The False Picture of the UK’s Battle Against Fraud

Expert journalist Dominic Carman here provides Lawyer Monthly with an overview of the “false picture” he claims is being portrayed in regard to the country’s battle against serious fraud, shedding light on the true scale of the UK’s fraud problem, and touches on the increasing and ongoing uncertainty surrounding the SFO’s future.

The Serious Fraud Office has had a good year, or so its advocates would suggest. In 2017, two deferred prosecution agreements made by the SFO with Rolls-Royce (£479.25m) and Tesco (£129m) delivered more than £600m in fines for the UK Treasury. The fact that no-one has yet gone to prison for the crimes committed by these companies, who both admitted their guilt, seems to have passed with little comment.

But the wealth of media coverage created by these two prominent prosecutions of high profile companies presents an entirely false picture of the UK’s wider battle against fraud. The simple truth is that there is more fraud and there are fewer convictions than in 2011, the year before David Green took over as SFO director. Data illustrating the full extent of the problem emerged over the summer as a result of much good work by the law firm, Pinsent Masons (Pinsents), which has done a public service in making the details available.

So what is the scale of fraud in Britain today? As a result of a Freedom of Information (FOI) request made by Pinsents, the Ministry of Justice (MoJ) provided figures which showed a fall in 2016 in the number of white-collar crimes prosecuted in England and Wales. In the same year, there was a sharp spike in the number of white-collar crimes reported.

The MoJ data for 2016 showed that there were 8,304 prosecutions brought, down from 9,489 in the previous year – a decline of 12.5%. These prosecutions comprise offences including: bribery, corruption, fraud, computer fraud, false accounting and insider dealing. This decline is not a one-off, but part of a sustained trend with a decline every year since 2011 when the figure was 11,200. That means an overall decline of 26% in prosecutions over five years.

On the other side of the coin, there has been an even more shocking increase in the number of crimes reported to the police relating to fraud. The figures for 2016 show that there were 641,539 reports – up from 617,112 in 2015 and a massive jump from the 2011 figure of just 142,911 in 2011. An extraordinary jump of 350% in five years. This is in line with comparable figures for 2016 produced by the Crime Survey of England and Wales.

According to a recent National Audit Office report, fraud cost private sector businesses an estimated £144 billion last year and individuals £10bn. Combined, these figures put the £600m fines levied on Tesco and Rolls-Royce into perspective since they are more than 250 times that sum. They also raise doubts over the true efficacy of the SFO to investigate and prosecute white collar criminals.

While it is fair to say that the SFO only investigates serious fraud, bribery and corruption, it would also be fair to assume that this has increased along broadly the same trajectory as more general fraud. We do not know the detail because government data does not breakdown reported or prosecuted fraud figures by value.

One thing we do know for certain, and upon which all commentators are agreed – uncertainty over the SFO needs to end. The constant speculation about its fate has a long and turbulent history: the SFO’s future has been in doubt as far back as 2011, when Theresa May (then Home Secretary) first mooted its abolition. Under her watch as Prime Minister, disbanding the SFO was firmly promised in the 2017 Conservative Election manifesto.

But since the election, there has been no government statement about the agency, simply an uneasy stalemate with May on one side and the SFO’s cheerleaders on the other. As someone who prominently supports the SFO in his newspaper, the former Chancellor and now London Evening Standard editor George Osborne has reportedly said that he will not rest until Theresa May is “is chopped up in bags in my freezer.”

None of which does anything at all to serve the interests of justice. Fraudsters, especially serious ones, must be rubbing their hands with glee since most of them, according to government statistics stand very little chance of either being detected or prosecuted for their crimes. Plotted on a graph, a year-on-year pattern of dramatically increasing fraud figures and ever-dwindling prosecutions would point to only one conclusion: as a country, we do not take fraud anywhere seriously enough.