The Serious Fraud Office’s abandoned investigation into Glaxosmithkline cost £7.5M. Nicola Sharp of business crime solicitors Rahman Ravelli considers the need for change at the agency and the aims of its new Director, Lisa Osofsky.
The news that the Serious Fraud Office (SFO) spent £7.5 million on its Glaxosmithkline (GSK) corruption investigation before dropping the case didn’t do the agency’s image any favours. So perhaps it isn’t surprising that the SFO Director has outlined the need for big changes.
The question now is if and when we will see the changes she wants to see.
Abandoning a five-year inquiry into an FTSE 100 company such as GSK– and at the same time dropping a similar high-profile investigation into Rolls-Royce – led to criticism of the SFO long before its costs became known via a freedom of information request.
SFO Director Lisa Osofsky has now said that her agency needs to speed up investigations, improve its handling of evidence and prosecute the right people. To her credit, she has been in her post less than a year but has already gone to great lengths to look at all aspects of the SFO’s caseload and the way it works. And she has decided that change is necessary. She seems to have recognised areas where things could be done better and has displayed an awareness that the SFO has to give the taxpayer something approaching value for money, even though this may be difficult to quantify.
Arguably, she had little choice. Dropping the GSK and Rolls-Royce investigations three months ago did not look good and the SFO’s failure to secure prosecutions of individuals in the Tesco accounting scandal (after entering into a deferred prosecution agreement with the supermarket giant) also cast the SFO in a bad light
Her challenge now is to ensure that her wish list for the SFO becomes a reality. Certainly, if we take the GSK case, five years is far too long for an investigation to go on before being dropped.
It is imperative that Lisa Osofsky’s change in strategy ensures that investigations do not drag on too long. When this happens it is expensive and possibly wasteful – and it is also unfair to make those who are under investigation face such a lengthy period of uncertainty. The Director has talked recently about wanting to see the best evidence her staff have on a case before deciding whether to proceed. Such an approach may prove valuable as there can be little justification for taking five years to determine whether there is sufficient evidence to prosecute or whether any such prosecution is in the public interest. We now wait to see exactly how the Director intends to speed up prosecutions.
What will be of equal, if not more interest will be how she follows up on her statement that the SFO needs to be prosecuting the right people. There have been cases where the investigation targeted staff at the lower levels while those higher up the management structure never came under the scrutiny that they should have done. The issue of individual liability versus corporate liability for an offence has also played its part in those at senior level not always being held to account.
This is a tricky area. But the SFO does now have to show that it can be transformed in the image that its director wants – so that it is left with no more huge bills for investigations that peter out and fewer cases where prosecutions are unsuccessful. The introduction of the failure to prevent bribery offence gave the SFO scope to tackle corruption. If the much-talked about corporate criminal offence of failing to prevent economic crime became a reality it would certainly assist the SFO. But as yet it is not available for the SFO to use.
The challenge facing the SFO, and in particular its Director, is the need to show that it can become quicker, smarter and less likely to run up big bills for little or no result.