Motivated by a “visceral reaction” to large-scale economic crime, Nick Ephgrave lays out vision for a bolder, more pragmatic, and more proactive agency.
Whistleblowers, dawn raids, and cross-agency collaboration are all top of Nick Ephgrave’s agenda as he settles into his new role as Director of the UK’s Serious Fraud Office (SFO). Taking to the stage for his inaugural speech at the Royal United Services Institute last week,[i] Ephgrave gave a glimpse into his ambitious (if optimistic) plans for the agency under his leadership.
We discuss our five key takeaways below.
1. Whistleblower incentives: Not very British?
Among Ephgrave’s most controversial proposals was to pay whistleblowers for information — or at least give more thought to the idea. Acknowledging that it is “fairly difficult to be a whistleblower”, Ephgrave argued financial compensation would offset some of the risks of speaking up and encourage more people to come forward. This way, the SFO could access “smoking gun” evidence to speed up its investigations.
Although a similar model exists across the Atlantic, there has been reluctance, on principle, to adopt it in the UK. Ephgrave’s predecessors argued that paying whistleblowers “just isn’t British”, and that motivation should come from moral responsibility, not cash. Equally, how much weight a court would accord to paid-for evidence is unclear.
One alternative to Ephgrave’s proposal is to offer whistleblowers greater protection. A Private Members’ bill tabled in the House of Commons last month[ii] revives the idea of creating an Office of the Whistleblower: an independent body that would enforce standards for the conduct of whistleblowing cases and provide redress to whistleblowers who suffer detriment. In any event, whistleblowing is clearly an area ripe for reform.
2. A new dawn (raid) for SFO investigations
Ephgrave promised “fast and rigourous” investigations and prosecutions, and emphasised that the SFO will not shy away from bold decisions. The agency will cull unviable cases at an earlier stage but will pursue more promising leads with vigour, including by way of dawn raids. Under Ephgrave, the SFO has already been through more front doors in the last three months than in the previous three years, including a substantial nine-site operation in November 2023 that resulted in seven arrests.
Dawn raids have been scarce since an embarrassing incident in 2014, which saw the SFO pay a multi-million pound settlement after its search warrants were ruled unlawful. For dawn raids to make a comeback, Ephgrave will need a large headcount at his disposal. Indeed, he spoke about the challenge of creating an attractive culture for staff and is reportedly recruiting up to 100-150 new investigators.
3. Home or away?
Ephgrave suggested that the SFO should concentrate on wrongdoing that affects ordinary, hardworking UK citizens, as well as cases in which the UK itself is the victim. Tellingly, the investigations he chose to highlight largely involve domestic businesses — from a bakery chain to a car-leasing scheme. Though Ephgrave ultimately refused to be drawn on whether the SFO would prioritise UK-based victims, this is likely to be his focus in the coming years.
It is no surprise that Ephgrave feels most comfortable pursuing quick wins at home given his lack of experience with multinational cases. No doubt some will query whether the agency’s resources would be better placed elsewhere. The clue is in the name — the SFO was created to investigate the most serious and complex cases of economic crime. Focusing on small to mid-sized domestic fraud cases means that the SFO’s work will increasingly overlap with that of other agencies, such as the Crown Prosecution Service and the Financial Conduct Authority (FCA).
4. SFO as the “collaboration partner of choice”
The SFO is expected to collaborate more closely with other agencies during Ephgrave’s tenure, both in the UK and internationally. Ephgrave cited examples of the SFO working successfully with the National Crime Agency and the Metropolitan Police, each bringing a distinct but complementary set of capabilities. Last year, the SFO also signed a Memorandum of Understanding with the FCA, paving the way for greater information sharing and joint meetings on policy and strategy.
Further afield, Ephgrave will try to strengthen ties with US enforcement bodies, perhaps the SFO’s most important international counterparts, and he is understood to have flown out this week to hold talks.
5. The disclosure burden
Disclosure remains a major challenge for the SFO. Not only does it “gobble up” around 25% of the agency’s £78.6 million operating budget,[iii] it slows the progress of investigations as staff spend days redacting documents. The SFO is piloting AI-powered review methods to relieve some of the pressure but Ephgrave was clear that broader reform was necessary, including narrowing the scope of evidence subject to disclosure and relaxing redaction requirements.
Fortunately for him, an independent review of the criminal disclosure regime is already underway, chaired by Jonathan Fisher KC.[iv] The review focuses on the challenges that large volumes of digital material (as many as 48 million documents in a single case) can pose for criminal investigations, and recommendations are due in the summer.
What next?
It will be no small task to draw a line under the SFO’s chequered record of recent years. However, Ephgrave brings a fresh perspective — he is the first non-lawyer to take the top job and he is already making his mark on the agency. Indeed, if his first few months are anything to go by, Ephgrave might just deliver on his promise of a more active, and more effective, SFO.
This post was prepared with the assistance of Emma Bunting in the London office of Latham & Watkins.
[i] https://www.sfo.gov.uk/2024/02/13/director-ephgrave-speech-at-rusi-13-february-2024/
[ii] https://bills.parliament.uk/bills/3676
[iii] https://www.sfo.gov.uk/2023/07/18/annual-report-accounts-2022-23/
[iv] https://www.gov.uk/government/collections/independent-review-of-disclosure-and-fraud-offences
