The U.K.’s Serious Fraud Office (SFO) was criticized for its leadership, culture, and conduct in a report examining why the agency botched a key corruption case that has now seen three convictions overturned.
In December, an appeals court rebuked the SFO for its failure to disclose key evidence in the trial of former executives of oil and gas infrastructure company Unaoil who were alleged to have paid bribes to secure lucrative contracts in Iraq. The court singled out the agency’s “wholly inappropriate” contact with a “fixer,” David Tinsley, who proposed a backroom deal where key managers would be prosecuted while the company’s owners were left alone.
The ruling reversed the conviction of Ziad Akle, a former Iraq-based executive at Unaoil, and paved the way for the subsequent overturn of convictions against Paul Bond, a former sales manager at Dutch energy services company SBM Offshore, in March and Stephen Whiteley, a former territory manager for Unaoil, on Thursday.
The Akle verdict prompted Attorney General Suella Braverman to commission an independent review into what went wrong in the Unaoil case. On Thursday, Sir David Calvert-Smith, a former director of public prosecutions and High Court judge, delivered his verdict, which exposed “fundamental” failures.
His review found while some of the events were beyond the control of the SFO, like strained relationships with U.S. authorities that also wanted to extradite the company owners, some were caused by failings on the part of certain individuals and “cultural” issues within the agency.
- Poor record-keeping that was “incompatible” with the U.K.’s Criminal Procedure and Investigations Act 1996 (CPIA) within the senior team and the organization;
- Poor compliance with casework assurance, resulting in disclosure failings;
- Inadequate resourcing resulting in priorities not always being dealt with as they should have been, such as the “drip feed” of information to the defense;
- Mutual mistrust between the case team and senior management caused by “disconnect” and differing priorities; and
- SFO Director Lisa Osofsky’s decision to engage with Tinsley as a trusted third party, leading the case team to think he had the director’s “seal of approval.”
Other problems highlighted in the report include the four-month absence of an effective, interim SFO director until Osofsky joined; no tailored induction process or support/guidance for Osofsky; and the absence of a general counsel before Osofsky took the reins. These collective failings made it more difficult for the case team, counsel, senior management, and Osofsky to keep track of what was supposed to be going on.
The review recommended:
- Closing gaps between SFO directors. Any deficiencies in experience/knowledge should also be filled once the new director begins. Likewise, the SFO should never be without a general counsel;
- Information from suspects or defendants must be fully recorded and shared with the case team;
- Information shared with the SFO director should be passed to the case team;
- Casework must comply with the CPIA and the SFO’s own handbook;
- All SFO cases should be reviewed at least annually;
- The SFO must ensure it has an effective system to support and monitor resourcing across all cases; and
- With “immediate effect,” the SFO must develop a clear route by which the case team can raise concerns about cases.
In a statement, Braverman said both she and Osofsky accepted the review’s recommendations and added ensuring lessons are learned and mistakes not repeated “remains a priority for the director and me.”
Her office will monitor the SFO’s progress and delivery of its action plan and provide an update to Parliament in November and February.
A separate report commissioned by Osofsky into last year’s collapse of a trial of former Serco executives over prisoner-tagging contracts also released Thursday and highlighted “significant disclosure errors” that led to the SFO offering no evidence.
Osofsky, who was singled out for her mistakes and misjudgments, called the reviews “a sobering read” and said she will use the findings to improve the SFO’s performance.
“The SFO of today is already not the same organization I inherited,” she stated. “While the expertise and determination of our committed staff remains steadfast, a new senior leadership team has prioritized investment in technology, introduced a stringent case prioritization system, and we have embedded a change program to overhaul the SFO’s working practices and culture.
“… I am determined to ensure these reviews help us to move forward with clarity and confidence.
Legal experts are divided about whether the reports will result in meaningful change.
Sue Hawley, executive director at nongovernmental organization Spotlight on Corruption, stated, “We need a huge reinvestment of the money the SFO brings into the public purse through fines and confiscation back into the agency to beef it up and ensure these failings aren’t repeated.”
Sean Curran, business crime partner at law firm Arnold & Porter, believes there will now be considerable pressure on SFO leadership to demonstrate better conduct and achieve results.
“The SFO has taken on board the recommendations of the review and has sought to give the impression of having already dealt with most of the issues raised, particularly in relation to disclosure,” he said. “While that is not unexpected, the real test will be whether disclosure failures will raise their head again when further cases come to court, especially in the cases where the SFO has outsourced disclosure to third parties.”
Nicola Finnerty, partner at law firm Kingsley Napley, said the findings “come as no surprise to defense lawyers.”
“The SFO now has very clear recommendations for change and a chance to reform and perhaps salvage some credibility,” she said. “However, if change on pretty much every level of the SFO’s culture, quality, structure, processes, and procedures is not forthcoming, then there cannot be any hope for its future. A lot, of course, will depend on resourcing and funding, and therein might lie the blocker to reform.”
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