The high-profile prosecution of two former directors of outsourcing giant Serco collapsed today when a judge at Southwark Crown Court directed a jury to acquit following admissions of disclosure failings by the Serious Fraud Office. Nicholas Wood and Simon Marshall had been accused of defrauding the government out of £12m by understating the profitability of Serco's prisoner-tagging contract. The matter was the subject of a deferred prosecution agreement in 2019.

In a statement, the SFO said that a prosecution review of its disclosure process 'uncovered errors made in the non-disclosure of certain materials'. Mrs Justice Tipples rejected a request for an adjournment to remedy the position so that it could pursue a retrial, saying this was not in the public interest. The judge also pointed to what she called 'real concerns in relation to the nature of the prosecution case'. 

Woods' solicitor, Andrew Katzen, partner at Hickman & Rose, said the prosecution had been driven by the narrative created by the deferred prosecution agreement 'in defiance of the facts'. 

Katzen said that his client had been prosecuted despite clear evidence that the failings of which he was accused were company policy and which he believed were completely legitimate. 'The fact that the SFO pressed on with its doomed prosecution despite this should be a matter of grave concern for everyone concerned for justice in this country.'

Marshall's solicitor, Neil Swift, partner at Peters & Peters Solicitors, said: 'Mr Marshall is of course very relieved that he is vindicated. But there is also a sense of indignation that the Serious Fraud Office’s case should fold in this manner, after putting our client through eight years of unfounded criminal allegations. Now, many questions must be asked, particularly in relation to deferred prosecution agreements entered into without proper exploration and testing of the evidence.'

White collar crime experts lambasted the SFO over the disclosure failing. 'Disclosure is paramount – that is the golden rule,' said Aziz Rahman, senior partner at Rahman Ravelli. 'The SFO will be far from happy to have lost such a high-profile trial in this way - by having to throw in the towel because of its disclosure failings.'

The case also raises questions about the DPA process, Rahman said. 'It seems too easy for corporates to be offered a DPA which then leads to the individuals being thrown under the bus while the company escapes the exposure that comes with a trial. There will surely be some soul searching at the agency as it considers how it came to this.'

Susan Hawley of campaign group Spotlight on Corruption said: 'This is a disaster for the SFO and for the UK’s deferred prosecution agreement regime.'