Pinsent Masons says that the SFO has upped its activity partly in response to rising public and political pressure on law enforcement agencies to clamp down on convicted fraudsters and career criminals who are still benefiting from their illegal gains.
Barry Vitou, Partner at Pinsent Masons, comments: “There has been a frustration that so many white collar criminals are able to keep hold of the assets that they have gained through fraud. If you are going to deter people from committing financial crime then you need to make sure that convicted white collar criminals are seen being stripped of their country mansions, their fleets of sports cars and their offshore bank accounts.”
Barry Vitou says that as well as increasing raids to seize assets, the SFO has also restarted property searches as part of criminal investigations (ie before the prosecution takes place). In the last 12 months it conducted eight such raids whilst in the previous year the SFO disclosed that it had not undertaken any such raids.
SFO investigative searches halted following controversy surrounding the Tchenguiz case. In 2011, the Tchenguiz brothers – Robert and Vincent – were detained in dawn raids on their homes and offices by the SFO. They were released and no charges were brought against them. The Tchenguiz brothers are now pursuing a major damages case against the SFO. The SFO’s perceived failure on this occasion may for a time have fuelled a reluctance to carry out further property raids in other investigations.
Examples of where the SFO has used confiscation orders to seize assets include:
· The case of Achilleas Kallikas, the self-styled ‘property tycoon’ who masterminded a fraud worth £750million. He attempted to defraud banks, including Allied Irish Bank, into providing him with millions of pounds to finance a property portfolio.
· The case of Asil Nadir, the former CEO of Polly Peck, the collapsed British conglomerate. Nadir turned Polly Peck into a FTSE 100 company before its collapse in 1990. He was subsequently investigated for false accounting and theft, before fleeing to Cyprus in 1993 to escape trial. He finally returned to the UK in 2010; and was subsequently tried and sentenced to 10 years imprisonment in 2012.
· Two MoD civil servants in Northern Ireland who were paid illicitly to favour a company’s bid in the tendering process for CCTV contracts.
Barry Vitou comments: “Greater amounts of assets retrieved from fraudulent activity is an encouraging sign as it indicates that the SFO has stepped up a gear.”
Pinsent Masons says that for the SFO to remain effective, it needs to continue to receive sufficient government funding to tackle financial fraudsters.
Barry Vitou explains: “The recent success of the SFO underscores just how important it is that the organisation continues to receive the proper funding. We believe that the right route would be to plough at least part of the funds retrieved back into the SFO.”
“Fighting financial crime does not come cheaply. Searching premises is a costly procedure. For example, one recent search involved over 70 police officers and SFO officials.”
“The SFO needs a stable funding system put in place so that it can pursue more cases – businesses frequently complain that the authorities reject too many fraud cases for lack of resources.”
Number of property raids conducted by the SFO relating to financial fraud (both raids as part of initial investigations and raids to seize assets after conviction, year ending March 31st)