The Serious Fraud Office has again gone cap-in-hand to ministers for cash. Solicitors and MPs are divided over whether this gives the authority the flexibility to do its job.
The Serious Fraud Office has again pleaded with the Treasury for more cash. The request, revealed by solicitor general Robert Buckland QC, was for a cash advance of £5.5m. This follows a similar request last month when the office asked for £15.5m to fund ‘significant investigations’.
On the face of it, these public requests appear a deeply unsatisfactory way to run the nation’s principal fraudbuster.
But the SFO is in a bind. It relies partly on core funding, which has steadily reduced over the years, and partly on ‘blockbuster’ funding – a special grant that the Treasury supplies for serious cases. Recent ‘blockbuster’ grants have comprised around half of the SFO’s overall budget.
Buckland’s statement would appear well timed, with the SFO riding the crest of a wave following its success in last month’s mammoth deferred prosecution agreement under which engineering giant Rolls-Royce agreed to pay more than £670m to avoid prosecution for bribery and corruption.
The success led critics to assert that the SFO is ‘now playing in the big leagues’.
Jonathan Pickworth, a partner at global law firm White & Case, said the DPA meant the SFO had earned the right to describe itself as a ‘revenue generator’.
But the latest cash request, and doubtless the Rolls-Royce success, have prompted MPs to debate the agency’s funding arrangements.
Labour MP Stephen Timms, who called last week’s debate, said making the SFO reliant on the Treasury on a case-by-case basis does not help maintain its perceived independence or security, and called for more core funding to aid investigations.
Timms’ views were echoed by Mark Field, a Conservative MP and solicitor, who said the ‘cap-in-hand’ nature of the SFO approaching the Treasury could expose the government to allegations that it has the ability to close down ‘politically sensitive inquiries’.
But Buckland denied that the Treasury, which he said had never refused funding, was a ‘gatekeeper’. Though the ‘blockbuster’ method was slightly ‘inelegant’, it was a price worth paying as it is often difficult to predict the cases that will arise, he said.
Jane Shvets, international counsel at Debevoise & Plimpton, agrees. ‘If there was a time for the SFO to make the case for extra funding, now would probably be it. But I think the flexibility that blockbuster funding offers works for them,’ she told the Gazette.
‘Ideally, it would get core funding that is sufficient to cover both run-of-the-mill and extraordinary cases. But in reality any core funding increase is very unlikely to cover the amount that is needed for the large-scale investigations.’
During the parliamentary debate Conservative MP Edward Garnier QC, former solicitor general, offered support for the SFO, which he said is ‘remarkably’ successful given its ‘limited resources’. He pointed out that overall funding had reduced from £40m in 2010 to £29m in the last spending review.
Although the blockbuster system was ‘not ideal’ he ‘would rather the SFO could apply to the Treasury than be constantly in danger of having its budget slashed and slashed again’.
But Pickworth said there are many reasons why the blockbuster system is not working and that there should be more encouragement for companies to turn themselves in – though he admits that the level of the penalty in the Rolls-Royce case ‘is not the sort of sum that will have the boards of errant companies scrambling to self-report’.
‘Shifting the cost of the investigation to the companies and away from burdening the taxpayer [would allow] the SFO to focus on the most serious cases,’ he said.
The SFO’s Rolls-Royce success, though trumpeted, was followed by another low point for the authority.
Just days later six people, including two former HBOS bankers, were convicted of criminal activities including fraud, bribery and money laundering after an investigation carried out not by the SFO or City of London Police, but by Thames Valley Police. The fact that the SFO missed the boat did not go unnoticed.
Anthony Stansfeld, the Thames Valley Police and Crime Commissioner, told the Police Professional journal last week that SFO ‘turned down the chance’ to investigate.
Shvets, though not commenting on HBOS directly, said that due to a requirement for a judicial review of all outcomes (including DPAs), the SFO has less leeway to leave the investigating to corporate counsel than other agencies, including US counterpart the Department of Justice. ‘That naturally adds pressure on the resources because less of the investigation can be outsourced,’ she added.
Stansfeld said that the office should either be ‘given more teeth and better finances to take on the big cases’, or a new national central body of experts set up to ‘deal with the big cases’.
The idea of creating a new body is not new. Theresa May, when home secretary, mooted the idea of merging the SFO with the National Crime Agency and it was suggested that as prime minister she might make this happen. However, Shvets said the prospects of an ‘FBI-style’ agency for the UK are receding.
‘This is probably partly due to recent SFO successes but also the government’s current focus on other priorities. The NCA is a relatively new organisation in itself so I think there were concerns as to how it would work in practice,’ she added.
In parliament, Garnier revealed he had ‘fallen out’ with the PM over the issue. ‘What I do not want is for the current Whitehall fascination with sticking things with nice initials into great pots of alphabet soup to destroy [SFO director] David Green’s valuable work or distract him from it,’ he said.
‘Any form of threat to any organisation caused by change is distracting and destabilising. One thing the SFO does not need when building success is for it to be subjected to further interference.’
An SFO spokesperson told the Gazette its funding was a ‘matter for ministers’, adding: ‘We are a comparatively small demand-led organisation taking on quite large and expensive cases by their very nature and it is not possible to anticipate what is around the corner. The blockbuster funding approach allows us to do these cases while avoiding the maintenance of very high permanent staffing levels, which we may not always need’.