UK's Serious Fraud Office "bouncing back" as property raids triple, says expert

Out-Law News | 16 Jun 2014 | 2:44 pm | 2 min. read

The number of property raids carried out by the UK's Serious Fraud Office (SFO) in response to suspicions of fraud or white-collar crime more than tripled in the year to 31 March, according to figures obtained by Pinsent Masons, the law firm behind Out-Law.com.

However, the 26 raids conducted in 2013-14 is still far fewer than the longer-term average of 50 business and individual property searches per year, which corporate crime expert Barry Vitou of Pinsent Masons said reflected its need for sound and sustainable funding.

The SFO was forced to suspend property raids in 2011-12 following its mishandled investigation into the business activities of Robert and Vincent Tchenguiz. Although the agency still faces a £300 million damages case from the businessman, Vitou said that the increase in raids from the eight conducted in 2012-13 showed that it was "finally bouncing back from the apparent crisis of faith it suffered".

"The SFO, under robust new management, is keen to prove that even though it has been handed a shoestring budget, it can still make good on its promise to be a threat to serious white collar criminals," he said. "This step-up in activity is part of its efforts to regain its poise and then its authority."

"However, even though the SFO has upped its activity in the last year, the number of raids is still well behind the broader longer-term trend. I think that the SFO should be pointing to its progress in raids this year as evidence of what it could do if it was actually put on a sound and sustainable financial footing," he said.

The budget of the SFO, which is the agency responsible for investigating and prosecuting the most serious cases of economic crime, has fallen by 40% since the financial crisis from £52 million to £38m. Earlier this year, it was forced to apply for £19m in additional 'supplementary' funding to cover the costs of its LIBOR investigations and other high-profile cases over the remainder of the 2013/14 financial year. Recent research by Pinsent Masons found that the number of prosecutions for fraud and other economic crimes fell dramatically in the same period, even as the number of such crimes rose.

"An effective SFO is critical to the UK economy, ensuring that businesses are protected from white collar crime," Vitou said. "An increase in activity has the potential to deter other would-be criminals."

"While special one-off budget injections for high profile investigations can certainly help the SFO, this type of funding is not the answer. The SFO needs a better system of funding so it can have a steady stream of money to ensure that it can operate as effectively as possible to stop fraudulent activity," he said.

Last week, the Financial Times reported that the UK government had begun a review of the effectiveness of the various bodies that investigate bribery and corruption offences, including the SFO and the newly-established National Crime Agency (NCA), amongst others. According to the report, funding arrangements for the various bodies will be considered as part of the review.