Throughout the 1970s and 1980s, the investigation and prosecution of serious financial crime in England lagged significantly behind levels found in the United States of America. This was in part due to England’s lack of an agency which possessed the legal, technical and operational ability to thoroughly investigate the type of wrongdoing alleged, a role which in the USA had been filled for some time by the Federal Bureau of Investigation (FBI) operating as part of the Department of Justice (DOJ). It was alsopartly because English law lacked legislation which allowed law enforcement to tackle the enablers (if not the perpetrators) of such crimes, in the way that the Foreign Corrupt Practices Act 1977 (FCPA) did.
In response, in 1983, the UK Government established the Fraud Trials Committee which, in 1986, recommended the creation of a new agency, the Serious Fraud Office (SFO). The SFO would hold powers of both investigation and prosecution andbe staffed by expert investigators, lawyers, and technical specialists, whose task would be to tackle the most serious financial crime. The formation of the SFO was followed by the introduction of anti-money laundering legislation, the Fraud Act 2006, the Bribery Act 2010 (which is regularly described as the most stringent anti-bribery legislation in force anywhere in the world), and most recently, the Criminal Finances Act 2017. Cumulatively, these developments acted as a full moon, causing the UK’s investigatory and enforcement attitude to mutate beyond recognition, from the relatively passive to the ruthlessly aggressive.
The legislation referred to above is draconian and easily breached, with such infringements, liable to investigation and prosecution by the SFO. The attendant penalties are similarly ghoulish. It is therefore definitely worth taking a minute to reacquaint oneself with some of the SFO’s powers so that if you fall foul, you know the situation.
The SFO was established pursuant to the Criminal Justice Act 1987. Section 1 CJA (3) CJA provides that the Director of the SFO “may investigate any suspected offence which appears to him on reasonable grounds to involve serious or complex fraud”, whilst section 5 CJA provides that the director may “institute and have the conduct of any criminal proceedings which appear to him to relate to fraud”. The director of the SFO may also take over the conduct of any such proceedings, at any stage.
The SFO’s most significant investigatory powers are found in section 2 CJA. Under sections 2(2) and 2(3) CJA, the director of the SFO:
“may by notice in writing require [a] person whose affairs are to be investigated…or any other person whom he has reason to believe has relevant information to answer questions or otherwise furnish information with respect to any mater relevant to the investigation at a specified and either at a specified time or forthwith”; and
“may by notice in writing require the person under investigation or any other person to produce at such place as may be specified in the notice and either forthwith or at such time as may be so specified, any specified documents which appear to the director to relate to any matter relevant to the investigation or any documents of a specified description which appear to him so to relate, and if any such documents are produced, the director may take copies of extracts from them; require the person producing them to provide an explanation of any of them”.
Requests pursuant to section 2 CJA, commonly referred to as 'section 2 notices', can either require responses in writing, or by attendance at an interview. In the case of the latter, an interviewee cannot refuse to answer a question, even by stating “no comment”, essentially unless to do so would waive privilege.
The horror, (when compared to normal police interviews conducted under the Police and Criminal Evidence Act 1984, for example), of such a requirement is mitigated (to a degree), by the fact that those invited to a section 2 CJA interview are typically witnesses rather than suspects. Further comfort should be taken from the fact that the interviewee’s answers cannot be used against the interviewee in criminal proceedings (save for in criminal proceedings brought against the interviewee because the answers were misleading). Given this, case law has established that those attending section 2 CJA interviews have no absolute right to have a lawyer present, although one may be permitted to attend at the SFO’s discretion.
Non-compliance with a section 2 notice requiring production of documents may result in the SFO obtaining a warrant authorising the police to enter premises and seize the relevant material. Simple failure to comply with section 2 CJA is also an offence in its own right pursuant to section 2(13) CJA, as is knowingly, or recklessly making a materially false or misleading statement in response to a request under section 2 CJA, pursuant to section 2(14) CJA (as envisaged in the interview context above). There is also, under section 2(16) CJA, a specific offence of falsifying, concealing, destroying or otherwise disposing of documents known or suspected to be relevant to a police or SFO investigation.
Whilst the SFO therefore has substantial (and in England, unparalleled) investigative tools, there are certain powers it does not possess, such as the power of arrest. However, pursuant to section 1(4) CJA, the director “may, if he thinks fit, conduct any such investigation in conjunction with either the police or with any other person who is, in the opinion of the director, a proper person to be concerned in it”. This provision gives the SFO the ability, for example, to request that the police make an arrest or obtain a warrant to conduct a search.
Since 2016, a number of parties (mainly corporate entities) under SFO investigation have sought to challenge the agency’s powers through civil and public law avenues. These include most notably, Soma Oil and Gas, and Unaoil. In respect of both, the court found that the SFO’s powers may be exercised with wide discretion, and successful challenges to such discretion would only be possible in “highly exceptional” circumstances.
Whilst the powers (and resources) available to American investigators and prosecutors are still, on many measures, greater than those extant in the UK, the huge growth in legislation, capability, and actions taken, in this jurisdiction, are reflective of an arguably more aggressive enforcement environment than that found in the USA. The American werewolf is in London, and here to stay.