Crime, fraud and investigations 2018: Changes at UK enforcement agencies

2018 will see a new director at the Serious Fraud Office (SFO), but what do recent announcements suggest about other potential changes at the UK's enforcement agencies?

In brief

  • After a generally successful tenure that has recast the SFO as a prosecutor of complex cases, David Green QC will step down in April 2018.

  • A new body is to be created within the National Crime Agency (NCA) to co-ordinate the response to economic crime in the UK.

  • Developments in 2018 will show whether the SFO is being brought under the control of the NCA or whether the SFO will retain primacy in dealing with complex fraud matters.

A new Director of the SFO

David Green QC’s directorship of the SFO will end in April 2018, when the two year extension to his original appointment comes to an end. It is unknown as yet who the replacement will be.

Green’s mark on the agency has been significant; he oversaw a sea-change by the agency in shifting away from civil settlements with corporates that had been criticised for failing to adequately punish corporate wrongdoing, and oversaw the implementation of the Deferred Prosecution Agreement scheme. This resulted in significant penalties being faced, and accepted, by several “UK Plc” entities including Tesco Stores Ltd and Rolls-Royce plc.

Perhaps Green’s largest success was, however, the continued survival of the agency as an independent investigator and prosecutor. Theresa May favoured disbanding it while she was Home Secretary and the idea of rolling it into the National Crime Agency was revived in the Conservative Party manifesto for the 2017 election. The loss of the Government’s majority in that election seemed to have put an end to that idea, though announcements in December 2017 raise the prospect of a changed relationship between the two authorities (see below). 

Whilst the view has been expressed in some quarters that, under Green, the SFO has sought to rely more heavily on “privatised investigative work” run and paid for by corporates that have uncovered potential wrongdoing, it was clear that any internal investigation, once brought to the attention of the SFO, had to be run in strict accordance with their input. This precluded any significant criticism that the SFO was merely following an American model of allowing private law firms to complete an internal investigation and then negotiate any potential punishment.

Green will likely depart to a private sector law firm.  This too has been an increasingly popular trend that Green seems to have done little to discourage. Any future head of the SFO will likely have to become accustomed to a revolving door between the regulator and leading law firms. Following Green’s largely successful tenure there will clearly be strong arguments for another director with a proven history in criminal law.

An increased role for the NCA?

The Home Secretary announced in late 2017 that a National Economic Crime Centre (NECC) is to be created within the National Crime Agency. This body will be tasked with coordinating expertise from various other entities to align the UK response to economic crime. It should be noted, however, that it is still unclear at present where the funding for this new project will come from.

It is understood that the plans for the NECC are being finalised by a multi-agency team that includes representatives from, amongst other bodies, the SFO, the Financial Conduct Authority (FCA), the Crown Prosecution Service (CPS) and HM Revenue and Customs (HMRC). Whilst the make-up of the centre is yet to be revealed, it is clear that there is a view within Government that there should be a shake-up of enforcement in the UK and a more joined-up approach to tackling financial crime.

One significant-sounding change as a result of the proposed reforms will be that, whilst the SFO will remain technically independent from the Home Office, legislation is proposed to “give the National Crime Agency powers to directly task the Serious Fraud Office”.

Quite what this tasking will look like is unclear. Fears that this "direction" will achieve by the back door Theresa May’s aim of incorporating the SFO into the NCA are, in our view, overstated - the NCA has the same power over other agencies under the Crime and Courts Act 2013, including the SFO, and has only used this power once in the four years since it was established. David Green has already stated that in his view nothing will change, pointing out that he would view it as a failure if the power had to be used.

Regardless of the practical effect of this change, however, the Government’s emphasis on NCA involvement at this time may affect the image of the SFO and that may in turn affect its recruitment efforts. 2018 will reveal whether the advent of the NECC and the appointment of a new director will lead to any significant change of course at the SFO.

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