The Serious Fraud Office (SFO) has finally stopped investigating a number of former Rolls-Royce employees in connection with the bribery and corruption scandal that has been rumbling on for many years now. A shrewd decision based on available evidence? Or the frightened actions of an organisation that appears to be treading a tightrope (especially so considering the mauling it took in court just a matter of weeks ago on another high-profile investigation)? Neither option can be ruled out, but questions need to be asked about the SFO’s handling of Rolls-Royce, as Aziz Rahman explains in some detail.
Two years ago, the SFO entered into a deferred prosecution agreement (DPA) with Rolls-Royce, with the company paying a total bill of £671 million for bribery and corruption in at least seven countries. The DPA ensured that Rolls-Royce as a company wasn’t prosecuted, but this didn’t mean that individual staff members couldn’t be charged.
Here we are, though, two years after the DPA and more than six years since the SFO first began its investigations and no-one has been charged. Only now are a number of suspects being told they’re no longer under investigation.
Why has it taken so long to reach this conclusion? Why have decisions not yet been made regarding all of the suspects? Surely there has been enough time to make those decisions?
Staunch defenders of the SFO would say that the organisation has concluded its enquiries and decided there’s no mileage in pursuing certain individuals. That may well be true, but I cannot help thinking that this decision may have more to do with Tesco – another DPA-related saga that the SFO seems unable to resolve to its own satisfaction.
Like Rolls-Royce, Tesco entered into a DPA with the SFO (early in 2017), paying almost £130 million to settle allegations that the business overstated its profits by hundreds of millions of pounds three years earlier. As with Rolls-Royce, certain former employees were investigated. Three were charged. Last month, the case against two of them collapsed when Court of Appeal Judges cleared the individuals of fraud and false accounting due to a lack of evidence. Judge Sir John Royce said the case was “so weak’’ it should not even have been put before a Jury.
This was a major embarrassment for the SFO, of course. Whether this has influenced the SFO’s decision to abandon investigations against Rolls-Royce individuals is something that only its senior figures will know.
Speeding up decision-making
This latest decision could be the SFO’s new director Lisa Osofsky acting as a ‘new broom’, sticking to her pledge to speed up decision-making and discard cases that she sees little or no value in pursuing. Or it could be the case that evidence has finally been found to absolve the individuals concerned of any blame. Whatever the reason, this decision should not have taken years to reach.
Once Rolls-Royce was under investigation, it co-operated fully with the SFO. If the evidence was there to agree a DPA, it’s hard to see how it takes two more years to decide whether or not individuals should be prosecuted.
News of the SFO’s decision to drop its pursuit of several individuals in the Rolls-Royce investigation comes at an important time for the agency. This week sees the beginning of a trial involving four former Barclays Bank executives. The case stems from an SFO investigation into how the bank raised capital during the financial crisis that occurred a decade ago.
Many other major companies – among them G4S, GlaxoSmithKline and, most recently, Patisserie Holdings – are also the subject of high-profile SFO investigations. Last year, the SFO’s case against Barclays Bank – as opposed to the current trial of four executives – collapsed. In 2016, the trial of brokers accused of helping convicted trader Tom Hayes to rig the Libor rate also collapsed.
The SFO may yet have some success with its current Rolls-Royce investigation, but the fact that this investigation has now been scaled down – and that the news of this occurrence comes after a number of recent setbacks for the agency – means that the SFO is now under intense pressure to deliver.
The speed with which the SFO investigates cases and the success of its investigations are now matters in which both the business and legal worlds are taking a very close interest. As a ‘new broom’, Lisa Osofsky may in fact have a bigger clear-out on her hands than she initially bargained for.
Aziz Rahman is Senior Partner and Head of the Corporate Crime Group at Rahman Ravelli Solicitors