Serious Fraud Cases UK

The Serious Fraud Office (SFO) is currently undergoing a range of complex investigations into a number of alleged serious frauds.

Over recent years, it has pursued a variety of cases, many of them involving some of the biggest names in UK business.

The SFO has successfully prosecuted several cases and has faced the collapse of others, leading to the ultimate acquittal of the accused.

Despite its powers and expertise, the SFO is not always able to secure a conviction, particularly in some of its more high-profile cases.

Here are some of the cases that the SFO have pursued…

Tesco

In April 2017, the SFO entered into a Deferred Prosecution Agreement with the supermarket giant. By entering into this agreement Tesco Plc accepted that their responsibility for false accounting practices had compromised the ongoing interests of the business and shareholders.

This had involved illegal practices between February and September 2015, where improperly recognised income was included in their UK accounts.

This took the form of  ‘pulling forward’ income from subsequent accounting periods This had developed as part of a culture where a blind eye was turned to such practices in order to meet accounting targets.

Under the terms of the DPA, the company agreed to pay a £129m fine along with £3m investigation costs. The company also undertook an ongoing compliance programme during the three years of the DPA.  The DPA came to an end on 10th April 2020.

Barclays Plc & Qatar Holding LLC

A long-running investigation into senior ex-bankers at Barclays Plc ended in February 2020 with the SFO failing to secure the prosecution it had hoped for. Criminal proceedings were originally initiated in 2017 into four individuals as a result of an investigation into dealings between Barclays Plc, Qatar Holdings LLC and Challenger Universal Ltd, with whom it had a capital raising arrangement. The four individuals were charged with conspiracy to commit fraud by false representation and unlawful assistance contrary to s151 of the Companies Act 1985. 

This was the first landmark investigation and criminal trial to properly examine the conduct of senior UK bankers during the financial crisis. The agency originally charged Barclays with fraud and illegal financial assistance to Qatar LLC, relating to a £3bn loan. This high-profile, flagship investigation for the SFO cost over £10m and ultimately resulted in the acquittal of the defendants.

Following on from the SFO dropping high-profile cases against Rolls Royce and GlaxoSmithKline, the case has raised wider questions about the ability of the organisation to successfully prosecute corporate crime allegations. Companies can only currently be prosecuted under existing fraud laws if prosecutors can show that a senior executive was a “directing will and mind,” behind an unlawful scheme.

The acquittals in this case represent a major setback for the agency, and some lawyers have suggested that it sets a precedent that will make it difficult for the SFO to successfully prosecute cases against a large company, with a proper board and management committees.

ALCA Fasteners LTD

In December 2017, the SFO opened an investigation into suspected bribery and money laundering in connection with the conduct of business by Alca Fasteners Ltd. This investigation included its officers, employees, agents and associated persons.

On the 30th May 2019, Carole Ann Hodson, the former owner of the company pleaded guilty to bribery in relation to a scheme to secure £12m of contracts. She was later sentenced to 2 years in prison and ordered to pay a confiscation order of £4,494,541.60 and costs to the SFO of £478,351. She was also disqualified from acting as a company director for 7 years.

Hodson paid over £300,000 in bribes to a purchasing manager employed by the Wurth Group of companies for a period of five years from 2011. The payments were made in brown envelopes, in monthly instalments and only ended when the purchasing manager in question retired. As a payback, the purchasing manager was promised 2.5 per cent of the total of every order the Wurth Group made to ALCA Fasteners.

False invoices were created to justify the payments, and each payment was recorded in the accounts of ALCA Fasteners as ‘sales commission payments’. Hodson would later lie to her auditors to disguise the true nature of the payments.

In 2017, Hodson sold the company and denied being involved in any unlawful conduct to the purchasers in order to maintain the company’s value.

The new owners informed the SFO of their suspicions, leading to the investigation and successful prosecution. The SFO is an organisation that faces much government, media and public scrutiny. The high-profile cases that it deals with are often reported in the financial press and completing successful prosecutions is their raison d’etre.

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