Budget cuts continuing to hinder SFO work, says expert, as raids drop by half

The SFO, which investigates and prosecutes the most serious cases of fraud, corruption and corporate crime, conducted 13 raids as part of its investigations in 2014/15. It conducted 26 such raids in 2013/14, according to figures obtained by Pinsent Masons, the law firm behind Out-Law.com.

Corporate crime expert Barry Vitou of Pinsent Masons said that the figures could also reflect the SFO's reluctance to act following a number of high-profile failed investigations.

"A sharp fall in the number of raids executed by the SFO does not, unfortunately, signal lower white collar crime rates," he said. "The figure simply reflects that fact that the organisation is in no shape financially to deal with its caseload and effectively pursue new leads."

"Raids are a key way for the SFO to collect evidence on which to build their case against businesses or individuals – it is vital, therefore, that the resources are there to carry them out. Fraud, bribery and corruption are notoriously difficult to prove; raids allow the seizure of material which often proves central to securing a conviction. Planned budget cuts will place the SFO under even greater pressure - what the organisation desperately needs is an increased and more regular flow of resources," he said.

Figures obtained earlier this year by Pinsent Masons showed that the number of people prosecuted for fraud and corruption offences had fallen by almost one fifth over a four-year period, despite an increase in the number of tip-offs of suspected wrongdoing made to law enforcement. Prosecutions fell from 11,261 in 2011 to 9,343 in 2014, despite government-backed central reporting service Action Fraud recording more than 210,000 reportable calls during financial year 2013/14.

The SFO's budget is projected to fall even further next year, according to spending projections included in its most recent annual report. The agency will be expected to reduce spending by 34%, from £69.1 million in 2014/15 to a planned £45.1m in 2015/16. The SFO's budget has fallen steadily since the 2008 financial crisis in particular, although it is able to apply to the government for additional 'blockbuster' funding to cover the costs of particularly high profile investigations on a case by case basis.

This year, the SFO was ordered to pay an estimated £7m in legal costs in relation to its failed investigation of Welsh mining firm Celtic Energy. The case came shortly after the High Court ordered the agency to pay millions of pounds in compensation to businessmen Robert and Vincent Tchenguiz in relation to "unlawful" premises raids conducted in March 2011.

"Recent high profile failures may have left the SFO cautious," said Vitou. "Unlawful raids have landed them in trouble before, and officials may now be less willing to take forceful action as a result."

"While clearly the SFO needs to be careful not to pursue cases without merit, it's vital that suspected fraud and corruption is properly investigated. The SFO needs to strike a balance to make sure that it doesn't err too far on the side of caution. In the UK, there has always been a problem over deterring fraudsters - the attention that the SFO raids attract helps to create that deterrence," he said.