Diversity and Inclusion - best laid plans
29 Apr 2013 | 10:05 am | 2 min. read
- SFO must avoid hand to mouth existence, says Pinsent Masons - Extra funding struggles to make up for budget cuts - Properly funded SFO vital for preventio of white collar crime in UK
The Serious Fraud Office’s (SFO) income fromsuccessful investigations jumped by 62% last year*, from £4.1m to £6.6m, says Pinsent Masons, the international law firm.
The SFO is allowed to keep some assets seized as a result ofits investigations through the Treasury’s Asset Recovery Incentivisation Scheme (ARIS).
Pinsent Masons warns that the funds that the SFO has historically kept are dwarfed by the scale of the white collar crime challenge that the agency is up against.
Barry Vitou, Partner at Pinsent Masons, says: "A properly funded SFO is crucial for protecting UK businesses and the UK economy from white collar crime. Preventing economic crime should be a priority for the Government."
"Unchecked white collar crime does serious damage to UK corporates and to the reputation of the City as a global business hub. White collar crime is a serious and growing risk to UK corporates and the UK economy. High levels of financial crime threaten jobs and can have a significant impact on the overall performance of the economy."
"It’s encouraging that historically the SFO has been able to top up its budget based on its own successes, but when you compare the SFO’s shrinking budget to the billions of pounds that white collar crime puts at risk every year, it’s hard to see how the SFO can keep up."
Barry Vitou adds: "The Treasury has agreed in principle to provide ad hoc funding when necessary for big cases. LIBOR is an example of this."
"Ad hoc funding for the SFO is crucial as the SFO’s operating budget continues to shrink. The SFO director has indicated a preference for case-by-case funding over extra funding from the incentivisation scheme. However extra funding is secured,care must be taken that ad hocfunding does not leave the agency living a hand-to-mouth existence."
"The SFO Director has said that the SFO will never refuse to take on a case simply on grounds of cost and that to do so would be deeply damaging to public confidence and provide a perverse incentive to criminals to commit high value complex fraud."
Pinsent Masons says that the £2.5m increase in the SFO’s income from the asset recovery schemeonly just makes up for ongoing cuts to the SFO’s operatingbudget.
Over the same period, the SFO’s operating budget** was cut by £1.2m from £39.9m to £38.7m.
Between 2008-9 – the first full year that the SFO received funds from the asset recovery scheme – and last year, the SFO operating budget** has fallen by £16m, from £54.7m to £38.7m, while the annual income from asset recovery has only risen by £5.4m.
The SFO’s budget is forecasted to fall to £33.3m in 2014-15.
Barry Vitou says: "While ad-hoc funding is welcomed, SFO funding must to be consistent and sufficient to enable the SFO to plan ahead with confidence. The SFO must avoid falling into the trap of living hand to mouth and avoid repeating history where there has been an element of penny wise, pound foolish."
Pinsent Masons adds that the SFO’s ARIS funding increasingly provides the vast bulk of the agency’s additional income, making up 95% of the SFO’s income last year, up from 69% the year before.
SFO income from successful investigations
*Year to March 31st 2011 and 2012
**Total Resource Budget, plus income
Diversity and Inclusion - best laid plans
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