The Serious Fraud Office is reviewing its operations after a high-profile embarrassment in court. So what’s going on and can the biggest fraud regulator be fixed?
“Like a teenager who has found a new friend.” That’s how Judge Martin Beddoe described Lisa Osofsky, director of the SFO, as behaving in a high profile international bribery case. It’s the latest in a long line of negative headlines for the regulator which has seen some start to question its existence.
So, what went wrong and can anything be salvaged?
The latest case relates to the regulator’s prosecution of executives from Unaoil for offering bribes to secure lucrative contracts. The defence tried to get the case thrown out over Osofsky’s communications with David Tinsley, a former FBI agent and now private investigator working for the defence.
In a series of what were described as ‘flattering’ texts between the two sides, Tinsley appeared to be attempting to sweet talk Osofsky into going easy on his clients. She in return appeared to be trying to steer him towards persuading his clients to plead guilty.
It worked. Tinsley is said to have approached his clients behind the backs of their legal team claiming that they may receive a more lenient sentence if they agreed to plead guilty. The defence argued that these communications made it impossible for their clients to receive a fair trial.
Judge Beddoe dismissed the claim but upheld the criticism of senior figures within the SFO. The regulator has announced it will now undertake a review to see what learnings might come.
However, this is not the first time in recent memory that the SFO has been caught short. The last few years have been marked by high profile failures and long drawn out cases. There was the acquittal of former Barclays executives accused of conspiracy to commit fraud; there was the failed prosecution of former employees of Sarclad and Guralp Systems with the company reaching a deferred prosecution agreement; and the collapse of the Tesco fraud trial.
Such high profile failures prompted Compliance Week to suggest companies accused of fraud might decide to take their chances at trial rather than take the safer DPA option.
The SFO’s reputation has taken a pounding and prompts renewed calls for a fundamental overhaul of the organisation. Some have been calling for the regulator to be merged with the National Crime Agency.
Osofsky has been vocal in opposing such a move, but this latest episode doesn’t do her credibility any favours. Either way, the recently announced review needs to be much more than a box-ticking exercise. With experts warning of an increased risk of fraud in the fall out from COVID 19 the UK needs an anti-fraud regulator which is at the top of its game.