Susan Hawley on the Demise of the SFO

Is the U.K.’s Serious Fraud Office (SFO) beyond repair?

Susan Hawley

Clare Montgomery, one of the U.K.’s top criminal defense attorneys, last month went on a podcast to answer the question with a resounding yes.

“I don’t think it’s within the grasp of any mere mortal to turn around an institution that has so many structural and systemic problems,” Montgomery said.

Montgomery now believes that the SFO should be merged into the Crown Prosecution Service.

It’s an idea that is gaining ground.

Susan Hawley is the director of the U.K. watchdog group Spotlight on Corruption. And she’s in agreement with Montgomery. Hawley says the government should create one super prosecutor for economic crime.

“The SFO has been in a bit of a freefall,” Hawley told Corporate Crime Reporter in an interview last month. “They lowered the bar so much for what would count as a self report. But it’s also because they’ve just had a number of very serious setbacks in the courts when they’ve tried to prosecute individuals. So there’s a sense now that –  why would you self report when you might be able to push it to the courts and get off scot free?”

The head of the Serious Fraud Office, Lisa Osofsky. is scheduled to leave later this year. 

Why is she leaving?

“It’s very clear now that she was brought in to smooth relations with the United States,” Hawley said. “Crucially, and there is quite widespread recognition within the legal community, that she did not really know or understand U.K. law. And she did not really understand U.K. civil service institutions. The SFO is part of the civil service. It’s not a truly independent body. It is a civil service unit.” 

“There were problems from the start about her not understanding the remit as well as you would want someone in that position to understand.”

“Problems arose in dealing with David Tinsley in the Unaoil case. Coupled with that, a lot of SFO cases went to court where they got big deferred prosecution agreements with the corporates. They then proceeded against the individuals, and case after case collapsed, whether it was the judge stopping it halfway through, or the jury acquitting. So you have these deferred prosecution agreements, which are like immaculate conceptions because no individuals have been shown to have committed the act.” 

“This kind of constant collapse of SFO trials has really, really damaged the SFO, possibly more than what Lisa did. There was a lot of unhappiness in the SFO. We’ve got some real issues with our disclosure regime, which is very heavily stacked in favor of the defense and based on a kind of pre-digital legislation.” 

“And you also have a kind of problem with the judiciary in the U,K. There isn’t any training for economic crimes. So you get very different outcomes. You don’t get consistent outcomes for these economic crime cases. Some of these problems were from the SFO’s own making.”

“We’ve had two reviews – one into the collapse of a trial. It was a fraud trial against a major U.K. contractor called Serco. And that trial collapsed. There was an independent review done of why that had collapsed. Then there was also an independent review of what happened in the Unaoil case.” 

“These two reviews came out last year. And they also showed an SFO really struggling with morale and low resources. One of the problems it has with the disclosure regime is you cannot for find good people to come into that job of reviewing thousands and thousands of documents to satisfy a court.”

The law firms get good people to do that. Why can’t the SFO?

“The law firms get good people to do that because they can pay good money. The SFO can’t increase salaries. They can’t pay counsel fees higher than a certain rate. Essentially, they are going into these processes with their hands tied behind their back. This has created real problems for the SFO.” 

“With a series of failures, fewer and fewer  good lawyers want to go and work there or represent them in court. You have a whole section of the top bar of the U.K. in this area that just won’t touch an SFO prosecution case. It has become a vicious circle downward.” 

“This has happened under Lisa. It’s not all of her fault. The Unaoil case was her fault. Many people thought the official review let her off very lightly. And many people thought that she was going to be forced to step down, which she hasn’t done. Instead, she signaled that she is going to leave.” 

“The real question for the SFO is can it get someone really good to come and lead it. It’s seen as such a toxic environment that there are not many top lawyers, King’s Counsel, who take the salary cut to go work there, or take a job where the SFO is seen as being a bit of a basket case.”

Lisa Osofsky is an American lawyer. How did she get that job?

“In part, the government was very keen on rebuilding relationships with the United States Department of Justice,” Hawley said. “Her predecessor, David Green, was robust and tough. He put the SFO on the map. And he said – we are going to prosecute. We are not here to negotiate with companies, we are going to prosecute. And he had some tough prosecutors under him. He was robust about the SFO’s independence. And after Green, there was a bit of sentiment to bring the SFO to heel.”

“The SFO is the only body in the U.K. that can take on big business. That is not something that governments are necessarily only on board with.”

Will they now go back to someone like David Green?

“That decision is made by the U.K. Attorney General. There is a robust appointment process, through which candidates emerge, then the ultimate pick with the Attorney General. It’s concerning whether they are going to get someone who can represent the SFO in a way that David Green did politically. He gave it quite a profile.”

“You want someone who is a top King’s Counsel. It should be one of the most prestigious prosecutorial jobs in the country. David Green turned the SFO around. He made it a place where people wanted to go and they were proud to be associated with it.”

“If the SFO can’t find someone of that caliber, then there are real risks to the SFO’s existence.” 

“One of the top lawyers in this field is Clare Montgomery. If you have big money and are up against the SFO, you want Clare Montgomery as your defense counsel. And she gave an interview recently where she said that she no longer believed it should exist. And you have people like a former Attorney General and Justice minister getting up in Parliament saying – I no longer think the SFO should exist.”

“Clare Montgomery was asking – is it really effective any longer? Its brand has become so toxic. There are really good allies of the SFO, who have now gone into private practice, who are saying – maybe it needs to have its name changed or some big rebranding.” 

“We have quite a lot of different agencies. You have the Crown Prosecution Service, which has an economic directorate. And then you have the SFO. And the boundaries between which agency does what are blurred and unclear. Too many cases are between the gaps.”

“If you look at the record of the Crown Prosecution Service, it is no better and in some ways it is a lot worse than the SFO. It was even more decimated by funding cuts.” 

“There may be a good argument to merge these two bodies together so that you would have a super economic crime prosecutor to do the top level, the middle level and even the bottom level. And you would build up that expertise that the U.K. so desperately needs, to build and retain people who know how to prosecute.” 

“There is a question about how to attract good talent when you don’t pay that much. And what do you do about it? The public service is the public service.”

“If you had a successful agency, people would want to work there. What you have at the moment is the worst of both worlds. You have an SFO that can’t pay that much. The head of a division at the SFO gets paid about $95,000, which is less than what a newly qualified lawyer would get in a city law firm. It’s the worst of both worlds. Not enough pay and a kind of toxic reputation. You continue to undermine the morale of staff. You need someone, a legal heavyweight to come in and turn it around.”

“And we need the government to put in place some serious reforms.” 

Is parliament considering consolidation and making a super prosecutor?

“Not yet. This is a new proposal about merging the SFO into the CPS. That was Clare Montgomery. She’s a top KC. She has a really good insight into what’s going wrong. I don’t think it’s coming from a pro-business point of view necessarily. She’s saying – this is not working anymore.”

[For the complete q/a format Interview with Susan Hawley, see 32 Corporate Crime Reporter 10(12), March 6, 2023, print edition only.]

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