Nick Ephgrave delivers first public address as SFO director

Unlike all of his predecessors, Ephgrave is not a lawyer. Rather, he’s a law enforcer and has been so for over 30 years. “Whenever I read a victim statement,” urged Ephgrave, “and whenever I’m briefed on the damage done to this country or the misdeeds of large corporations, I have a visceral reaction to it. My hackles rise. I have this urge to bring them in and bring them to justice securely and quickly. That’s how I feel about it. On that note, I’m absolutely committed to the SFO’s mission. That approach – that visceral reaction to criminality – will inform the sort of approach I take as director.”

Of course, the opportunities presented by the modern world for fraudsters to ‘ply their trade’ present a real challenge for law enforcers, whomever they may be, whether it’s the SFO, the National Crime Agency or the various police forces.

Across the years, the team at the SFO has evolved to encompass lawyers, investigators, forensic accountants, data experts and crypto experts. As affirmed by Ephgrave, the SFO is (and always has been) at the cutting-edge of tackling fraud, bribery and corruption and has brought forward some of the biggest cases of fraud, bribery and corruption this country has ever seen.

Ephgrave stated: “We’ve a case on our books involving over 40,000 individuals who’ve lost their money, while in the Buy2Let car scheme, £88 million worth of ordinary people’s money was invested and then lost.”

At the company level, the SFO agreed the biggest-ever deferred prosecution with Airbus, which was worth €1 billion. There was the successful prosecution of Glencore to the tune of £280 million.

“In the last five years,” commented Ephgrave, “we’ve generated £1.1 billion for His Majesty’s Treasury. That’s a return on investment of 317%. For every pound put into the SFO, we give back three. That’s a pretty good argument for investing in the SFO.”

Increasing challenges

Ephgrave continued: “The scale and complexity around us, the costs that are wrapped up by us and the people who are defending cases against us all mean that the consequences of failure are potentially very significant to us, both reputationally and financially. While that risk is very clear and ever-present, that doesn’t diminish our appetite one drop to take on defendants with big pockets. If the evidence is there, we will build a case and take it to court. That’s the right thing to do.”

According to Ephgrave, the passage of time tends to degrade evidence. Memories fade and the willingness to participate diminishes. “We must do all we can, then, to try and contract the time between investigation and prosecution. This is a real challenge for us.”

Today’s fraud cases generate enormous amounts of data. The largest case at the moment is an active investigation that involves 48 million documents, or 6.5 TB of data. “You can imagine what that kind of disclosure burden this presents for us, with the constant pressure of court timeframes, ongoing defence requests and the spectre of making a mistake hanging over us. One mistake and, all of a sudden, the ship will be dashed. We estimate that the cost of disclosure – just disclosure – gobbles up around 25% of our operational budget.”

Under Ephgrave’s leadership, the SFO will play a greater role in the national effort to tackle fraud. He’s already looking at ways in which the SFO can support the Government’s Fraud Strategy. The organisation is an active partner in the Government’s ‘Stop! Think Fraud’ campaign and staff are being sent to the National Economic Crime Centre to look at how the SFO can better engage with the latter. “It’s really important that our experience and our insight informs the national strategic threat assessment, and also that the SFO is writ large in the ambitious control strategy generated from that assessment.”

He continued: “Under my leadership, SFO cases will be faster. I’ve already described how our cases are complex, multijurisdictional and have huge volumes of data. That doesn’t mean there are not things we can do to crunch the timeline. I know how dangerous extended timelines can be, both financially and for victims. I have already brought in measures to try and address some of this.”

The first is the introduction of “a rigorous and intrusive review process” for active cases to make sure the SFO is continually focusing on the core issues. A wider range of investigative techniques is being introduced. Also, ‘technology-assisted review’ is being piloted. This is a form of machine learning to assist disclosure obligations and yield a speedier review process.

Bold, pragmatic, proactive

Ephgrave wants the SFO to be bolder, more pragmatic and more proactive. “This means that we will not be afraid to shut down investigations if it’s increasingly apparent that the threshold for charge isn’t going to be reached. We can redirect those resources to cases that have momentum and where there’s a greater chance of us putting the person in front of a Jury.”

Continuing this theme, Ephgrave noted: “We need to be bolder and explore new ways of doing things. I want to be the first to prosecute someone under the new provisions of the Economic Crime and Corporate Transparency Act. There are great new tools. Let’s be bold about using them.”

Under Ephgrave’s leadership, the SFO will “become the collaborator of choice” for other agencies and seek to bring the capacity and capability of more than one organisation to bear. “The SFO will become an organisation that’s characterised by its strength, dynamism, confidence and pragmatism.”

At present, RUSI is conducting research on the idea of incentivising whistleblowers. “I think we should pay whistleblowers,” stated Ephgrave. “If you look at the example of the USA, their system allows that, and I think 86% of the $2.2 billion in civil settlements and judgments recovered by the US Department of Justice is based on whistleblower information.”

Since 2012, over 700 UK whistleblowers have engaged US law enforcement. “This is not just about the SFO,” said Ephgrave. “I would invite us to think about whether or not we want to consider incentivising whistleblowers. It has many benefits.”

Ephgrave opined: “We have fantastic legislation here which allows us to encourage assisting offenders to progress our investigations. In the US, it’s done without any question. My own research suggests that, over here, the use of the Serious Organised Crime and Police Act is not well-developed. We seem reluctant, culturally, to do so. It’s not used very often, and yet the benefits from doing so are enormous, both to the defendant, who could receive a reasonably decent reduction in sentence, and to us as it can provide us with the evidence we need to prosecute a case more quickly.”

Building blocks

Put those two things together (ie the incentivisation of witnesses and better use of the assisting offenders legislation) and, believes Ephgrave, the building blocks are there for a much quicker and more efficient way of dealing with big cases.

Ephgrave concluded: “Going forward, the SFO will not only be really effective, thanks to fast and rigorous prosecutions, but also serve as a major contributor to the national intelligence picture such that we can better understand the security threat. We will also put our weight and expertise behind prevention initiatives. I aspire for us to be the collaboration partner of choice, both in this country and abroad. In that role, if we do those things as an organisation over the next three or four years, I think that’s the way in which we will fulfil our mission, which is to protect the country’s economy and reputation and bring justice to those victims who’ve suffered at the hands of callous and unpleasant fraudsters.”