Serious Fraud Office

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Guidance clarifies the implementation date, scope, and application of landmark new corporate offence, and provides suggestions for fraud-prevention procedures.

By Pamela Reddy, Clare Nida, Annie Birch, and Matthew Unsworth

On 6 November 2024, the UK Home Office published long-awaited statutory guidance on the new corporate offence of “failure to prevent fraud” (the Guidance).1 The failure to prevent fraud offence will come into force on 1 September 2025, after having been introduced last year by the Economic Crime and Corporate Transparency Act (ECCTA). It follows similar corporate “failure to prevent” offences in relation to bribery (under the Bribery Act 2010 (BA)) and the facilitation of tax evasion (under the Criminal Finances Act 2017 (CFA)). The Serious Fraud Office (SFO) has been calling for the introduction of a similar offence, specifically in relation to failure to prevent economic crime, for a number of years.

The offence is expected to make it easier for prosecutors to hold organisations accountable for fraud committed for their benefit and, as with the BA, is expected to drive a “major shift in corporate culture”. Along with the changes to the identification principle for corporate criminal liability introduced by ECCTA, it is anticipated that the number of successful corporate prosecutions will increase. The Guidance helpfully clarifies the scope and application of the new offence, as well as giving advice on what will constitute reasonable fraud-prevention procedures — and we set out our key takeaways below.

View Of Bridge Over River Against Cloudy Sky

The sentencing of Romy Andrianarisoa, the first ever foreign public official to be convicted under the Bribery Act 2010, provides important takeaways.

By Pamela Reddy, Robin Spedding, and Matthew Unsworth

On 10 May 2024, Romy Andrianarisoa was sentenced to three-and-a-half years’ imprisonment for soliciting bribes contrary to Section 2 of the Bribery Act 2010 (Bribery Act). Andrianarisoa, former Chief of Staff to President Andry Rajoelina of Madagascar, requested substantial cash payments in exchange for helping UK-headquartered Gemfields Group…

Elevated view of London financial district at dusk

The Serious Fraud Office’s strategy for 2024 to 2029 indicates aspiration to be a more effective agency and to incentivise personnel.

By Nathan Seltzer, Pamela Reddy, Clare Nida, and Annie Birch

On 18 April 2024, the UK’s Serious Fraud Office (SFO) published an ambitious, albeit high-level, five-year plan (the Plan), setting out its proposed framework to address the increasingly complex landscape of serious fraud, bribery, and corruption. The Plan indicates Nick Ephgrave’s ambitions as the new director…

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Individuals continue to face risk from prosecutions for economic crime, despite media focus on corporate criminal liability reforms.

By Stuart Alford KC, Mair Williams, and Matthew Unsworth

Four individuals have today appeared at Westminster Magistrates’ Court charged with fraud in connection with the collapse of UK café and bakery chain, Patisserie Valerie.[i] This follows a five-year investigation by the Serious Fraud Office (SFO) — codenamed “Operation Venom” — which was launched after the chain suddenly announced that its financial statements over successive years had been “mis-stated and subject to fraudulent activity”.[ii] Among those charged is former CFO, Christopher Marsh, who was arrested on suspicion of fraud when the scandal first emerged but was released on bail soon after.

While corporate criminal liability continues to dominate headlines ahead of reforms to be introduced by the Economic Crime and Corporate Transparency Bill, the Patisserie Valerie charges serve as a reminder that there remains a risk of prosecution at the individual level. Indeed, this is the third case in which the SFO has charged individuals this year, and the agency is targeting a minimum 60% conviction rate of individual (as well as corporate) defendants between 2022 and 2025.[iii]

The UK government is taking further measures to tackle economic crime in the UK, reforming its corporate register, and giving extra powers to the Serious Fraud Office.

By Stuart Alford KC, Clare Nida, and Mair Williams

The UK has published the new Economic Crime and Corporate Transparency Bill 2022 (the Bill), which focuses on reforms to Companies House, the role of limited partnerships, seizure of suspected criminal cryptoassets, and new intelligence gathering powers for law enforcement.

