For the SFO, the year 2023 was largely a story of an organisation trying to turn a page. The flurry of activity around the departure of former Director Lisa Osofsky and the appointment of Nick Ephgrave QPM, gave a taste of what might be expected of the agency in the months to come. Ephgrave's tenure started with due fanfare with new investigations announced and a series of raids whilst several long running international investigations were dropped shortly before Ms Osofsky's departure. After a difficult few years in which the SFO had repeatedly made headlines for the wrong reasons, this new leadership, together with the reforms set out in the Economic Crime and Corporate Transparency Act 2023, which gained Royal Assent in October, offered the prospect of change. However, despite the buoyant mood, key challenges remain if the SFO is to prove itself.
New investigations/charges
Ephgrave's arrival heralded an expected uptick in SFO activity. On 11 October, the SFO announced its criminal investigation into Safe Hands Plans Limited and its parent company SHP Capital Holdings Limited. This move came after the collapse of the funeral plan scheme operated by the companies. Safe Hands Plans had marketed pre-paid funeral plans, where customers paid instalments for plans priced up to £4,000. The collapse left approximately 46,000 plan holders in limbo, having contributed funds towards their future funerals. Further, on 14 November, the SFO arrested seven individuals and executed searches across nine sites in connection with a criminal investigation into Axiom Ince, a collapsed law firm, and the disappearance of £66 million in client money. When one reviews these matters alongside the charges brought by the SFO against four individuals in connection with the collapse of bakery chain Patisserie Valerie (brought very shortly before the arrival of Ephgrave) it might hint at the possibility of a trend. In addition to all three matters arising out of insolvency (which is hardly surprising in the current economy), it may prove significant that they are all fraud related and domestic in nature. Given Ephgrave's experience as a police officer whose work was concentrated on UK matters (and as the first non-lawyer to hold the DSFO position), it would not be surprising if his focus remains on domestic fraud matters.
By contrast to Ephgrave, Ms Osofsky was a dual qualified US/UK lawyer who had previously served as a former federal prosecutor and deputy general counsel at the FBI. She often spoke of her desire for increased international cooperation on cross border corruption matters. Prior to her departure the SFO dropped two such investigations. First, its long running probe into alleged bribery in the Democratic Republic of the Congo by Kazakh mining group ENRC Ltd, citing insufficient admissible evidence with which to prosecute and following extensive criticism of the SFO for its handling of the case over the course of a decade. The second was the SFO's investigation into suspected corruption in the conduct of business in the Republic of Guinea by the Rio Tinto Group. In August of this year the SFO carried out a review of the case and concluded that it was not in the public interest to proceed with a prosecution in the UK and closed the case. The Australian Federal Police is still investigating the matter.
In December the SFO opened an investigation into suspected fraud at aircraft parts supplier AOG Technics Ltd after the UK Civil Aviation Authority and European Union Aviation Safety Agency issued safety notices in relation to unapproved aircraft parts being supplied by the company. The SFO conducted a search operation at a site in Greater London and made one arrest in connection with the investigation.
This was the third investigation that has been announced since Ephgrave began his tenure at the SFO and suggests that the SFO may be turning its attention to fraud investigations as opposed to the international bribery and corruption that it has been associated with in recent years.
Prosecutions
In 2023 the SFO enjoyed some success at trial, securing convictions of two former executives at Balli Steel PLC for their involvement in a $150 million trade finance fraud. Ahead of the trial, Nasser Alaghband, the company's CEO, pleaded guilty to the charges and received a six-and-a-half-year prison sentence. The investigation, which started in 2014 and involved information-sharing between law enforcement officials across 36 countries, was hailed by former SFO director Lisa Osofsky as unprecedented in its scope. The acquittal of a fourth defendant in that case, however, served to cap any claim to an outright victory.
However, there were setbacks too with the collapse of the SFO's prosecution of three former executives at G4S in March on the basis that it was no longer in the public interest to proceed. The SFO's stated reasons for its decision was that it was unable to resolve outstanding disclosure issues in the case within a reasonable time frame; following disclosure related delays, the trial had been due to start in January 2022, but it was adjourned for a year due to disclosure issues. The collapse marked a further example of disclosure issues derailing a high profile SFO matter, following the collapse of the trial against Serco executives in 2021, which gave rise to the Altman review. The year also saw the acquittal of Mishcon's client Robb Simms-Davies, together with two co-defendants, all of whom had been prosecuted by the SFO for bribery offences. All three defendants were unanimously acquitted by the jury following a 15-week trial.
DPAs
In keeping with the trend of 2022, the SFO did not enter into any Deferred Prosecution Agreements (DPAs) in 2023, with the last DPA having been secured in 2021. The SFO has faced criticism for its repeated failure to secure the conviction of individuals following the conclusion of DPAs with the companies implicated in the allegations. It had some limited success in that regard securing the guilty plea of an individual connected to the £2.5m DPA entered into with Bluu Solutions Ltd and Tettris Projects Ltd in 2021. However, it should be noted that the individual was an agent and did not act for or on behalf of either company. He was not an individual through whom the SFO had established corporate liability for the purposes of the DPA. It follows that – after 12 DPAs over 8 years – the conviction of an individual in respect of whose conduct a corporate and the SFO have agreed a DPA continues to remain out of the SFO's reach.