This article was first published by the Law Society Gazette on January 12, 2024.
The new SFO Director, Nick Ephgrave QPM, marks his first 100 days in post this month after succeeding Lisa Osofsky in September 2023. Ephgrave has overseen a dynamic start to his tenure with the announcement of three new investigations in quick succession. Greater challenges lie ahead for the new Director, however, with the ultimate test being whether these new and other pre-existing investigations are successfully concluded under his watch, whether by way of corporate resolution or contested trial that makes it past the halfway stage and avoids damaging disclosure failures.
Much has been made of how Ephgrave is the first non-lawyer Director, having previously served as the Assistant Commissioner of the Metropolitan Police. In truth, this is likely to be of little import given that he is surrounded by, and will presumably take advice from, seasoned criminal lawyers. The Director’s key functions are operational, directional and cultural, for none of which being a qualified lawyer is a pre-requisite. Indeed, during his first 100 days in post, the new Director has made full use of his specialist investigative background and appears keen to lead by action rather than rhetoric, giving limited press interviews and instead getting on with the job of revitalising the agency.
New Director, New Legislative Toolkit
It is better to be lucky than good, as the tired adage goes, and the new Director may have luck on his side given the favourable timing of taking up post amidst the most radical legislative overhaul of the UK corporate criminal landscape in decades. The Economic Crime and Corporate Transparency Act 2023, passed in October, significantly enhances the corporate criminal liability toolkit available to the SFO, introducing a new offence of failure to prevent fraud and an expansion of the “identification doctrine” – the main way in which criminal liability has been attributed to corporate entities in England and Wales – for economic crimes, to include “senior managers”. 1
Additionally, the SFO’s powers of compulsion pursuant to section 2 of the Criminal Justice Act 1987, previously available only in cases involving international bribery and corruption, have now been extended to cover cases of suspected fraud and domestic bribery. This should have the positive effect of speeding up the SFO’s case acceptance and, if used properly, ensuring that only those cases in which the evidence supports an investigation are taken on. Together, these legislative developments should make it easier for the SFO to investigate and prosecute serious and complex fraud and corruption and will underpin Ephgrave’s stated desire to build a “strong, dynamic and pragmatic”2 agency.
This emphasis on pragmatism is notable and could indicate a willingness to keep the Deferred Prosecution Agreement (DPA) door open for those companies who are willing to acknowledge wrongdoing, cooperate fully with the SFO and undertake a process of corporate overhaul and remediation.
A Promising Start
Shortly before the new Director took up his role, the SFO closed its long-running investigations into two mining companies.3 Cleared to set the tone for his own time in charge, Ephgrave quickly evidenced the clear-eyed and fast-paced decision-making that critics allege has been missing at the agency in recent times.
In October, the SFO announced an investigation into suspected fraud at the funeral company Safe Hands Plans Limited and its parent company SHP Capital Holdings Limited after the collapse of their funeral plan scheme in 2022.4
In November, the new Director authorised a dawn raid in connection with the investigation into the collapsed law firm Axiom Ince and an alleged £66 million of missing client funds.5 The raid involved over 80 SFO investigators, accompanied by Metropolitan Police officers, conducting searches across nine sites and resulted in the arrest of seven individuals.
In December, underscoring his preference for visible action, Ephgrave authorised a second dawn raid, resulting in the arrest of one individual at the London address of the aircraft parts supplier AOG Technics Ltd, in connection with an investigation into suspected fraud.6
Sterner Tests Lie Ahead
The prompt launch of new investigations and the renewed use of the agency’s search and seizure powers point towards a fresh energy at the SFO under Ephgrave. However, as his predecessors have discovered, the hardest part is yet to come. The SFO’s recent record of securing convictions following a contested trial is mixed and the agency has at times struggled to achieve successful conclusions in some of its larger corporate investigations.
The SFO’s first opportunity to secure individual convictions is the ongoing trial of two individuals accused of bribing Saudi Arabian officials to secure defence contracts with the UK government for GPT Special Project Management.7
The SFO has also committed to making its individual charging decisions in the Glencore case by July this year, though if charges are brought it will be some time before the cases reach trial. Indeed, the trial of four individuals charged with fraud in September 2023 in connection with the collapse of bakery chain Patisserie Valerie will not take place until March 2026.8
The new Director is off to a promising start, but we must remember that he is serving an initial five-year term. A reliable assessment of his success or otherwise in the role is best deferred to 2028, rather than after the first 100 days.
1 Section 196, ECCTA 2023.
2 UK Serious Fraud Office, Press Release, Nick Ephgrave QPM begins tenure as Director of the Serious Fraud Office (25 September 2023), https://www.sfo.gov.uk/2023/09/25/nick-ephgrave-qpm-begins-tenure-as-director-of-the-serious-fraud-office/.
3 UK Serious Fraud Office Case Update: ENRC Ltd, https://www.sfo.gov.uk/cases/enrc/
4 UK Serious Fraud Office, Press Release, SFO launches criminal investigation into funeral plan provider Safe Hands Plans (11 October 2023), https://www.sfo.gov.uk/2023/10/11/sfo-launches-criminal-investigation-into-funeral-plan-provider-safe-hands-plans/#:~:text=The%20SFO%20is%20a%20specialist,updates%20via%20a%20web%20page
5 UK Serious Fraud Office, Press Release, Serious Fraud Office launches investigation into suspected fraud at Axiom Ince with nine raids and seven arrests (14 November 2023), https://www.sfo.gov.uk/2023/11/14/serious-fraud-office-launches-investigation-into-suspected-fraud-at-axiom-ince-with-nine-raids-and-seven-arrests/.
6 UK Serious Fraud Office, Press Release, SFO launches criminal investigation into global aviation supplier with dawn raid in London (6 December 2023), https://www.sfo.gov.uk/2023/12/06/sfo-launches-criminal-investigation-into-global-aviation-supplier-with-dawn-raid-in-london/
7 Suzi Ring, Financial Times, ‘Deep corruption’ at centre of SFO Saudi bribery trial (22 November 2023), https://www.ft.com/content/792f6767-45d3-411e-a2f1-a83a391ad3b1.
8 Alex Lawson, The Guardian, Patisserie Valerie fraud trial will not start until 2026, court told (7 November 2023) https://www.theguardian.com/business/2023/nov/07/patisserie-valerie-trial-will-not-start-until-2026-court-told.