Last month Nick Ephgrave, the new director of the Serious Fraud Office, set out his vision for an organisation whose success has otherwise been limited by challenges.
While many of the SFO chief’s proposals are not new to regulators in other jurisdictions or to lawyers representing businesses being investigated, the SFO finally appears to be taking steps to level the playing field for its benefit.
If implemented, Ephgrave’s plans could mean speedier and more effective investigations, so it is worth businesses taking careful note.
Ephgrave appears to be building up a new armoury for the SFO.
Cash for tips
The most eye-catching of Ephgrave’s plans is to consider providing financial incentives to whistleblowers. While not currently within the SFO’s armoury, financial incentives are not unfamiliar to the UK.
UK whistleblowers and regulators – the SFO included – have long been beneficiaries of the US’s established incentivisation practices, while domestically, HMRC offers cash to individuals providing evidence about tax fraud.
Delivering on this goal, however, will require significant institutional and legislative change.
The courts currently frown on witnesses being paid to take the stand, while the Financial Conduct Authority and Prudential Regulation Authority concluded in 2014 that introducing financial incentives would make little difference to the number of successful enforcement actions.
Indeed, the existing Public Interest Disclosure Act 1998, intended to protect whistleblowers from negative treatment, is facing repeal through a private member’s bill in the House of Lords, which proposes an independent Office of the Whistleblower that also does not offer financial incentives.
Even if policymakers decide that financial incentives are a step too far, there are other options available to create a more whistleblower-friendly business environment.
Changing the law to make it a criminal offence to subject a whistleblower to a detriment or other negative treatment is one idea – Australia and France already have such laws in place.
Assisting offender and co-operating witnesses
Ephgrave proposes maximising existing ‘assisting offenders’ legislation to encourage witnesses to co-operate in order to progress their investigations under the Serious Organised Crime and Police Act 2005. For example, sentence reduction offers can be made to offenders to secure their assistance with investigations.
Although common practice in jurisdictions such as the US, it has rarely been used in the UK.
Speedier and more effective investigations
SFO investigations have been especially slow in recent years. Ephgrave aims to accelerate this process, in part by culling prosecutions that are unlikely to succeed early on.
This is a welcome change, as businesses under investigation often find the prolonged uncertainty most damaging.
Ephgrave also advocates for more dawn raids, a key tactic in combatting white-collar crime, as they can inject crucial momentum into investigations.
It is not yet clear if Ephgrave will be given the financial and staffing resources to make this ambition a reality.
Use of new offences under the ECTA
The Economic Crime and Corporate Transparency Act 2023 introduced various new provisions into law, including a failure to prevent fraud offence (to apply to large organisations only, as defined under the Companies Act 2006).
