What is going on at the Serious Fraud Office (SFO)? The short answer is, ‘a lot’. Recent months have seen the UK’s top investigator and prosecutor of serious fraud and corruption attract significant press coverage, much of it lacking any consistent theme, with headlines veering from, ‘Serious Fraud Office back in the dock’ to ‘Significant victory for the SFO’.

To a certain extent, such mixed fortunes come with the territory of investigating and prosecuting the most complex and factually challenging criminal cases, as well as facing well-resourced suspects who are prepared to fight every step of the way. However a number of recent developments warrant further scrutiny.

Second term for Green

On 9 February, the attorney general announced that SFO director David Green QC had been granted a two-year contract extension. Green was appointed director in April 2012 for a fixed term due to end next month but which will now conclude on 20 April 2018. This is an important announcement, as it should provide the SFO with much-needed stability and continuity.

Green has done a good job in turning the SFO back into a proper criminal prosecutor. He has enjoyed notable recent successes with the conviction of Libor trader Tom Hayes (picturred); securing judicial approval for the first deferred prosecution agreement (DPA); and securing the first ‘failure to prevent bribery’ plea under the Bribery Act.

That said, there remains much to do: Alstom, Rolls-Royce, GSK, Barclays, Tesco, further Libor prosecutions and others are still waiting on trials or charging decisions. It will be against this list that the success of his directorship will be judged.

NCA power of direction

On 15 February, the Financial Times reported that the National Crime Agency (NCA) will be granted the power to direct investigations carried out by the SFO. As well as suggesting that the NCA will be able to tell the SFO which bribery investigations to take up, the article also claimed that an NCA representative will sit on the SFO’s board. It is not clear whether these reports are accurate but, taken at face value, any such developments would be a blow to the SFO’s independence.

The background to these purported proposals is that, while the SFO technically reports to the attorney general, it is in fact operationally independent of all government ministers. By contrast, the NCA is part of the Home Office and as such is accountable to the home secretary. As far back as 2011, it was reported that Theresa May, home secretary then as now, had pressed (unsuccessfully) for the SFO to be dismantled, subsumed into the NCA and placed under Home Office control. These recent reports do little to suggest that she has altered her stance.

What remains unclear is why May would want to take control of the SFO. The SFO’s cases are challenging (with an attendant high risk of failure) and subject to the most intense media scrutiny – a heady cocktail that politicians usually like to avoid. There are also legitimate concerns as to what relevant expertise the NCA has to enable it to direct the SFO properly. Indeed, recent reports suggest that the NCA has not been able to staff its own anti-corruption team. Anecdotally, and despite these legitimate concerns, the NCA and SFO already have a good relationship – and this development is probably more of a political issue than an operational one.

Libor – success and failure

The Libor trials are the keystone to Green’s term as SFO director. It was Green, after all, who resurrected the investigation after his predecessor, Richard Alderman, declined to investigate alleged benchmark manipulation by UK banks. In August 2015, the first Libor trial resulted in the conviction of Hayes and a 14-year prison sentence (reduced to 11 years on appeal).

In January 2016, a jury returned the opposite verdict by finding six brokers (accused of conspiring with Hayes to manipulate the Libor benchmark) not guilty. Notwithstanding the fact that two juries returned seemingly inconsistent verdicts, the British press immediately jumped on the SFO, claiming this was a failure for the organisation. That is a simplistic response, betraying a basic lack of understanding of the criminal process.

As a prosecutor, the SFO is required to follow the two-stage test set out in the Code for Crown Prosecutors. This requires cases to satisfy an evidential and public interest test, both of which appear to have been satisfied in relation to the Libor prosecutions. What the SFO cannot do is decide whether a defendant is guilty; that is a matter solely for the jury.

This case is emblematic of nothing more than a criminal process that has worked as it should. A case was prepared and presented that, in the jury’s opinion, did not clear the high burden of proof required to obtain a criminal conviction: there was, in the jury’s opinion, reasonable doubt. As Mukul Chawla QC (prosecuting for the SFO in the case) sensibly remarked, ‘these things happen’.

The first DPA

Much has been written about the SFO entering into its first DPA in November 2015 with ICBC Standard Bank Plc, which was resolved, in-part, with the bank paying a hefty $33m. Significantly, the DPA was negotiated after the company admitted conduct contrary to section 7 of the Bribery Act.

While securing the first DPA was undoubtedly a public success for the SFO, it appears to have been based on a very specific fact pattern which is unlikely to be replicated. Practitioners have long questioned what additional benefits a DPA provides, given the precipitously high threshold in England and Wales for establishing corporate criminal liability. Even the perceived reputational benefit for a company of being able to ‘clear the decks’ by self-reporting and negotiating a DPA is questionable, given the likelihood of individuals being charged in subsequent criminal proceedings and the negative publicity that would follow.

Notwithstanding a company’s reluctance to put its hands up to conduct that the SFO may not be able to prove to the required standard, the SFO appears to be adopting an extremely cautious approach. Nowhere is this more clearly demonstrated than by comparing the SFO’s repeated public claims that several unnamed DPAs would be concluded by the end of 2015 with the fact that the timing of these DPAs continues to slip.

It may well be that, given the vital importance of judicial approval of any proposed DPA, the SFO is nervous of a judge refusing to approve a DPA because, in the words of the legislation, it is not ‘in the interests of justice’ or, ‘fair, reasonable and proportionate’. Whatever the reason, it is extremely unlikely that we will see an opening of the floodgates for DPAs.

Where next?

That the SFO continues to face considerable challenges in relation to its caseload, its political positioning and its increasingly unworkable budget arrangements is beyond doubt. None of these challenges are insurmountable however. It appears to me as a criminal defence practitioner that, after years of under-performance, a more confident SFO is moving in the right direction.

Christopher David is counsel at WilmerHale