You lose some, you win some. A week in the life of the UK’s SFO

Heads may certainly have been spinning at the Serious Fraud Office this week. After some likely handwringing following the unexpected collapse on Monday of a key trial of two men on charges of fraud related to the Serco Geografix case, SFO prosecutors must have been punching the air on Wednesday when GPT Special Project Management Ltd (“GPT”) admitted corruption at Southwark Crown Court, ending nearly a decade-long SFO investigation. Indeed, the GPT result will have provided some welcome relief for the agency, which has faced repeated criticism and a string of unsuccessful prosecutions in recent years. However, the lack of a consistent performance and successive mistakes by SFO staff have led to commentators questioning whether the SFO really is fit for purpose.

Monday – you lose some

The prosecution on charges of fraud by misrepresentation of Nicholas Woods and Simon Marshall, both former directors of Serco Geografix Ltd (SGL), arose out of a scheme by SGL to defraud the UK government out of £12m by understating the true profitability of a prisoner tagging contract operated by it for the Ministry of Justice (MoJ). SGL’s involvement was settled by way of a deferred prosecution agreement (DPA) in July 2019, under which SGL paid a financial penalty of £19.2m and the SFO's costs, amounting to £3.7m. This was in addition to £12.8m compensation already paid to the MoJ by SGL’s parent company, Serco Group, as part of a £70m civil settlement in 2013.

The conviction of individuals in respect of corporate misconduct previously settled by way of a DPA would have been important for an SFO eager to prove its worth after repeated failures to hold any actual person to account for company wrongdoing. In the SGL case, however, as in previous SFO investigations, the prosecution failed. On this occasion, the trial of Woods and Marshall was brought to a halt a third of the way through after it emerged that the SFO had made mistakes in the disclosure process and had failed to disclose certain documents to the defence. Mrs Justice Tipples refused the SFO’s application to adjourn the trial while it remedied the situation as not being in the public interest and ordered the jury to acquit the defendants on all charges.

Wednesday – you win some

However, no sooner had the SFO’s soul-searching begun than the agency secured an unexpected victory, when GPT pleaded guilty to corruption in another longstanding bribery investigation. GPT, a former subsidiary of Airbus, had been under investigation by the SFO for misconduct in relation to the awarding of £2bn of contracts to supply communications systems to the Saudi Arabian National Guard. The company had been charged with corruption in July 2020 and was due to stand trial in 2022. However, at an application hearing on 28 April 2021, GPT pleaded guilty to one count of corruption. It was sentenced directly, to a financial penalty of £7.5m, a confiscation order of £20.3m and an order to pay the SFO’s costs of £6.7m.

Again, three individuals have separately been charged with corruption and misconduct offences in relation to the Saudi contracts, including GPT’s former managing director. Those proceedings are ongoing and the SFO will no doubt be hoping for positive outcomes. However, it is clear that an admission of guilt from a corporate in no way guarantees a successful prosecution of any individuals:

• In July 2019 a jury found three former executives of technology metals company Sarclad Ltd not guilty of conspiring with overseas agents to offer gifts and payments in return for 27 contracts in East Asia. It was subsequently disclosed that Sarclad itself had entered into a DPA three years earlier to settle charges of corruption and a failure to prevent bribery relating to the systematic use of bribes to secure contracts.
• Following the Tesco DPA in April 2017, the prosecution of three former Tesco managers for fraud and false accounting charges was finally abandoned in January 2019, with the Court of Appeal holding there was insufficient evidence for a jury to consider.
• Likewise, the SFO's investigation into the conduct of individuals relating to alleged bribery by agents of UK engineering company Rolls-Royce was dropped in February 2019, even though Rolls-Royce had entered into a DPA in respect of the conduct in January 2017. 

Results such as these have led for repeated calls for a review of the entire DPA process and a re-examination of the interplay between corporate and individual accountability. We will be considering these issues in our forthcoming podcast. For now, it is interesting to note that, earlier this month, the SFO opened a new investigation in alleged fraud by Raedex Consortium, which ran car leasing investment schemes before entering administration in March 2021, while in March the agency closed its investigation into KBR Ltd for suspected offences of bribery and corruption, declaring that the evidence did not meet the evidential test as defined in the Code for Crown Prosecutors.

As they say, you win some, you lose some.