A sobering read. What next for the SFO?

The reports into the SFO's handling of two recent cases were published on 22 July 2022. SFO director Lisa Osofsky has described the reviews as “a sobering read for anyone who believes in the mission and purpose of the SFO". Both Sir David Calvert-Smith's review into the SFO's handling of the Unaoil investigation, set up by the Attorney-General, Suella Braverman, and Brian Altman QC's review into the collapse of the R v Woods and Marshall trial, which was set up by the SFO itself, made a large number of recommendations for reform and improvement. Although the reports deal with issues arising from different circumstances, it is notable that they both highlight similar issues in the internal running of the SFO, including a lack of resources, inadequate supervision and a lack of compliance with SFO internal procedures. Can these concerns be addressed? Or is it time to call time on the SFO?

Sir David Calvert-Smith’s report (the “Unaoil Report”)

The Unaoil Report concentrated on the interaction of the SFO with third parties in the Unaoil case, as well as looking at the management of the investigation in the round. It was commissioned following the quashing of the conviction for bribery of Ziad Akle, the first of three men to have their convictions overturned in this case. Allowing Akle’s appeal, the Court of Appeal ruled that the SFO had "handicapped" Akle's defence by not disclosing key documents about its contact with American “fixer" David Tinsley and that, accordingly, Akle had been denied a fair trial. The convictions of co-defendants Paul Bond and Stephen Whiteley have since also been quashed on similar grounds, the last, coincidentally, on the same day as the reports were released. 

Sir David identified a number of issues and recurrent themes that he considered the SFO needs to address in order to “move on and learn” from the Unaoil case. Some specifically relate to the events of the Unaoil case itself, such as the involvement of David Tinsley and the approach displayed towards him and his communications by senior management, which “amplified the level of distrust between the case team and senior management” and created difficulties when it came to disclosure of evidence. The SFO’s Operational Handbook at the time did not deal with the issue of non-legal representatives. However, it has since been amended to cover this topic clearly. It was also noted that, at the time these events occurred, Lisa Osofsky was very new to the director role following a period of “interregnum” since the departure of the previous director, David Green QC, and had been given little or no training or guidance on how she might be expected to respond in such circumstances. The government has already committed to address these issues.

However, many of the concerns raised in the Unaoil Report appear to be rooted in the SFO’s culture and practices. These are arguably more serious but potentially just as fixable.

• Quality assurance: Sir David identified a lack of command over the case as a whole. Ownership and accountability were not clear and there was no effective understanding of, or challenge to, the issues. 
• Inadequate resourcing: Insufficient staffing of cases led to the need for prioritisation and created pressure points in the conduct of investigations.
• Poor compliance with relevant policies: Sir David noted a failure by staff to comply with relevant policies relating to case management, resulting in inadequate record-keeping, a failure to pass on relevant information and an ineffective assurance process. 
• Lack of trust between case team and senior management: Differing priorities in the management and handling of the case led to a “disconnect and growing mutual distrust” between the different levels of staff members. This led to a “degree of confusion” about the most appropriate case strategy and the case team feeling “unsupported” when they raised their concerns.

Some of these criticisms and concerns are not new. Her Majesty’s Crown Prosecution Service Inspectorate report of October 2019, published shortly after Ms Osofsky took over as director, found that while the operational handbook set out what was expected and, in some instances, mandated, “there is inconsistency in application, with individual case managers operating in their preferred way and this can impact the effectiveness and efficiency of case progression… Whilst there is a clear internal guidance and expectations the SFO could do more to improve its assurance processes to ensure full and appropriate compliance.” It seems that there is still more to be done in this regard. In its response to the Unaoil Report, the government accepted Sir David’s recommendations to emphasise and communicate to all members of staff the requirement to comply with all the casework assurance processes set out in the SFO’s Handbook, and to address issues around disclosure strategy and the management of documents.

The issue of resourcing is also not new but more a perennial source of concern for those leading the UK’s response to financial crime. Lisa Osofsky recently faced some tough questions from the House of Commons public accounts committee (“PAC”) on why the SFO was at risk of over-spending on its budget by £2.5 million (a so-called “excess vote"). The PAC was keen to hear evidence on the SFO's conduct of disclosure in the Serco Geografix Ltd bribery investigation. A failure by the SFO to identify and disclose relevant documents in that case led to the collapse, in April 2021, of the trial of two former Serco executives, Nicholas Woods and Simon Marshall (the “Serco Executives”), after an investigation lasting over seven years. Much of Ms Osofsky's evidence to the PAC focussed on the huge volume of documents that the SFO often has to deal with as part of its cases and the lack of technology and expertise the agency has to cope with such quantities of material. She subsequently commissioned the second of the two reports now published, that by Brian Altman QC, to review SFO failings in that investigation.

Brian Altman QC’s report (the “Altman Report”)

The Altman Report concentrated on the SFO's disclosure processes and capabilities in the specific circumstance of the collapse of the prosecution of the Serco Executives for fraud. However, the conclusions are of general application for the agency going forward. 

Amongst the main findings and recommendations of the Altman Report are that:

• Staffing and resourcing were insufficient for the job, with inexperienced personnel being put in charge of large and complex cases, sometimes without sufficient support. The Altman Report recommended that remuneration for disclosure reviewers is currently not reasonable and should be increased. In response, the SFO has said that although it will review fees in the next three months, increasing these costs would reduce the funding available for other operational priorities. Other recommendations for improving resourcing and reducing pressure on case teams have been accepted by the agency.
• The SFO’s disclosure reviewers had “an embarrassment” of internal disclosure guidance documents to assist them. However, these documents lacked clarity and practical advice, and the sheer quantity meant that important messaging risked being lost. The SFO has committed to reviewing its disclosure guidance and issuing any new policies or guidance by the end of 2022.
• Some of the relevant documentation may not have been disclosed as a result of document reviewers misunderstanding their role. The SFO has responded that it recruits staff with appropriate skills but has accepted that it needs to provide targeted casework project management training within six months of the report. 
• The SFO’s internal infrastructure was unable to deal with the additional strain placed on it by the Covid-19 pandemic – for example, there were no facilities to enable audio or video calls with staff. The Altman Report recommends that the SFO should continue to invest in technology, both to improve its document review and case management systems and to ensure its teams can work remotely if necessary. In its response, the SFO pointed to the £4.4 million it was allocated in the 2021 Spending Review, which it will use to ensure its technology is “fit for purpose, including hybrid working”.

Addressing the issues

How effectively the SFO will deal with the concerns and criticisms raised in the two reports remains to be seen. While it may be possible for the agency to address some from within – review and adherence to procedural processes and policies, enhancing supervision of case management and repairing the challenging internal culture, for example - tackling others will ultimately depend on funding decisions made outside the SFO itself. Recent press reports have suggested that the SFO has been asked to look at ways of reducing headcount by up to as much as 40% as part of the government’s efforts to cut civil service costs. It is difficult to see how such cuts would not further exacerbate the resourcing issues identified in the reports and forestall attempts by the SFO to put into place the reports’ recommendations.

While both reports were careful not to lay the finger of blame on any one individual, if the SFO is to survive, the criticisms must not fall on deaf ears. Ms Osofsky has not yet indicated whether she will seek an extension to her term, which is due to end in September 2023. Will she roll up her sleeves and get on with the job or call time on her tenure at one of the UK’s top crime fighting agencies? We’ll have to wait and see.

Both reports and the government's and SFO’s responses are available from the SFO's press release, here.