New SFO Director reaffirms her intentions and priorities for the agency.

By Stuart Alford QC, Nathan Seltzer, and Christopher Ting

Fifty days have passed since Lisa Osofsky took over at the UK’s Serious Fraud Office (SFO), pledging to be a “different kind” of director. In her first days, Osofsky set out her priorities for the agency, which included:

  • Improved cross-border coordination
  • Improved corporate engagement
  • Continued use of Deferred Prosecution Agreements
  • Use of technology in investigations

This blog post will analyse what Osofsky has accomplished since joining the SFO, including her first major strategic decision, a further explanation of her priorities, and key personnel changes.

ENRC Appeal

In her first major strategic decision for the SFO, Osofsky decided not to appeal the ruling in Director of SFO v Eurasian National Resources Corporation to the Supreme Court. On 5 September, the Court of Appeal overturned a High Court decision in favour of the SFO’s interpretation of legal professional privilege and reaffirmed the boundaries of litigation privilege if litigation is reasonably in contemplation. Amidst speculation that the SFO would further appeal that judgment, Osofsky issued a statement on 2 October that the SFO would not take the decision to the Supreme Court.

While that statement could be viewed as a win for corporates, Osofsky cautioned that the SFO “remains prepared to challenge those it considers to be ill-founded [in their assertions of legal privilege].” Further, the decision not to appeal the ruling does not bind the SFO to any position on claims of privilege in the future, nor does it imply what position the SFO might take if the decision in Three Rivers were to be subject to challenge in the way the Court of Appeal’s judgment in ENRC suggested it could be.

The SFO’s Priorities

Osofsky further expounded her priorities for the organisation when she spoke at the American Bar Association’s London White Collar Crime conference on 8 October. Appearing alongside Sandra Moser, acting chief of the US DOJ’s Fraud Section, she identified the following SFO priorities:

  • Increased attention to money laundering. Osofsky said the SFO would look for opportunities to add money-laundering to underlying charges of fraud or bribery offences. Given the overlapping conduct, these types of charges can be included together on an indictment; which can increase the potential risks and penalties for corporates under investigation. Moreover, a heightened focus on money laundering increases the chances that banks and other financial institutions will become ensnared in these investigations, even if they are not the primary suspects of a fraud or bribery.
  • Speeding up individual prosecutions. Osofsky stated that the SFO would be looking to accelerate its investigation and prosecution of individuals. In the past, the SFO has been criticised for being slow in making charging decisions. However, speeding up those decisions can be difficult if there is a related corporate investigation, and it creates a risk that the interests of the individual and of the corporation will diverge.
  • Whistleblower programme? Osofsky expressed support for financially rewarding whistleblowers, similar to the US Securities & Exchange Commission programme. However, the question of financial incentives for whistleblowing was extensively considered following the financial crisis, but did not receive support from any of the UK’s financial regulators. While Osofky accepted that introducing such a system would be unlikely in the UK in the near future, her public support for such an approach demonstrates her intention to take a fresh look at current law enforcement practice.

SFO Senior Personnel Team

Finally, as often happens with a change of director at the SFO, there have been several high level personnel moves. Most significantly, on 24 September the SFO announced that Alun Milford, SFO General Counsel, was leaving to join a London criminal firm. Earlier in the month, the case controller for the ENRC case, John Gibson, had also returned to private practice in London. These moves added to senior staff losses following the suspension of the case controller on one of the SFO’s largest investigations, Unaoil, amid allegations of gross misconduct.

As part of shaping her new senior team, Osofsky has implemented a number of key changes in September. First, she has brought in US lawyer Peter Pope on a one-year secondment as International Liaison and Investigations Adviser. Pope’s arrival coincides with that of the DOJ’s secondee to the SFO; underscoring one of the key themes of Ososky’s stated priorities — the continued development of cross-border cooperation.

In September, Osofsky also announced the appointment of a Head of Intelligence, to “accelerate the drive to a more proactive approach to sourcing new cases”, and a Head of Corporate Services, to allow the SFO’s General Counsel to “return to a more focused legal role”.

It has been a busy 50 days for Lisa Osofsky, as she establishes herself as Director of the SFO. While too early to discern a pattern in the cases she is taking on, Osofsky’s intentions and priorities for her five years at the helm of the SFO are clear.