June 09, 2020

Serious Fraud Office strategy to improve culture and case management - a response to HMCPSI reports


On 2 June 2020, the Serious Fraud Office ("SFO") responded to two reports prepared by Her Majesty's Crown Prosecution Inspectorate ("HMCPSI"), the first of which was a report dated 22 July 2019 relating to leadership  (the "Leadership Review") and the second a report dated 8 October 2019 on  case progression  (the "Case Progression Review", together, the "Reports").  The Leadership Review was particularly critical of the SFO, noting that a "culture of delivery" in many cases led to "tolerance of neglectful approaches to management or, in some cases, of unacceptable behaviours".  The SFO's responses to the Reports demonstrate a clear intention to focus on a number of key areas relating to culture and case management, including creating a balanced and effective workforce, rebalancing resources according to case needs and delivering training to support case progression. 

This is not the first time in recent years that the SFO has commissioned an extensive review of its own working practices.  In May 2016, HMCPSI published a report evaluating whether the SFO structures, procedures, leadership, accountability and direction were effective and efficient. That report highlighted the significant improvement made by the SFO under the direction of its former Director, Sir David Green QC, but also noted a number of challenges that remained, including weaknesses in the board and committee structure.

Leadership Review

The aim of the Leadership Review, which was conducted at the request of the SFO's then Chief Operating Officer, was to assess staff engagement in order to better understand a drop in engagement scores.  It was also conducted to assist the Director of the SFO, Lisa Osofsky, "to address some entrenched cultural issues"1 within the organisation.  While the Leadership Review did not provide any formal recommendations, it did identify the need for the SFO to be more consistent in areas such as the development of staff and application of performance management.  In response to the Leadership Review, the SFO has introduced a three year "Culture Change Programme" and a new "People Strategy", which has four key objectives, namely to:

  1. implement effective organisational development to deliver the SFO's vision;
  2. create a balanced and effective workforce by recruiting and retaining the right people at the right grades and disciplines;
  3. improve and maintain learning and development opportunities; and
  4. support improvements in staff wellbeing.

The three year time frame reflects the fact that a cultural shift in any organisation, including the SFO, does not happen overnight.  It is one of the most difficult challenges for senior management to drive an agenda of cultural change and requires the buy-in from all members of staff to combine goals, values and attitudes.  As the Leadership Review notes, in order to become a "truly values-led organisation", the SFO's leadership needs "to develop and communicate a more strategic approach to cultural change".  It will certainly be interesting to see how successful the SFO is in implementing its new strategy.

Case Progression Review

While there have been some major recent successes for the SFO (notably the deferred prosecution agreement with Airbus), the agency has historically been criticised for the length of time it takes to investigate cases and make a charging decision, particularly where individuals have been identified as suspects and the prosecutions have ultimately been unsuccessful.  For example, the SFO's investigation into Barclays was opened in August 2012, charges were only brought in July 2017, and it was not until February of this year when the prosecution concluded when three former Barclays bankers were acquitted of fraud.  Another notable case is the SFO investigation into Tesco plc: the investigation was opened in October 2014, charges were brought against senior Tesco executives in September 2016, and the trial of two senior executives took place in 2018 at which the judge stopped the trial of due to lack of evidence.

Further, commentators have been critical of the SFO's less than impressive conviction rates. Between 2015 and 2018, its conviction rate for individuals was 60%. In 2019 that figure was 53%. Out of those who are convicted in SFO trials, sentences and financial penalties are low in comparison to, for example, the United States2 (which is often seen as the “gold standard” for prosecutions of serious fraud).

It is against that backdrop of mixed results and prolonged investigations that HMCPSI conducted the Case Progression Review, focussing on case progression systems and processes between case acceptance and charge.  While noting that the SFO deals with complex cases involving huge amounts of data and often extensive international cooperation, all of which bring challenges to the effective progression of cases, the Case Progression Review identified a number of areas that would benefit from improvement.  The Case Progression Review made seven key recommendations relating to a number of topics including: resourcing based on staff skills and time; considerations for use of independent counsel; impact of seizures on the digital forensic unit; focus and delivery of training; and monitoring of key milestones in the investigation and prosecution of cases.

Ms Osofsky has stated that she is committed to improving case progression and "the observations and recommendations made in the report will help"3 the SFO.  The SFO accepted all seven of HMCPSI's recommendations, with the exception of one recommendation that it only accepted in part.  Some of the most important changes being implemented by the agency in response to the Case Progression Review are:

  1. recruiting a unit of permanent paralegals to reduce the number of temporary document reviewers;
  2. establishing a Resourcing Steering Group to oversee the future allocation of resource according to business needs;
  3. formulating new guidance on engaging independent Counsel; and
  4. publishing a monthly bulletin to collect and publicise new, innovative ways of working and best practice guidelines drawn from case learning.

These tangible changes should improve the SFO's ability to conduct complex investigations in a timely manner, and will hopefully help ensure that the cloud of uncertainty hanging above any company or individual under investigation does not linger for longer than is necessary. The SFO's objectives should all be achievable; as the Case Progression Review notes, the SFO for the most part "already has in place the frameworks within which the necessary improvements can be achieved".  That does not mean any changes will be easy – a key challenge for the SFO will be to ensure that processes are complied with in a consistent manner, across the board.

Further thoughts

While these strategic goals will take a number of years to implement, they do demonstrate the SFO's willingness to focus more heavily on equipping itself with all the talent and systems it needs to effectively investigate and prosecute future cases.  The cultural change will be particularly challenging for the SFO, as it requires a great deal of time and attention to ensure that any cultural change is not just superficial. 

The plans neatly coincide with the appointment of Michelle Crotty as the SFO's new Chief Capability Officer.  In Ms Crotty's own words, the Chief Capability Officer's remit is "to strengthen the SFO's capability and enabling functions" and "deliver top quality corporate and technological services".4   No doubt the Chief Capability Officer will have in mind HMCPSI's findings and recommendations while carrying out her role.  

With its recent appointments and a clear vision of cultural change focussing on better resourcing and staffing capabilities, we should expect the SFO to become a greater force to be reckoned within the next few years to come.  Will those changes convert into an improved successful prosecution rate for the SFO?  Only time will tell.

1 Paragraph 1.3 of the Leadership Review, https://www.justiceinspectorates.gov.uk/hmcpsi/wp-content/uploads/sites/3/2019/07/2019-07-11-SFO-leadership-inspection-Final.pdf
2 https://fcpablog.com/2020/03/24/sfo-needs-urgent-fix-to-fight-covid-19-fraud/
3 https://www.sfo.gov.uk/publications/corporate-information/publication-scheme/hmcpsi-report/
4 https://www.sfo.gov.uk/2020/05/28/michelle-crotty-appointed-chief-capability-officer-as-john-carroll-becomes-permanent-chief-operating-officer/

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