Brian Sims
Editor
Brian Sims
Editor
THE SERIOUS Fraud Office (SFO) should be replaced by a new body wholly dedicated to combating economic crime and with greater emphasis on prevention. That’s according to a new position paper published by the free market Think Tank that is the Institute of Economic Affairs.
According to the Institute, the SFO has been “plagued” by a series of high-profile failures, including “ethical misconduct and incompetence”. In 2021, a high-profile bribery conviction of a former Unaoil executive was overturned due to the SFO’s failure to disclose key material relating to a director’s ‘inappropriate’ communications with a Unaoil advisor during the prosecution.
Leading economic crime academics Professor Mark Button (co-founder and co-director of the Centre for Cyber Crime and Economic Crime at the University of Portsmouth), Dr Branislav Hock (co-Editor-in-Chief of the Journal of Economic Criminology) and Dr David Shepherd (economic crime researcher and Senior Lecturer at the University of Portsmouth) are now calling for the SFO to be abolished and a Serious Economic Crimes Office (SECO) to be established in its place.
The new body would keep powers to prosecute serious fraud, but would also have new responsibilities at its disposal to deter fraud before it occurs. The SECO would be expected to develop good practice advice on prevention in closer collaboration with the private sector.
Costly delays, failed prosecutions
According to the authors of the report entitled ‘Replacing the Serious Fraud Office: The Case for a New Approach to Serious Economic Crime’, the criminal justice system is “incapable of addressing the intricate, technical and complex nature” of cases involving serious fraud. This is leading to costly delays and, quite often, failed prosecutions.
The SECO would instead be encouraged to embrace alternative justice mechanisms, including Deferred Prosecution Agreements, and the use of larger fines. There would also be expanded powers to set standards and impose regulatory sanctions. This would include Ethics Orders, which would require corporations to implement ethics and compliance programmes.
The authors also envisage the creation of a register of serious economic crime offenders, modelled on the HMRC’s list of individual and company tax defaulters. A spot on the register could result in prohibition from being a company director or otherwise selling financial products.
The report suggests enhancing the level of collaboration with private investigators specialising in economic crime. This could involve staff exchanges or outsourcing partial or full investigations to experienced firms such as Kroll, KPMG or EY.
The thought-provoking position paper suggests that the SFO’s focus on high-profile prosecutions has diverted resources away from other important areas, such as crime prevention and the support of SMEs who are increasingly susceptible to fraud. The proposed SECO would address these gaps by prioritising a more balanced approach, combining enforcement with preventative measures.
Record levels
Professor Mark Button explained: “Serious economic crime is at record levels and set to continue to rise. The existing structures and approaches are failing to have a significant impact. Our report sets out a wide range of innovative reforms and actions designed to cope with this increasing challenge.”
Dr Branislav Hock added: “The segregated serious economic crime policing structure in the UK requires a new enforcement authority that operates above the surface of institutional and procedural complexities.”
Dr David Shepherd concluded: “The SFO is hamstrung by its focus on criminal justice and courts that are not fit-for-purpose. Breaking these constraints with a revitalised agency, a new identity and a broader range of regulatory-style powers would better serve the public good.”
*Read Replacing the Serious Fraud Office: The Case for a New Approach to Serious Economic Crime
**The report builds on previous research conducted at the Institute of Economic Affairs that highlighted a series of high-profile SFO failures, including the “forging of documents, systematic prosecutorial incompetence and inefficiencies”