Serious Fraud Office – Costing less but more effective?

The Serious Fraud Office (SFO) says it is now ‘stronger, faster and leaner’, in a statement published on its website this week. The government’s independent fraud and corruption investigators have promised to deliver ‘more for less’, after reporting a successful year recovering millions of pounds in ill-gotten gains.

The SFO has recovered £7 million, from a company that was not directly involved in corruption but had benefited through share dividends based on profits that had arisen as a result of contracts won through corruption. This year in total more than £64 million has been identified for payments to victims and will be enforced through the courts as compensation or voluntary payments to them. In one case alone £33 million was returned to victims even before the alleged fraudsters went to trial. The funds were restrained following legal action in the courts and the SFO has worked with the courts and the Swiss authorities to return the money to victims.

With its conviction rate high for the year - at more than 80 per cent - the SFO claims to be increasingly using innovative approaches to deliver justice for both the public and victims of economic crime, but is this ringing true with professionals within the industry?

SFO Director Richard Alderman is satisfied with the progress that has been made and is pleased with the SFO’s performance in 2010-11. “Investigation times have been slashed, conviction rates remain high and huge sums of money are being returned to the victims of economic crime,” says Mr Alderman. “All of this is being done at less expense to the public purse.”

Despite the encouraging statistics offered by the SFO, Kevin Still, Director of the Association of Professional Debt Solution Intermediaries (APDSI), has raised several questions with regard to how transparent the latest figures actually are.

“The difficulty with measuring the success of fraud prevention is that most fraudsters are not loyal to any one sector or fraud category in the SFO’s ‘Taxonomy of Fraud’,” he says.

“This means that as soon as one scam is closed down another will pop up targeting new audiences or with a slightly different proposition designed to cause detriment to one of the victim groups. There is a rising international and cross-border dimension to fraud that requires complex liaison across legal jurisdictions, which can be very difficult to monitor and convict. The rise in Internet and social media based scams must be of concern, with many practitioners of these scams being based outside of the UK.”

The report claims that the running of the SFO works out at a lowly figure of just 64p for each person in the UK, down from 73p per person the previous year.

SFO Chief Executive Phillippa Williamson attributes this to advancements in technology: "We have transformed our digital forensics capability which allows us to respond quickly to court requirements,” says Ms Williamson.

In 2010-11 the SFO processed over 70 million documents.

“In one case we were able to identify and produce over 47,000 emails overnight to satisfy a judge's order. Such speed of response would have been impossible in the past.

There is no doubt the SFO could do even more given greater powers and we are pressing for them. The government is committed to combating economic crime and with the powers to deal fraudsters a body blow that white collar criminals have previously been able to avoid. These powers are still a matter for discussion. In the meantime the SFO's skills will continue to bring fraudsters to book; deliver justice to victims and provide value for money."

An increasing level of scams from abroad targeting UK citizens has been made well aware.

“It is interesting that if you undertake a ‘Whois Lookup’ [an online domain name search tool] search on a number of the unlicensed websites shutdown this week by the OFT that they are registered to individuals based in India,” Kevin says.

“These types of sites feature strongly in the SFO site - http://www.sfo.gov.uk/taxonomy.swf - to fraud committed against individuals. The CAB Super-complaint currently being investigated by the OFT features ‘advance fee payments’ and ‘loan scams’.”

Kevin warns that people need to be increasingly vigilant of frauds targeted at either using their identity or their assets, including bank accounts and credit cards details, more than ever.

“Early detection of new scams and reporting the symptoms should be routinely communicated using the available broadcasting and social media tools now available to consumers that are likely to be vulnerable to these types of frauds,” he says.

“We all have public duty to protect those most susceptible to being taken in by ‘look-a-like’ scams and again the OFT has been active in shutting down websites that impersonate charities or are designed to mislead people.”

“Businesses must also be vigilant regarding potential frauds involving their company details, like the recent VAT frauds in 2009 and 2010. Businesses in industries that are subject to scams and complex fraud need to collaborate to prevent fraud and to educate prospective clients of the right type of businesses to use, including membership of trade associations and kite marks of quality or trust. Having been involved with the Credit Industry Fraud Avoidance Scheme (CIFAS) at its inception in the eighties, it is pleasing to see that such schemes have evolved to protect both the credit industry in a range of sectors (e.g. finance, mobile phones, commercial lending), but also the innocent victims of fraud.

“The involvement of the police in schemes such as CIFAS was very important, as the commercial sector is often able to invest significantly in sophisticated fraud prevention systems that benefit the authorities in detecting and prosecuting offenders in some instances. This can be particularly relevant in more complex frauds involving high value assets like mortgages, high value mobile assets (e.g. commercial vehicles, boats, prestige cars) and investments, where the collusion of several parties, including ‘trusted’ professionals (e.g. a lawyer, surveyor, investment broker), is a characteristic of the fraud.”

During the past four years the SFO has halved the time it takes to investigate a case and, though the budget has reduced year on year over the past five years, the SFO is now dealing with more cases - over 100 compared to just over 60 five years ago.

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