The Serious Fraud Office (SFO) is a prosecuting authority that investigates economic crime cases spanning serious or complex fraud, bribery, and corruption. In this article, we roundup the latest developments regarding the SFO.
SFO investigates £150 million investment schemes
The Alpha and Green Park group of companies are under investigation by the SFO for suspected fraud regarding student accommodation investment schemes. The Alpha-branded companies are alleged to have fraudulently mislead investors into purchasing leaseholds in Leicestershire, Lancashire, Staffordshire, and West Yorkshire. The Green Park-branded companies are alleged to have been involved in similar schemes for the sale of family accommodation leaseholds in Devon.
Between 2014 and 2019, more than 1,500 investors from around 50 countries invested an estimated £150 million into the schemes. The investors were promised 8 – 10% guaranteed returns on their investment over the first 10 years. In 2018, the investors stopped receiving any returns on their investment. It is thought that the directors of the companies made around £20 million from the schemes.
The Chief Investigator of the Serious Fraud Office, Mick Gallagher said “thousands of ordinary people lose their pensions or life savings on risky schemes, while those at the top line their own pockets and enjoy a lavish lifestyle. The Serious Fraud Office is committed to delivering justice for victims of fraud and corruption. We invite anyone who believes they have a connection with our investigation to come forward.”
UK-based investors were invited to complete a questionnaire by 30 November 2021. The SFO will then use the information obtained through these questionnaires to progress their investigation.
SFO seizes funds from a senior executive
Stephen Whiteley, a former senior executive at Unaoil, has been ordered by Southwark Crown Court to repay criminal gains of almost £100,000. In July 2020, Mr Whiteley was found guilty of corruption regarding the payment of over $500,000 in bribes for a $55 million contract for Unaoil. The contract involved the supply of oil infrastructure in Iraq.
Three other senior oil executives were also investigated and convicted for corruption. A total of $17 million in bribes were found to have been paid in the scheme to win a $1.7 billion in contracts for Unaoil.
Emma Luxton, Head of Proceeds of Crime and International Assistance at the SFO said “the SFO relentlessly pursues those who line their own pockets with illicit gains, and we have a proud record of recovering funds for victims and for the UK taxpayer.”
We have discussed the Unaoil bribery case in an earlier article. The article discusses the convictions secured by the SFO of Mr Whiteley’s co-conspirators.
SFO secures bribery convictions
In October 2021, the SFO announced that Petrofac Limited had been ordered to pay £77 million for its involvement in corrupt schemes used by senior executives within the Petrofac Group. The investigation, which follows on from the investigation into Unaoil, involved the awarding of contracts through unfair and dishonest schemes.
Over £2.6 billion in oil and gas contracts in Iraq, Saudi Arabia and the United Arab Emirates were won after £32 million was paid in bribes. The scheme involved, over a period of 6 years, the use of agents to bribe officials, the disguising of payments through sub-contractors, creation of fake contracts for fictitious services, and cross-border bribes to prevent traceability.
The former Head of Sales at Petrofac, David Lufkin pleaded guilty to 11 counts of bribery in 2019 and a further 3 counts in 2021 Mr Lufkin was sentenced to a two-year custodial sentence, suspended for 18 months, after co-operating and assisting with the SFO investigation.
Petrofac Limited admitted that it had failed to prevent senior executives from corrupt behaviour. Although the investigation into suspected bribery and corruption regarding the corporate entity and subsidiaries has been concluded, the investigation into the conduct of individual suspects continues.
Lisa Osofsky, Director of the Serious Fraud Office, said “by pleading guilty, Petrofac Limited has accepted that senior executives within the Petrofac Group acted deliberately and without conscience in the pursuit of greed. The company’s failure to prevent this conduct distorted competitive market conditions and tainted the oil and gas industry. Today’s result should serve as a warning; the SFO will use all the powers at its disposal to root out and prosecute companies and individuals, whose criminal activity detrimentally affects the reputation and integrity of the United Kingdom.”
We have discussed the criminal proceedings against Mr Lufkin in an earlier article. Mr Lufkin’s guilty pleas concerned corrupt offers and payments made between 2012 and 2018.
Money recovered by the SFO used to benefit critical global aid project
The SFO and the UK Government used £4.4 million recovered from a series of corrupt transactions involving individuals and companies connected to staff at the Chadian Embassy in Washington, United States to benefit the people of Chad. This money has been used to support Chad’s COVID-19 response. This marks the first time the UK has agreed to divert money from a civil corruption case into a global aid project. The money is said to have helped over 150,000 people regarding food insecurity and malnutrition.
Lisa Osofsky said “we are both proud and delighted that illicit funds recovered by the Serious Fraud Office have now been redistributed to the people of Chad. The money we seized has rightly been spent on much-needed humanitarian aid projects, rather than lining the pockets of corrupt officials. Our dedicated staff are experts in their field, working tirelessly to recoup the ill-gotten gains of criminals and deliver justice for victims wherever they may be”.
Companies under investigation spend up to ten times more than the SFO
The Bureau of Investigative Journalism has stated that some companies are spending up to ten times more on legal and investigation fees than Britain’s anti-fraud and bribery organisations. The SFO operates on an annual budget of £52 million.
The Bureau found that the fight against economic crime was undermined by the lack of funding, senior officials moving from the SFO to law firms representing the companies being investigated, and a perceived hesitation in prosecuting companies and executives. Since 2018, the SFO has dropped 30 investigations. This contrasts with the 13 cases dropped by the SFO in the five years prior to 2018.
The former justice secretary, Robert Buckland noted that “a situation where one side has unlimited resources cannot be fair” and that the “imbalance in arms” between defendants and the SFO must be tackled. Mr Buckland further added that, “constantly having to shed staff and then rehire them doesn’t provide the continuity that prosecuting complex cases needs”.
Lisa Osofsky stated in a letter, “it’s no secret that [private law firms] use all the resources at their disposal to challenge our cases, as they are entitled to do. But to focus on financial resources is over-simplistic. Our relatively modest budget doesn’t prevent us from delivering”. In the past five years, the SFO has generated around £1.3 billion in fines and penalties against large businesses.
Rosenblatt can help
Rosenblatt has a wealth of experience in financial crime and is uniquely placed to support clients’ that are the subject of a SFO investigation and prosecution having been involved in high profile investigations into a global pharmaceuticals company, a multi-million-pound affordable property investment scheme, a multi-million pound pension fraud scheme and a world leading global security company.
https://www.rosenblatt-law.co.uk/services/financial-crime/#financial-crime
Sources
- SFO announces investigation into £150m investment schemes – Serious Fraud Office
- SFO reclaims £100,000 from Unaoil executive – Serious Fraud Office
- Serious Fraud Office secures third set of Petrofac bribery convictions – Serious Fraud Office (sfo.gov.uk)
- UK aid supports vulnerable people in Chad using millions of pounds recovered during corruption case | GovWire News
- Serious Fraud Office outgunned by UK firms | Business | The Times
- Letter: SFO’s revolving door works better than a closed shop | Financial Times (ft.com)
We at RBG Holdings/Rosenblatt support and encourage free/independent thinking in relation to issues which are sometimes considered to be controversial subject matters. However, the views and opinions of the authors of articles published on our website/s do not necessarily reflect the opinions, views, practices, and policies of RBG Holdings/Rosenblatt.
