The Role of the SFO

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Serious Fraud Office
Catching the Villains
Helen Garlick Assistant Director
3rd ICAC SYMPOSIUM 9th - 11th May 2006
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• The Core Obstacles to Freedom- Poverty,
  Corruption, Banality. Karl Marx
• If the money sometimes ended up in an orphanage,
  then I am very happy- but lets say it didnt
  always end up in an orphanage
• Loik Le Floch Prigent
  Chief Executive Elf Aquitaine
  1999

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• Corruption charges corruption? Corruption is
  government intrusion into market efficiencies in
  the form of regulation. Thats Milton Friedman.
  He got a goddam Nobel Prize. We have laws against
  it precisely so we can get away with
  it.Corruption is why we win.
• From the film Syriana
  2006

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• The Serious Fraud Office

• Set up in 1988
• 5 Operational Divisions each with approximately
  8 lawyers and 30 investigators.
• Multi Disciplinary team approach to investigation
• Compulsory powers to compel production of
  documents and answers to questions

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The Serious Fraud Office

• Investigates and Prosecutes cases of serious or
  complex fraud
• Over 1 million
• Approximately 80 domestic cases, approx 270
  permanent staff
• Assistance to overseas prosecutors. Last year 31
  countries assisted, total sums at risk 34 bn
• Receives and vets all reports of overseas
  corruption

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Why does it matter so much?

• 1. IRAQ
• Corruption doesnt just line the pockets of
  political and business elites, it leaves ordinary
  people without essential services and deprives
  them of access to sanitation and housing
• Transparency Int.

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Why does it matter so much?

• OIL FOR FOOD
• 1996, largest UN humanitarian effort. US
• Treasury reported 10bn illicit gains including
• Benon Sevan, UN official heading the
  programme accused of misusing office in return
  for oil vouchers
• b) Australian Wheat Board, the largest supplier
  of aid, accused of paying Saddam 220m to
  secure contracts

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Why does it matter so much?

• COALITION PROVISIONAL AUTHORITY
• April 2003 June 2004
• 8.8bn unaccounted for, according to US
  Inspector General for Reconstruction
• b) Includes bid rigging for contracts for
  cell phone networks worth 500m p.a

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Why does it matter so much?

• 3. POST WAR RECONSTRUCTION
• The reconstruction of post war Iraq is set to
  become the biggest corruption scandal in history
  Transparency International
• Iraq has been reduced from an oil exporting to an
  oil importing state, 20 oil products are
  disappearing. The Inspector General to the Oil
  Ministry concedes this is impossible without
  senior government complicity
• (World Service 25.4.06)

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Why does it matter so much?
2. CORRUPTION IN THE ARMS TRADE The affair has
been a disaster for the sub continent , with all
the juicy allegations of larceny and intrigue to
savour, it is easy to forget that the Bofurs guns
added to the ever growing armouries of India and
Pakistan, which now face each other in an
unstable nuclear balance of power. N
Cohen New Statesman
15.11.99Commenting on the Bribery scandal
involving payments of 30m to the Indian PM
Rajiv Ghandi
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Difficulties in Investigating

• 1. Secrecy
• 2. Contractual Complexity
• 3. Use of agents and consultancy commissions
• 4. Offsets

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Political Corruption

• 1. LOBBYING
• Abramoff/ Scanlon scandal in the US
• Lobbyists use Political Consultants and think
  tanks to disguise fees and avoid disclosure.
• to expand the parameters of international
  discourse in an effort to leverage the combined
  power of world intellect.
• Exploitation of clients, in this case Indian
  tribes
• Corruption of political process , gifts and
  corporate entertainment. Fact Finding trips

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Political Corruption

• 2. UK Cash for Peerages investigation
• Funding of Political parties
• soft loans to avoid limits on donations
• The system was set up in secret without my
  knowing about it, or the elected national
  executive knowing about it
• Labour Party Treasurer
• April 2006

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How can we strengthen the global fight against
corruption?

• A. Harmonising National Corruption Laws
• 1. Compatible Definitions of the Offence
• a) Should the offence be limited to public
  officials?
• (UK law applies to both private and public
  sectors, to any agent acting for a principal)

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How can we strengthen the global fight against
corruption?
A. Harmonising National Corruption Laws 1.
Compatible Definitions of the Offence
b) How do we define corruption or corruptly?
corruptly is a simple English adverb and I am
not going to explain it to you except to say that
it does not mean dishonestly. It is a different
word and it means purposely doing an act which
the law forbids as tending to corrupt.
Wellburn (1979)
An act is corruptly done if done voluntarily and
intentionally and with a bad purpose of
accomplishing either an unlawful end or result or
a lawful end and result by some unlawful method
or means. US v Liebo
When the intention is to influence an agent
(including anyone exercising a public function)
in the exercise of his duty.
Home office Consultation paper
2005
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How can we strengthen the global fight against
corruption?
A. Harmonising National Corruption Laws 1.
Compatible Definitions of the Offence
c) Should facilitation payments be excluded?
OECD excludes, as does FCPA. payments to
expedite or secure the performance of a routine
governmental action UK law does not
exclude but exercises prosecutorial discretion,
for small payments made in countries where it is
normal practice.
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How can we strengthen the global fight against
corruption?
A. Harmonising National Corruption Laws 1.
Compatible Definitions of the Offence

