New Director, New Direction? Initial insight into the next era at the Serious Fraud Office

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The question on everyone's mind since the announcement of the Director of the SFO on 4 June 2018 has been: how (if at all) will the new Director change the SFO's strategic direction and enforcement priorities?  

We have had the first insight into that topic with the speech delivered in September by Lisa Osofsky in her capacity as the new Director of the SFO at the Cambridge International Symposium on Economic Crime. The take home message was that Ms Osofsky expects the SFO to remain committed to ensuring that the United Kingdom is, and will continue to be, a high risk place for the world’s most sophisticated criminals to operate. She anticipates achieving that through global cooperation, the potentially expanded use of DPAs and technological advancements. 

The importance of co-operation to the SFO’s continuing success

The Director discussed the need for international cooperation due to the increasingly multijurisdictional and complex nature of cases in order to help the SFO achieve global settlements, as achieved with Rolls-Royce. The Director stressed her focus on strengthening and deepening international relationships to achieve more global settlements like Rolls Royce, including the need further cooperation with newcomers to DPAs involving countries such as Argentina, Canada and Australia. The Director discussed how DPAs are no longer just a US only phenomenon. She cited her familiarity with the DPA process and indicated a commitment to a continued and potentially increasing use of DPAs under her tenure at the SFO. 

The Director also highlighted the continuing work with national law enforcement organisations, including the contribution of the SFO to the development of the National Economic Crime Centre and the SFO’s continuing work with the National Crime Agency. A controversial topic surrounding the SFO's administration has been the continued speculation over a potential merger with the National Crime Agency. This was not expressly mentioned within the Director's speech, although she has publicly come out since her appointment was announced to share a view that this would not be in the SFO's interest, and the suggestion has similarly been dropped from the Conservative Party's most recent manifesto. Nevertheless, it is clear from the speech that domestic cooperation with a number of agencies and institutions is going to be intrinsic to the Director's approach. 

The Director briefly touched on the SFO’s secondment and exchange programme as part of her vision of cooperation including the DOJ secondee currently with the SFO. On the topic of secondments, the Director discussed the exciting development and future cooperation with the National Economic Crime Centre (NECC), highlighting the potential opportunities for SFO employees to be seconded to the NECC. The Director also talked of the “natural ally” she saw in HM Revenue and Customs, stating that the SFO and HM Revenue and Customs could build “very strong” cases.

The future of privilege at the SFO? 

In one of her first major decisions, the Director has chosen not to appeal the SFO's recent defeat in the ENRC case.Whether or not this signifies a break in term of attitude towards privilege compared to her predecessor, the Director's speech only briefly touched on the topic of privilege; her primary focus in this regard was on enhancing the SFO's use of technology in the process of identifying privileged documents produced in the course of investigations. For example, Osofsky discussed the deployment of an AI robot which helped to check for legal professional privilege material in the Rolls Royce case which led to cost savings of 80%. 

This is consistent with the Director's commitment to the advancement and the importance of the strategic use of cutting edge technology within the SFO. The Director discussed the SFO’s creation of an “eDiscovery” platform, a feature that will assist with the future review of new investigations to create greater efficiencies, hopefully bringing quicker decisions and shorter trials. Committed to improving the SFO’s intelligence function, the Director stated how there is a need to have an ability to collect and analyse data to improve knowledge of priority or emerging threats to enable the SFO to identify proactive investigative lines of enquiry.  

Whilst the thrifty element of this new approach in criminal investigations is to be welcomed as a process to utilising financial resources, and may also be helpful for firms negotiating with the SFO in structuring their own investigation, the approach to the SFO’s treatment of privilege remains somewhat uncertain post ENRC, and the criticism levelled by the Court in AL v SFO.  The Director's focus on the Rolls Royce case though does suggest that investigation subjects may still face pressure to voluntarily disclose interview memoranda, should they want credit for a course of “full and extraordinary cooperation” with the SFO in a Deferred Prosecution Agreement.

It leaves open the question of whether the changed position on privilege will result in a practical difference from the SFO when it comes to measuring cooperation credit, or whether there will still be some expectation from the SFO that parties subject to investigations will waive the protection offered by privilege in return for an amicable settlement.

Technological innovation 

Discussing the technological challenges that the SFO investigations face, including data-heavy criminal investigations, the Director set out how the SFO is exploring technology to find the right solutions for these challenges, including the use of technology to overcome issues arising through encryption. The SFO will also continue to focus on making the most out of witnesses to bring the most compelling evidence before judges and juries, as well as prioritising the recovery of criminal proceeds. 

The expected importance of extensive international and national cooperation, continued pursuit of deferred prosecution agreements and commitment to technology highlights the Director’s commitment to becoming a “different kind of Director”.

1. http://www.allenovery.com/publications/en-gb/Pages/ENRC-v-SFO-appeal-internal-corporate-investigation-documents-are-protected-by-privilege.aspx​

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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