UK SFO Speeding Up Investigations
The Director of the U.K.’s Serious Fraud Office (the “SFO”) – the U.K’s primary enforcement authority for economic crimes – has stated that the SFO needs to improve its handling of evidence in fraud and corruption cases to speed up its investigations and resulting prosecutions. As Canadian companies may be subject to U.K. jurisdiction in certain circumstances, and regulators in other jurisdictions such as Canada and the U.S. may follow suit, the SFO’s comments are instructive to the investigative approach Canadian companies may face in the U.K. or elsewhere.
The SFO is a specialist investigative and prosecuting authority that tackles cases involving large-scale economic crime, particularly those involving serious or complex fraud, bribery, and corruption in the U.K. The agency pursues individuals who have benefitted financially from their own crimes and assists overseas jurisdictions with investigations of a similar nature. The SFO also has the power to investigate and prosecute corporate failure to prevent the facilitation of overseas tax evasion.
The agency describes its mandate as having, at its heart, the protection of the public interest, the reputation and integrity of the UK as an international financial centre, and the overall economy and prosperity of the UK. In this capacity, SFO director Lisa Osofsky has undertaken to review all cases on the agency’s books and ensure that SFO cases stand on strong evidentiary ground.
Effective Evidence for Effective Prosecutions
The SFO has reportedly been burdened by a significant backlog in the investigation and prosecution of its cases, and received scathing criticism in a December 2018 judgment regarding the “real weakness” of its case against two former Tesco executives. Ms. Osofsky has stated that it was taking more than 5 years in some cases for the SFO to decide whether to bring charges against companies and individuals. Certain cases opened more than 6 years ago have yet to be concluded, including probes into Kazakh mining group ENRC, outsourcers G4S and Serco, and GPT Special Project Management, an Airbus subsidiary.
In an effort to clear the large backlog of cases, Ms. Osofsky decided to close certain long-running investigations, including a high-profile case against Rolls-Royce and GlaxoSmithKline. Ms. Osofsky has stated this decision was based on insufficient evidence to provide a realistic conviction, and that it was not in the public interest to proceed with the prosecution.
Ms. Osofsky highlighted that the SFO must be more efficient in its approach and that, in determining which cases to pursue and which to drop, she and her team would look to the best evidence they had on each case.
Ms. Osofsky has also emphasized the role of advanced investigative techniques in efficient investigation. In a recent speech to the Royal United Services Institute in London, she stressed that law enforcement must increase its digital investigative capabilities to keep up with increasing digital crimes. Approximately 95% of the evidence that the SFO confronts is electronically based. As a result, Ms. Osofsky pointed to the SFO’s newly-employed use of artificial intelligence software and forensic computer expertise to quickly and intelligently examine evidence.
Implications for Canadian Companies
Ms. Osofsky’s comments are relevant to Canadian companies both because they may be subject to U.K. law, and insofar as the approach taken by the SFO may be indicative of enforcement trends adopted by regulators in other jurisdictions. Canadian companies may in certain circumstances be subject to enforcement proceedings by the SFO under U.K. law. For instance, U.K. courts have jurisdiction under the Bribery Act over any company that carries on business in the UK (wherever in the world it may be incorporated or formed). Canadian company Griffiths Energy was fined £4.4 million by the SFO in 2018 in connection with its bribery of Chadian diplomats (the same factual matrix underlying the Canadian case R. v. Griffiths Energy).
In addition, the SFO’s considerations are similar to recent considerations in Canada which have led to changes in Canadian law targeted toward ensuring civil and criminal cases proceed to trial within a reasonable time. Following amendments to the Ontario Rules of Civil Procedure as of January 1, 2017, subject to certain exceptions or court order, matters commenced on or after January 1, 2012 in Ontario are automatically dismissed if not set down for trial within five years after they were commenced. Similarly, the 2016 Supreme Court of Canada case R. v. Jordan introduced a presumptive ceiling of 18 or 30 months (depending on court) for criminal cases to proceed to trial.
If followed through on, Ms. Osofsky’s comments should come as welcome news to organizations under investigation. Regulatory investigations into serious financial crimes can often take years to resolve, including production of significant documentation and significant legal cost in responding to the investigation. Efforts by regulators to reduce the length of investigations, and not to proceed with investigations in which they do not have sufficient evidence to obtain a conviction, may serve to reduce the legal, reputation and financial burden of companies under investigation. Whether the SFO will be able to successfully implement these changes, and whether similar initiatives will be adopted by regulators in other jurisdictions, remains to be seen.