Between 2008 and 2010 the SFO conducted between 43 – 63 raids per financial year (April 1st to March 31st), yet following the 16 raids it conducted in the first quarter of 2011, the SFO did not lead any raids in the following year.*
According to Pinsent Masons, the figures suggest that the SFO has taken an overly cautious position following its dawn raids on the properties of businessmen Vincent and Robert Tchenguiz in March 2011, for which it has been forced to apologise due to flaws in its search warrants.
Pinsent Masons says that the SFO’s reluctance to conduct raids might raise some eyebrows, because the amount of fraud perpetrated and discovered during periods of low economic growth tends to be high.
Barry Vitou, Partner at Pinsent Masons, says: “These statistics show that recent warnings of dawn raids from the SFO have in fact been hollow threats.”
“With the SFO under new management it is critical that it delivers on its promises to investigate and prosecute serious fraud that threatens to damage UK PLC. Unless it does so it risks being perceived as a toothless prosecutor.”
The SFO recently stated it would not shy away from convicting ‘white collar’ criminals, particularly in cases that may threaten the reputation of the City.
Barry Vitou adds: “The SFO’s decision to rein back on raids during the past year could be a missed opportunity. You would expect that a financial crime agency dealing with fraud would become very active after a recession, but that hasn’t been the case for the SFO in the last year.”
“If businesses and individuals are guilty of serious fraud it is vital that there is an effective system in place to catch them. The SFO may be smarting from public criticism of its perceived shortcomings in the Tchenguiz case, but it is important that it is not deterred from bringing important cases.”
The cost of fraud to the UK economy is currently estimated at around £73 billion per year (source: National Fraud Authority), but the SFO’s budget, has been slashed – dwindling from £51.5m in 2008 to just £33.9m today.
*Based on number of applications by SFO for search warrants. Data does not exclude any failed applications for warrants or warrants that are not subsequently used in a raid.