News & what's on - Written by on Sunday, August 31, 2014 12:24 - 1 Comment

OPINION: SFO Whistleblowing data flags need for debate on incentivised whistleblowing & better use of money laundering disclosures

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harlequin-fraud-officeA freedom of information request by the Huffington Post has revealed the SFO has followed up three cases following tip offs via SFO Confidential, hotline and email reporting address.

The Huffington Post reported that two of the reports, referred in September 2012 and January 2013, were taken forward as ‘projects’, and one referred in 2012, was taken up as a ‘pre-project’.

Put another way neither were formally opened as investigations at the time.

The SFO launched its “SFO Confidential” whistleblowing service to much fan fare in November 2011 under the former Director Richard Alderman.

The Huffington Post reported that SFO Confidential telephone hotline received 1057 calls from its inception until its closure in 2012.

Under its then new Director, David Green CB QC, the SFO closed the hotline on 12 June 2012 as “a disproportionate amount of staff time was being spent dealing with telephone calls”.

In its place the SFO continued with its email reporting mailbox.

The Huffington Post reported that the SFO’s entire ‘Confidential’ whistleblowing service received 5,582 reports so far since November 2011.

Some have criticized the numbers, the Huffington Post reported that a member of the Public Accounts Committee, Tory MP Steve Barclay, said:

“It is unacceptable that the SFO has followed up as few as 3 cases out a potential 5,500 from its tip-off service. This is letting down those who come forward with information, and also the taxpayer who is funding a body that is failing to perform as it should… …The idea behind a confidential tip-off line is to target the action of the SFO on the fraudulent use of tax payers’ money. Once again there are now serious questions as to whether the SFO is delivering value for money to the tax payer. The SFO should certainly be looking into its handling procedure for reports of fraudulent activity and should ensure that each tip-off is given serious consideration rather than being dismissed as it seems to have been in recent years.”

We disagree.

A Serious Fraud Office spokesperson said:

“The Serious Fraud Office deals with the very most serious and complex fraud, bribery and corruption. The vast majority of fraud investigations are carried out by other organisations.”

 “SFO Confidential is for people who want to tell the SFO about serious or complex fraud or corruption, including whistleblowers. The SFO decided to close the telephone element of SFO Confidential on 12 June 2012 because a disproportionate amount of staff time was being spent dealing with telephone calls that did not contribute to this aim.

 The Action Fraud helpline remains available for all types of fraud referrals, and SFO Confidential can be contacted by email and post, or through the secure online reporting form.”

Opinion

The SFO whistleblowing hotline was always a gimmick.

The SFO statistics also flag the need to debate the use of incentivised whistleblowing.

The US has a long history of incentivised whistleblowing including Que Tam and a scheme put in place by the IRS.  More recently Dodd Frank imposed an additional incentivised whistleblowing scheme which has produced results.

The UK FCA recently argued that incentivised whistleblowing was not the answer, did not work and reported:

“We therefore propose not to introduce financial incentives, but to press ahead with the regulatory changes necessary to require firms to have effective whistleblowing procedures, and to make senior management accountable for delivering these”

Unincentivised whistleblowing doesn’t appear the answer in its current format either.

The UK has strong anti-money laundering reporting obligations which exist under the 2002 Proceeds of Crime Act. We have long argued that information gleaned from these reports, under a regime which was designed to gather intelligence, should be more efficiently reviewed.

 

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