Pinsents FOI request reveals dramatic drop in SFO raids

In the 2011-12 financial year the SFO, which investigates and prosecutes fraud and corruption, failed to raid a single property – a conclusion reached by looking at the number of applications it made for search warrants.

Based on the same criteria the SFO made 63 raids in 2008-09, 43 in 2009-10 and 47 in 2010-11, including 16 raids in the first quarter of 2011. The statistics were obtained by Pinsent Masons following a freedom of information (FOI) request.

The dramatic drop suggests that the organisation has become cautious following its dawn raids on property tycoons Vincent and Robert Tchenguiz in March 2011 as part of its investigation into the collapse of Icelandic bank Kaupthing. The Tchenguiz brothers have since questioned the legality of the SFO’s warrants, leading to a judicial review (25 May 2012).

Barry Vitou, head of corporate crime at Pinsent Masons, said: “These statistics show that recent warnings of dawn raids from the SFO have in fact been hollow threats.”

“With the SFO under new management it is critical that it delivers on its promises to investigate and prosecute serious fraud that threatens to damage UK PLC. Unless it does so it risks being perceived as a toothless prosecutor.

“The SFO’s decision to rein back on raids during the past year could be a missed opportunity.  You would expect that a financial crime agency dealing with fraud would become very active after a recession, but that hasn’t been the case for the SFO in the last year.”

“If businesses and individuals are guilty of serious fraud it is vital that there is an effective system in place to catch them. The SFO may be smarting from public criticism of its perceived shortcomings in the Tchenguiz case, but it is important that it is not deterred from bringing important cases.”

Sources at the SFO deny that its handling of the Tchenguiz case has played any part in the drop in the number of raids carried out. A spokesperson for the SFO added: “There has been fewer search operations in the past year.  Much depends on the case life-cycle.  Furthermore, not all investigations need searches . Where material can be obtained by other means, and where a search operation is deemed unnecessary, so much the better.

“It would be completely wrong to interpret a reduction in search numbers as a lack of activity or a loss of appetite to vigorously investigate fraud.  Each case is assessed on individual requirements and this includes assessing the merits of a search.   As recently as 16 May we conducted searches at five properties and arrested three men.  The operation involved over 70 investigators and police.”

According to Pinsent Masons while the cost of fraud to the UK economy stands at around £73bn every year, the SFO’s budget has been slashed since 2008, when it was £51.5m, to £33.9m today.