SFO budget cuts restricting its ability to seize assets from convicted UK white collar criminals, says expert

Out-Law News | 11 Mar 2014 | 10:42 am | 1 min. read

The Serious Fraud Office (SFO) only managed to seize around a tenth of the assets it had intended to confiscate from convicted fraudsters last year, according to figures obtained by Pinsent Masons, the law firm behind Out-Law.com.

The proportion of assets collected by the agency responsible for investigating and prosecuting serious or complex cases of fraud and corruption has fallen to 15% of that sought over the past three years, as the impact of budget cuts has begun to be felt. In 2012-13, the SFO only obtained £3.9 million of £31.9m sought from convicted fraudsters, and it has only recovered £9.6m of a total of £62m sought over the past three years, according to the figures.

White collar crime expert Barry Vitou of Pinsent Masons, the law firm behind Out-Law.com, said that budget cuts inevitably constrained the SFO's ability to pursue ill-gotten gains, which can be expensive to do.

"Tracking down the proceeds of crime is rarely easy to do but it is essential if potential fraudsters are to be deterred and businesses reassured that white collar crime is being taken seriously," he said.

"Seizing more assets from fraudsters will see more individuals and businesses compensated. It is vital for UK businesses, individuals who have been victims of crime and for British justice. Unfortunately if the SFO is asked to operate on a shoestring they are going to find it very hard to track down criminals' assets through overseas shell companies and trusts, or reclaim funds that have been 'gifted' to relatives or former spouses," he said.

The SFO's budget has fallen by 40% since the financial crisis from £52m to £32m despite it being widely expected that the recession would lead both to more fraud being committed and to an increase in the discovery of fraudulent activity. It has recently applied for £19m in additional 'supplementary' funding to cover a number of high-profile investigations and prosecutions over the remainder of the financial year, as well as litigation costs in relation to the failed Tchenguiz prosecution.

Vitou pointed out that the bodies responsible for pursuing smaller confiscation orders in respect of lower value crimes tended to be more successful than the SFO. In particular, the Courts and Tribunals Service successfully collects 90% of confiscation orders under £1,000, he said. However, the administration costs associated with each individual claim means that more value could be extracted from successfully pursuing bigger value confiscation orders, such as those from the serious fraud cases under the SFO's remit.

"White collar criminals are being convicted but effectively getting away with the vast majority of the proceeds of their crimes," said Vitou.

"As it has been made clear from the request for emergency funding for the SFO, they require a larger budget to do their job. With an increased budget, the SFO would be able to investigate more fraudulent activity and recoup a far greater proportion of the proceeds of crime for the Exchequer and victims of crime," he said.