Pinsent Masons Report: SFO sees surge in tip-offs

Data obtained from the SFO indicates that the UK enforcement agency has received 350 calls to the hotline in the first quarter of 2012 alone. A further 288 tip-offs were received by e-mail or post.

Despite the high volume of calls, the SFO has confirmed that no cases have yet been accepted for full investigation as a result of the hotline.

Tom Stocker, a Partner in the Corporate Crime and Internal Investigations unit at Pinsent Masons, says that despite the lack of investigations, the whistle blowing hotline is making a clear impact.

Stocker says, "There is clearly an increased propensity for people and companies to report matters directly to the Serious Fraud Office, as well as the National Fraud Reporting Centre and the Serious Organised Crime Agency."

"Investigations will almost-certainly follow from these tip offs. There is no doubt that businesses and people involved in bribery and fraud are at an increased risk of being caught as a result of the hotline."

However, Stocker also believes that the figures show the scale of the challenge facing the SFO's incoming Director David Green.

"The SFO has a difficult job to do. At one point the former Director set the SFO a target of prosecuting 100 cases a year, yet it's receiving over 100 complaints a month at a time when it is budget is being slashed. The SFO's ambitions may not, unfortunately, be matched by its resources", says Stocker.

"With that volume of complaints coming in, the SFO has a huge job on its hands to separate the wheat from the chaff. A proportion of the tip offs will be malicious or without foundation, and sifting through those takes time and resource.

"Considering the volume of tip offs, investigations will inevitably follow. It will be interesting to see how the new Director prioritises the SFO's resources in the months ahead. It is likely that many cases will be referred to local police forces and other law enforcement agencies, and we can expect the SFO to go after the most serious and complex cases."

International dimension

Stocker also points out that the SFO might refer matters with an international dimension to other enforcement agencies, such as the Securities and Exchange Commission.

Says Stocker, “Where cases have a clear US element, they might be referred to the SEC which has greater resources, and that is where we could see some significant penalties."

Pinsent Masons say that there is a clear evidence of an emerging global trend of whistleblowing in cases of corporate governance and fraud, particularly in the US where tipsters can be entitled to a percentage of any penalty ultimately applied by the SEC.

Stocker concludes, "The recent Olympus case is a good example of what can happen when an insider blows the whistle. Likewise corporations need to understand that competitors will not have qualms about reporting others to the authorities if they think it will produce a competitive advantage. The risk of corporate wrongdoing being uncovered is only going upwards.”