In March 2022, the Economic Crime (Transparency and Enforcement) Act 2022 (the Act) created a new register of overseas entities holding UK property assets alongside changes to the unexplained wealth order and sanctions regimes (see previous Latham blog). The Act was passed in response to the Russian invasion of Ukraine and targeted Russian assets held or flowing through the UK. At the time of the Act in March, the UK government said a second part would follow, and the Bill, published in September 2022, sets out the plans for that second part.

Recent judgments help to clarify purpose and threshold of unexplained wealth orders.

By Stuart Alford QC, Oliver Browne, and Clare Nida

The National Crime Agency (NCA) has had a mixed start to 2020, with appeals heard on unexplained wealth orders (UWOs) testing the new investigative tools provided under the Criminal Finances Act 2017 (CFA).

What is an unexplained wealth order?

UWOs were introduced by the CFA (in force from 31 January 2018), creating a new section 362A of the Proceeds of Crime Act 2002 (POCA).

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.

New director Lisa Osofsky confirms her focus on cross-border and corporate cooperation.

By Stuart Alford QC, Nate Seltzer, and Clare Nida

On 3 September 2018, in her first speech, after only one week as head of the UK’s Serious Fraud Office (SFO), Lisa Osofsky laid out her plans for the agency.

Upon announcement of her appointment, Latham identified possible priorities for the new director here. As predicted, Osofsky’s unique cross-border and corporate experience is shaping the SFO’s…

English Court of Appeal reaffirms privilege over internal investigation documents prepared in contemplation of litigation.

By Jon Holland, Andrea Monks, Stuart Alford QC, Nate Seltzer, Dan Smith, and James Fagan

In a much anticipated decision, the Court of Appeal has reaffirmed legal privilege protection for documents prepared during internal investigations (e.g., interview notes, forensic accounting analysis) whose dominant purpose is preparing for litigation reasonably in contemplation, and on the facts confirmed that this can occur even in the early stages of a government investigation.

This decision affirms that English law remains in line with other jurisdictions, including the work-product privilege in the United States, and should permit corporates to conduct internal investigations in anticipation of litigation without fear that external counsel will be required to turn over interview notes or other documents to authorities or to adversaries in collateral litigation.

Corporates should bear in mind the following practical tips:

  • Consider possible litigation. Corporates should place critical importance on considering at a very early stage in any investigation whether the investigation can be characterised as being for the dominant purpose of defending actual or anticipated litigation. Previous cases demonstrate that obtaining external advice is strong evidence in this regard. Companies should also consider documenting the dominant purpose in external engagement letters, Board or Audit Committee resolutions, or other materials.
  • Be wary of multiple purposes. The dominant purpose test remains vital to attracting Litigation Privilege, and will depend on a close analysis of the facts. Corporates should consider carefully where documents are also prepared for other purposes (such as compliance, business, or financial purposes), as this could prevent privilege from applying.
  • Consider legal advice privilege. The Court of Appeal expressed the view that Legal Advice Privilege might also apply, but declined to rule on this given contrary binding authority. However, even here the Court of Appeal took a more reserved position on whether information obtained from ex-employees could qualify. Therefore, corporates should take extra care when obtaining information from ex-employees as this may complicate parallel claims of Legal Advice Privilege.

New director Lisa Osofsky’s cross-border and corporate experience may lead the SFO in a fresh direction.

By Stuart Alford QC and Clare Nida

The announcement that Lisa Osofsky has been appointed as Director of the UK’s Serious Fraud Office (SFO) likely signals new strategic directions for the agency. For the past six years, the SFO has been led by David Green QC, who stepped down from his position in April. In this blog post, Latham partner and former Head of the Fraud Division at the SFO, Stuart Alford QC, provides five predictions for the SFO’s strategic priorities under Osofsky.

Background

Osofsky previously served as Regional Leader of Investigations for Europe, the Middle East, and Africa (EMEA) at Exiger, the global regulatory and financial crime, risk and compliance company. She has also held posts on the other side of the Atlantic. Her experience includes serving as a US federal prosecutor, as Deputy General Counsel and Ethics Officer at the FBI, as Money Laundering Reporting Officer (MLRO) at Goldman Sachs International, and as a member of the Corporate Investigation Division of Control Risks.