Is the UK heading towards a US-style justice system? That is the question many of London's white collar crime experts have been pondering ever since former FBI lawyer Lisa Osofsky was appointed head of the Serious Fraud Office (SFO) in August 2018.
A dual US/UK national, Osofsky’s experience includes pursuing the mafia, bank robbers, fraudsters, and money launderers as deputy general counsel and ethics officer at the FBI; special attorney in the US Department of Justice’s Fraud Division; money laundering reporting officer at Goldman Sachs; and, prior to joining the SFO, regional leader and head of investigations for EMEA at Exiger. However, many London firms believe this appointment might lead to closer cooperation with the US authorities which may affect the way criminal cases are carried out here.
‘Spend time in jail or wear a wire and work with us,’ Osofsky told the Evening Standard in April, giving criminal practitioners’ further pause for thought on the new SFO chief. An SFO spokesperson told fivehundred that Osofsky’s comments were misinterpreted and wearing a wire was not a statement of SFO policy.
Even so, some argue that the approach could be a welcome change, saving time and resources on investigations and, therefore, taxpayer money. Most lawyers, however, remain dubious.
First, the doubters highlight a cultural barrier to this proposal – the British attitude to witnesses who cooperate to save their own skin is different to that across the pond. Second, and perhaps more pertinently, our legal system is too structurally different for this method to work.
Specifically, the use of Serious Organised Crime and Police Act 2005 (SOCPA) agreements would be too difficult or unattractive a proposition for witnesses. Issues with SOCPA agreements include reluctance by some prosecutors to make a deal with suspects; suspects having to make admissions before they know the strength of evidence against them; suspects having to appear as a witness in the trial(s) of their co-accused; and a SOCPA agreement does not prevent prosecution overseas.
Putting the profession’s concerns to the agency, a spokesperson said: ‘The SFO will continue to use [SOCPA agreements] where appropriate, where a defendant is willing to plead guilty and be genuinely cooperative in a way that will help the SFO’s investigation. While a SOCPA agreement does not automatically prevent prosecution overseas, if another jurisdiction attempts to prosecute a cooperating witness the SFO will dissuade them from doing so, making clear that it would undermine the UK’s SOCPA scheme and adversely affect the interests of various parties.’
How else have lawyers rated Osofsky’s tenure to date? Citing insufficient evidence and a lack of public interest, the SFO recently dropped its high-profile and costly six-year corruption investigation into alleged corruption at Rolls-Royce and five-year probe into bribery allegations at GlaxoSmithKline, decisions it was criticised for, as well as the collapse of the prosecution case against two former Tesco executives.
Some lawyers saw the decision not to pursue individuals in these cases as an embarrassing defeat for the agency; having already secured deferred prosecution agreements (DPAs) with Rolls-Royce and Tesco, securing individual convictions should have been a slam dunk, according to some.
Others, however, see this clearing of the decks as a pragmatic move to save taxpayer money and, with a 2018/19 conviction rate of just 53%, an attempt by the SFO to refocus resources on cases with a greater chance of success. There is currently a significant backlog of cases – in December 2018, Osofsky said she was personally reviewing over 70 cases awaiting charging decisions. If there is one thing many lawyers agreed on, it was that this process needs to be sped up.
In August, the SFO produced new guidelines which contains a non-exhaustive list of the ways companies can cooperate with the prosecution agency. While the move by Osofsky is in stark contrast with that of her predecessor, David Green, some lawyers, such as Aziz Rahman of Rahman Ravelli, see the five-page guidelines as ‘a missed opportunity’ as is it ‘seems to offer little valuable advice and comes dangerously close to raising more questions than it answers’.
‘It was a miss-step not to make more positive noises about what a cooperating company might receive in return,’ said Greenberg Traurig’s Barry Vitou. ‘Cooperating firms are looking to ensure a DPA, and so to state in the guidance that, “It is important that organisations seeking to cooperate understand that co-operation – even full, robust co-operation – does not guarantee any particular outcome”, is unnecessarily off-putting.’
Companies considering cooperation will understandably weigh their options carefully. ‘Unfortunately the guidance does not assist in adding much weight to the calculus and may in certain cases make it harder to argue for,’ added Vitou.
Speaking at the Cambridge Symposium on Economic Crime in September, Osofsky called for greater global cooperation in fight against fraud. ‘Both worthwhile and necessary – especially in today’s digital age – we still seem to lack real detail about the investigative efforts of the SFO,’ said Neil Williams, of Rahman Ravelli, in response to the speech.
‘Other jurisdictions will surely expect cooperation from the SFO to include the products of its own investigations – not just that provided to the SFO from those it may or may not choose to prosecute,’ said Williams. ‘The SFO wants cooperation to be the norm. But cooperation is a two-way process. And that means the SFO has to now show it can produce its own goods rather than rely on the efforts of others.’
Williams continued: ‘Given the much-anticipated recent guidance issued by the SFO on corporate cooperation, cynics might query whether the SFO is truly confident in its own investigative abilities. That has to be considered an issue in light of the numerous, high-profile failings in certain investigations – failings that have hung heavily on the shoulders of Ms Osofsky in her first year.
At a time when children are returning to school, Ms Osofsky’s end-of-year report has a “could do better” feel about it.
‘In fairness, those historical investigations that have brought unfavourable outcomes can be attributed to the caseload that she inherited. But in the short term, they define the SFO, and highlight a need for a new approach. So far, the new approach is less bombastic than in the past; which is a good thing.
‘But the danger – for all Ms Ososfky’s well-crafted speeches – is that the SFO will be perceived as lacking bite.’
Newly launched investigations into Greenergy and Patisserie Valerie might signal that the agency is now looking to the future rather than dwelling on the past. However, it seems Osofsky’s new direction has created more questions than answers. The legal market is unsure of the SFO’s intentions and unsure of the implications of its recent decisions. Perhaps when we see companies putting the new cooperation guidance into practise, we will find out if the much-anticipated advice works in a real world setting. Only then will we have a clearer picture of how the course of Osofsky’s tenure will run.