SFO prepares to adopt the American way as challenges mount

The new Serious Fraud Office (SFO) director Richard Alderman started his new role three months ago and so far has had to contend with an appeal over the BAE fiasco, a scathing review by former New York City prosecutor Jessica De Grazia and the departure of four senior prosecutors from the unit.

SFO prepares to adopt the American way as challenges mountThe new Serious Fraud Office ;(SFO) ;director Richard Alderman started his new role three months ago and so far has had to contend with an appeal over the BAE fiasco, a scathing review by former New York City prosecutor Jessica De Grazia and the departure of four senior prosecutors from the unit.

Many may see this as a rocky start, but in an exclusive interview with The Lawyer, Alderman says he is embracing these challenges. “The goal is to ensure that the SFO is best placed to protect society and to do this we need to have a long, hard look at where the SFO is today,” says Alderman.

Part of the issue is that only seven weeks after the former SFO director Robert Wardle left the unit, deputy director James Kellock and assistant directors Philip Blakeborough, Helen Garlick and John Benstead have also announced their intention to leave.

DE GRAZIA’S 163-PAGE REVIEW

The SFO’s failings include:

• Skills shortage in lawyers and investigators
• Unfocused investigations
• Lack of clarity over roles and responsibilities of management
• Low conviction rate

De Grazia says:

• “As a consequence of the leadership deficits described above, a ‘pass the buck’, risk-averse, ‘complaint’ culture has developed in the SFO. This culture discourages robust decision-making and innovative and effective use of powers.”
• Comparative data showed that, during 2003-07, the SFO’s average conviction rate was 61 per cent of defendants, while the Manhattan District Attorneys Office (equivalent to the SFO) had a 92 per cent conviction rate.
• In 2007 the SFO employed 56 staff lawyers and spent an additional £4.23m on external counsel ranging from newly qualified barristers to silks and in five years prosecuted to conclusion a total of 166 defendants. Meanwhile, the Manhattan District Attorneys Office Frauds Bureau, which is staffed by only 19 lawyers, does not contract out work to the external bar, but still managed to conclude the prosecution of 124 defendants in the same period.

This does cause problems, and even Alderman concedes this; however, he adds that, to ensure the SFO has the best talent within its ranks, its lawyers need to have had experiences elsewhere.

“I’ll actively encourage people to take secondments, to move into different spheres and leave the SFO after building a foundation here. When they come back they’ll have a lot more value to add to the SFO due to these experiences and will come in at a much higher level,” explains Alderman.

Apart from Alderman’s own initiative, he is keen to embrace parts of the New York style of fraud fighting, welcoming De Grazia’s critical report on the state of the SFO. In her review, De Grazia compares the SFO to its New York counterpart and makes recommendations in line with operations in the US.

Alderman says he is considering the various recommendations and, as The Lawyer reveals, he has already accepted the need for a general counsel.

The director reflecting the US style, however, goes beyond De Grazia. He tells The Lawyer that he is keen on the Government adopting plea negotiations.

“It’s not plea bargaining, where a sentence is agreed. It’s different from that as plea negotiations are more about offering different options,” explains Alderman. “The point is that it will be an extremely useful tool. Cases take too long. They need to be dealt with as quickly as possible, and with plea negotiations going to the whole substance of the matter, it provides efficiency.”

The need for efficiency, but also to increase the number of effective prosecutions, will be driving much of the work under Alderman, just as it did with Wardle. This push has already seen the SFO invest £1m into a new digital forensic unit, launched last Monday (16 June), to deal with the increasing load of electronic evidence.

“One of the largest cases the SFO is currently working on has 150 terabytes of electronic evidence,” he says. “If this was paper based and had to be taken to court, it would take 150,000 lorries to do so. This is the size of the task that faces us as IT plays an ever-increasing role in fraud.”