A larger staff base, sharper legal tools and a more proactive approach will strengthen the hand of the Serious Fraud Office (SFO) in the fight against corporate crime, says its Director Nick Ephgrave QPM.

Speaking at Chartered Accountants’ Hall as part of the annual meeting of the Fraud Advisory Panel, Ephgrave noted that the SFO has already produced record performance in the 20 months since he has been in post.

Milestones include the announcement of 10 new investigations – one every eight weeks – plus two cases being brought to charge within 18 months of Ephgrave opening them. “That’s really quick,” he said. “Our average charge time is 4.3 years. Now, we’re doing it in half that.”

In the past 18 months, the SFO has also charged 17 individuals with 44 fraud, bribery and corruption offences. For the 18 months ahead, it has eight cases listed at Southwark Crown Court. “These are big numbers,” Ephgrave said. “We’ve been busy – and that’s only going to accelerate.”

Preventative role

Ephgrave noted that, under his leadership, the SFO’s motto is ‘Sharper, faster casework’. To that end, it is working to a strategy with four pillars.

First, it is committed to investing in employees, in terms of both numbers and capabilities. “By the end of next year, we’ll be bigger than we’ve ever been, with close to 700 people,” Ephgrave said.

Second, the SFO will drive investment in technology. For the first time, it will have a comprehensive case management system, while a data fusion project will pool information from a range of old IT systems to enhance analysis. 

In addition, Ephgrave stressed, the SFO will invest in its ability to link up with intelligence systems, so it can pull data from sources it has not previously been able to access. Turning to artificial intelligence, the SFO has already trialled a machine learning tool on a disclosure exercise in a live case, which delivered a 40% efficiency saving with zero loss of accuracy. The tool is now being rolled out to other cases.

The SFO will also adjust the nature of its mission. While maintaining its role as an investigating and prosecuting body, the agency will beef up its intelligence-gathering activities. “There’s more we can do to assist the country’s understanding of the threat that fraud presents,” Ephgrave said. 

In tandem, it will play a larger role in crime prevention. As a policing veteran of 35 years’ standing, Ephgrave noted: “It was always drummed into me that it’s far better to prevent a crime than solve it. We have a part to play in educating companies and individuals on how to avoid falling into pitfalls of criminality – whether inadvertently or deliberately.”

Finally, the SFO will boost its engagement with international partners. That commitment has already borne fruit with the March launch of the International Anti-Corruption Prosecutorial Taskforce; a collaboration with the Office of the Attorney General of Switzerland and the Parquet National Financier of France.

Game changers

Alongside the development of Ephgrave’s strategy, the Economic Crime and Corporate Transparency Act (ECCTA) has equipped the SFO with sharper legal instruments for carrying out its work.

“We’ve seized the new powers and provisions that are relevant to us with both hands, and have been using them extensively,” Ephgrave stressed. “For example, the use of Section 2 powers at the pre-investigative stage of fraud cases has been a complete game changer. It enables my intelligence division to rapidly assess a referral and bring it to an investigative point much more quickly.”

Another game changer, he pointed out, is the lowering of the bar for criminal liability. No longer must investigators prove that key figures in a company represent its ‘directing mind and will’. Now, the gauge for liability is simply whether the individuals concerned are senior managers. “We haven’t yet tested that in prosecutions,” Ephgrave said. “But we will. And I’m determined to be the first to create case law on what ‘senior manager’ means here.”

Looking ahead, Ephgrave highlighted the entry into force of the corporate Failure to Prevent Fraud offence, due in September, as “another very significant tool in my toolbox, which I intend to use as much as I reasonably can. We’re training all our people on this.”

Pragmatic solution

Among the challenges that Ephgrave intends to confront, one issue he describes as “existential” is work generation. “We have many referrals each year, but it’s a slightly reactive process,” he said. “We sit there and wait for cases to come in. I’m not content with that. I’m more ambitious than that. I want us to go hunting for cases.”

He advocated for the incentivisation of whistleblowing, proposing a “well developed, incentivised whistleblowing scheme” that would help develop a healthy pipeline of fraud cases in areas that would otherwise never be investigated. “It would also incentivise corporates to get their own house in order and, if they’ve got a problem, to come and tell me about it – because then we can work together and sort it out via a deferred prosecution agreement (DPA), or some other mechanism.”

Ephgrave hailed DPAs as a “fantastically pragmatic” solution to a knotty problem: how to keep a company running while dealing with suspected wrongdoing. “I want more of them,” he said. “And incentivised whistleblowing will make corporates really concentrate and think about what they want to do when they come across wrongdoing – especially in light of the Failure to Prevent offence.”

ICAEW Director, Trust and Ethics, Laura Hough says: “Accounting for an estimated 41% of crime last year, fraud remains the most common type of offending against individuals in England and Wales. We welcome the new strategic direction of the SFO and await further developments in relation to whistleblowing.”

Hough notes that the government published guidance on the Failure to Prevent Fraud offence in November, outlining reasonable prevention procedures that organisations should have in place. “That covers top-level commitment, risk assessment, proportionate risk-based prevention procedures, due diligence, communication – including training – plus monitoring and review,” she says. “For further insights on ECCTA please visit our Economic Crime Hub.”