grasping a nettle that has been avoided for years. I am encouraged by his early efforts and look forward to the SFO becoming the revered organization it once was.

Tony McClements is head of Investigations at Martin Kenney & Co (MKS), an international asset recovery litigation practice based in the British Virgin Islands.