• d) Corporate Liability
• OECD Convention 1999. each party shall establish
  liability of legal persons for the bribery of
  foreign public officials.
• UK law requires proof of guilt by directors or
  managers who represent the directing mind or
  will of the company

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How can we strengthen the global fight against
corruption?
A. Harmonising National Corruption Laws 1.
Compatible Definitions of the Offence

• e) Extending Jurisdiction
• UK Law covers corrupt acts committed abroad by
  nationals and by UK companies but we do not
  think it appropriate to take jurisdiction over a
  foreign company for actions which take place
  entirely in a foreign country
• http//uktradeinvest.gov.uk

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How can we strengthen the global fight against
corruption?

• B. Encouraging And Protecting Sources
• Whistleblower Protection
• Giving Information, Usually To The Authorities
  About Illegal Or Underhand Practices
• The UK Experience
• Public Interest Disclosure Act 1998
• Public Concern At Work

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How can we strengthen the global fight against
corruption?
B. Encouraging And Protecting Sources

• people at work who raise genuine concerns in good
  faith
• disclosures made tomanagers/employers/government
  departments/police/regulators
• Protection against victimisation and unfair
  dismissal
• Protected disclosures are not regarded as
  contractual breach of confidence

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How can we strengthen the global fight against
corruption?

• C. Cooperating Witnesses Plea Bargains
• Serious and Organised Crime and Police Act
  2005
• a) Immunity From Prosecution. Formal agreement
  with conditions attached.
• b) Restricted Use undertakings, to encourage
  accomplices to make statements with the
  assurance that they will not be used in evidence
  against them. Conditions can be attached.
• c) Plea Bargains Co operating Defendant
  Agreements, negotiating a plea of guilty in
  return for a reduction in sentence.

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Money Laundering

• Most serious laundering takes place of shore and
  in the developing world. A Misconception?
• The UKs Financial Services Authority found that
  between 1996 and 2000 some 1.3bn was laundered
  through accounts held by the Abacha family and
  associates in UK bank accounts.

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Money Laundering

• Some issues
• Balancing legal professional privilege with money
  laundering laws
• s328 Proceeds of Crime Act 2002, offence of
  being concerned in an arrangement which
  facilitates money laundering
• But
• The right to consult legal advisors without fear
  of the communication being revealed is
  fundamental to the administration of justice
• Bowman v Fels (2005) EWCA

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Money Laundering
Some issues

• 2. Multi National Currencies
• The Puzzle of the Missing Bin Ladens The
  Guardian 20/4/06
• The 500 euro bill. Spain accounts for 26 of
  the total issued across 12 participating
  states. Concerns about money laundering and
  corruption

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Mutual Legal Assistance

• 1. The Abacha case
• FGN request for prosecution of Abacha family
  Swiss request for assistance in money
  laundering investigation
• Abacha family mount legal challenge to both,
  alleging
• that criminal MLA process pursued by FGN for
  improper ulterior motive- to force settlement of
  civil claims
• that material obtained by Swiss authorities would
  be used by the Nigerians for collateral civil
  actions.

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Mutual Legal Assistance
1. The Abacha case

• Collateral legal action in Nigeria to
  challenge the constitutional validity of the
  requests
• Request made in 04, satellite litigation
  concluded in 04. Not necessarily
  representative but

• Principles
• a) MLA must be swift.
• Available at the outset of an
  investigation
• Appeals must be limited and quick
• b) MLA requests need to be treated in confidence

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Mutual Legal Assistance
Serious Fraud Office

• Zadari (1988)
• Some of the suspects who are likely to be the
  subject of investigation and prosecution will be
  powerful, rich ruthless, sophisticated criminals
  It is quite plain that the process (of MLA) is
  not a trial it is the process of gathering
  evidence. The use to be made of the evidence so
  gathered is a matter for the requesting state It
  seems to me entirely appropriate for the UK,
  requested to act by a foreign state, to pay
  regard to the wishes of that state when asked by
  someone in the position of the applicant for
  details of the case against him.
  Lord Bingham

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Mutual Legal Assistance

• But
• MLA may engage human rights issues e.g invasion
  of privacy
• and
• Persons affected must have sufficient information
  to take legal advice and consider whether they
  have grounds to challenge.
• (cf similar debate Re Extradition, European
  Arrest Warrant and Anglo/US Treaty)

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Serious Fraud Office
Catching the Villains
Helen Garlick Assistant Director
3rd ICAC SYMPOSIUM 9th - 11th May 2006