News & what's on - Written by on Wednesday, September 5, 2012 13:23 - 1 Comment

30th International Symposium on Economic Crime: University of Cambridge: SFO Director speech

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David Green CB QC, Director of the Serious Fraud Office, also delivered a keynote at the Cambridge Symposium.  The speech struck a number of familiar chords for those who have been following Mr. Green’s public statements as well as developing some of his earlier themes.

Back to basics

Mr. Green said again that the 
SFO exists to investigate and where appropriate prosecute top drawer fraud and brings together legal, prosecutorial, accountancy and computer forensic skills.

He repeated that his objective is to bring the SFO to the top of its game as a prosecutor of top tier fraud and went on to say that the SFO focus would be on conduct that undermines UK plc in general and the City of London in particular.

It should be no surprise that the SFO is proposing to focus on the City.  This was also a stated objective of the prior Director, Richard Alderman.

Focus on the City and UK PLC

What is different is that Mr. Green is putting his money where his mouth is.   Plus the political landscape has changed.

It is now politic for the SFO to investigate financial institutions and the City.  In recent weeks the SFO has announced investigations into LIBOR, Barclays (and the payments made in 2008 in connection with its capital raising), EADS/GPT (and a Saudi Arms contract) and reopened an investigation into Weavering Capital a failed hedge fund.

In cases like these, he said, the SFO will use its unique model.

This is good news.

In our view it is critical that London’s position as a pre-eminent, reputable financial hub is not lost amid the wave of recent criticism of the regulatory set up in the UK.

He highlighted that the investigations that the SFO will undertake are and will be high profile and high risk and made the fair point that not every case will result in prosecution.

This is a realistic approach.  Some suspicions and allegations will be unfounded and should not result in prosecution.

Put another way, sometimes there is smoke, but no fire.

Dealing with the decisive steps he is taking to address recent criticisms of the SFO (most recently in the Tchenguiz debacle) he flagged that the SFO was restructuring to build in layers of quality control adding a general counsel, a Chief Investigator and recently retired Judge Rivlin among others.

He announced the SFO will undertake a recruitment campaign to the Bar and private practice solicitors to bring in fresh blood.

He also referred again to beefing up the SFO’s intelligence gathering and analysis function to identify cases.

Keep it simple

Making passing reference to the Asil Nadir prosecution (though he underplays his role in this success) he also said that the SFO
 would focus cases with a view to presenting them to a jury.

This underscores a common theme with the new Director, namely that of a tougher more prosecutorial approach.  He emphasized again that where there is  sufficient evidence and it is in public interest the SFO will prosecute.  Assuming this threat is carried out the SFO could, theory, turn out to have sharper teeth than the DOJ for whom corporate prosecutions are as rare as hens teeth.

We shall see… It is unlikely that the SFO will be offering the possibility of a plea bargain versus Madoff time, anytime soon.  By the way, in our view, the SFO’s position on this is a good thing!

Speaking of the Deferred Prosecution Agreement debate he said that the SFO will also look at use of other tools including DPAs, but he acknowledged that the SFO needs to articulate why companies should self report – what’s in it for them?

We look forward to hearing more on this.

Echoing the comments of the Attorney General, Dominic Grieve MP, he said that civil recovery remained an option – and used the example of Oxford University Press.  He also observed that the OUP settlement was in line with the recent OECD recommendation for transparency.

We posted on this at the time – highlighting the much more detailed approach in the announcement of the OUP settlement.  We are surprised that this does not appear to have been picked up more widely.

On the subject of finance he said that while the SFO cannot afford to be out gunned it cannot keep financial expertise on payroll.   Instead it must have ‘surge capacity’ to meet need.  Elaborating, Libor, he said, cannot be funded by finding loose change down the back of the sofa.

Our view on this is simple.  The SFO must be properly funded.

Finally, in a lighthearted note, the new Director noted that with the office move taking place in November/December – the Nightmare on Elm Street (the SFO’s address) will be over.

In our view it already is.

[With thanks to Anne-Marie Ottaway in preparing this piece]

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