The Serious Fraud Office and the Coronavirus Challenge

Neil Williams of business crime solicitors Rahman Ravelli outlines why the Covid-19 pandemic may mean the SFO cannot return to business as usual.

While these are uniquely testing times for many of those in business, the situation is perhaps least straightforward for the Serious Fraud Office (SFO). While many in business and finance will – it is hoped – return to workplaces at some point in the near future to resume what they did in pre-virus times, it is unlikely to be so simple for the SFO.

By the time things return to anything like normal, the SFO’s version of normal may differ significantly from what it was just a few months ago. This could, given time, be an opportunity for the agency to show its mettle and expertise as it meets a variety of new or increased challenges. But any perceived failure to meet those challenges could lead to questions about its effectiveness. It is, after all, only three years ago that the then Prime Minister intended to hand the SFO’s duties to the National Crime Agency.

Such a plan was eventually dropped. But now the SFO will now have to juggle its existing workload – which it tends to tackle with mixed results – with what is certain to be a slew of new investigations arising from coronavirus.

By the time things return to anything like normal, the SFO’s version of normal may differ significantly from what it was just a few months ago.

There is likely to be a public interest in – and strong backing from the public for – investigations and prosecutions of businesses and individuals suspected of making or attempting to make fraudulent gains from the healthcare challenges posed by the pandemic. Whether this is by price fixing of pharmaceuticals or equipment, pandemic-related investment fraud, the sale of counterfeit medical products or online selling of goods at hugely inflated prices or goods that do not exist, the SFO may well have a huge amount of pandemic-related work coming its way. Having had its fingers burnt many years ago with its failed Operation Holbein investigation into pharmaceutical price fixing – which was, at the time, the SFO’s biggest ever prosecution – it may not be relishing any more such cases.

Yet there is a strong possibility such cases will arrive at the SFO’s door. As will allegations relating to those looking to use real or non-existent charities as vehicles for fraud. It would also be a huge surprise if the government’s Coronavirus Job Retention Scheme was not targeted by those in organised crime looking to make fraudulent gains. Chancellor Rishi Sunak has also acknowledged that the payment scheme for the self-employed may also be vulnerable to fraud.

The SFO, therefore, may soon have a bigger workload due to recent events. But such events may also indirectly lead to the SFO facing more challenges from the past.

Warren Buffett’s quote, “It’s only when the tide goes out that you discover who’s been swimming naked,’’ may not have won any awards for good taste but the point it makes remains valid – when the economy takes a turn for the worse we get to see who wasn’t as legitimate as they appeared before the bad times. The economic problems that coronavirus prompts may reveal historic fraud that would otherwise have remained hidden. And that may well produce more work for the SFO.

The situation at this very moment may mean that the SFO has time to examine cases that have been in the in-tray for a long time while more pressing ones demanded immediate attention. The SFO is now in a position to do some spring cleaning in relation to the cases that do not usually receive prompt action; either because they are not considered urgent or because they were simply too time consuming to make swift progress on. The SFO Director Lisa Osofsky has often spoke of her desire for her agency to move swiftly and efficiently. The lockdown may well give the agency the chance to tackle investigations that have been lingering too long for her liking.

The SFO could, therefore, view the virus-related lockdown as a blessing that gives it the chance to play catch-up on some cases. But it could equally come to regard it as a curse, if and when the avalanche of expected virus-related fraud cases arrives on its desks.

Precisely how such matters will develop is impossible to forecast with pinpoint accuracy. But what can be said with a degree of certainty is that the SFO is facing a number of challenges. They may not all be new. They may not all arrive at the same time. But how it manages the workload that COVID-19 looks set to induce will be provide a true indicator of the SFO’s own health.