Calls to overhaul ‘antiquated’ trial rules grow as SFO forced to drop G4S case
The UK’s Serious Fraud Office (SFO) on Friday said it would be dropping its case against three former G4S executives over claims they defrauded the UK government of tens of millions of pounds.
The collapse of the SFO’s case came after G4S itself took responsibility for the fraud that saw it mislead Britain’s Ministry of Justice (MoJ) by giving it false information about the costs it incurred in providing it with electronic tagging services.
The SFO’s failure to actually secure prosecutions against G4S’s execs now comes as the third instance in the past five years in which the UK’s fraud investigator has secured prosecutions against a company but failed to convict the firm’s individuals executives.
Critics of the SFO were quick to hit out at the fraud investigator as lawyers acting on behalf of the three G4S execs accused the agency of “mishandling” the case and “wasting millions of pounds of taxpayers money”.
Yet in explaining the SFO’s repeated failures, lawyers and campaigners claimed the fraud investigator is being hindered by stringent disclosure rules that hugely increase its workload by requiring it to review millions of documents.
Now, lawyers and campaigners are increasingly calling for a complete overhaul of those disclosure rules, arguing major reform is needed to ensure executives are made accountable and the SFO is able to carry out its work effectively.
G4S
The SFO’s decision to drop its case comes after G4S in 2020 took responsibility for efforts to mislead the UK government about the costs it faced in delivering electronic tagging services, after the firm won a contract with the MoJ.
G4S’s deal with the UK government saw it agree to a contract through which the Home Office would be eligible to recover half of the value of any “cost efficiencies” it made in providing the electronic tagging services.
In turn, G4s was required to provide regular updates, every six months, regarding the revenues it generated and the costs it incurred in fulfilling the MoJ contract.
However, an investigation carried out by the UK government later revealed G4S had overstated its costs by almost £70.7m over a seven-year period.
These overstatements reduced the sums recoverable by the government meaning G4S generated higher profits on the MoJ contract, leading to the company defrauding the UK government out of tens of millions of pounds owed to it under the “cost efficiencies” clause.
The case subsequently saw G4S agree to pay £121m to the UK’s MoJ and a further £44m to the SFO over its liability for the fraud.
The executives
The SFO later shifted its focus towards three former G4S execs in charging ex-managing director Richard Morris, ex-commercial director Mark Preston and ex-finance manager James Jardine with seven counts of fraud in 2020.
However, the case against the three G4S executives has now completely collapsed after the SFO on Friday told the court it would not be proceeding with the trial.
An SFO spokesperson said: “As a public prosecutor we have to make difficult decisions, including ending a prosecution where it is right to do so. In line with the Code for Crown Prosecutors, we have determined it is no longer in the public interest to continue this prosecution.”
Yet for many, the collapse of the SFO’s case against the three G4S executives seemed to come as a repeat of the investigator’s previous failures.
Critics of the SFO noted the investigator has in recent years suffered a series of high profile failures in which its cases against individual executives have collapsed after it secured prosecutions against the companies in which those executives worked.
Those failures include the collapse of its case against two Tesco directors in 2018 and the collapse of its case against two Serco execs in 2021.
Disclosures
Lawyers and campaigners are now increasingly pointing the finger towards the rigorous disclosure rules that require the SFO to manually review all and any documents that might potentially undermine its case and give those documents to the defense.
Critics of the disclosure regime argue the current rules are unsuited to a world dominated by digital communications, in which prosecutors must manually review millions of documents in the form of emails and Whatsapp messages to build and pursue cases.
Barry Vitou, the head of HFW’s global investigations practice, noted “the SFO is particularly susceptible to disclosure failures” due to the fact it works on “very document-heavy cases”.
The disclosure rules, which were first set out in 1996, saw the SFO forced to review more than 7m documents in building its case against the three G4S execs.
The SFO subsequently began outsourcing its disclosure work to a private legal tech company after its trial of the G4S execs was delayed because of disclosure issues.
Overhaul
SFO director Lisa Osofsky has previously called for a major overhaul of the disclosure regime, arguing the current rules are not suited to the modern era due to the fact they were designed “before the advent of mass digital data”.
Dr Susan Hawley, executive director of Spotlight on Corruption, agreed in arguing “antiquated disclosure rules and serious resourcing issues at the SFO are essentially making it impossible to do its job properly”.
Vitou argued the SFO lacks the resources necessary to carry out the disclosure work properly as he argued for a complete “overhaul” of the rules, with a view to updating them for the digital age.
Now in pushing ahead with reform, Hawley was clear that “nothing should be off the table”.
The campaigner noted that giving defence lawyers the “keys to the warehouse”, by allowing them full access to almost all of documents being used by the prosecution, could be a solution to the SFO’s troubles.
Lawyers and campaigners also warned that a lack of funding at the SFO has undermined the agency’s abilities and made it vulnerable to serious failures in complying with the disclosure regime.
In tackling the issue, Sean Curran, a partner at Arnold & Porter, called for the SFO to be given “significant resources to be invested into disclosure, training and retention”.
Hawley agreed in arguing cash raised by the SFO should be reinvested in the agency.
“Until more of the assets that the SFO brings in are reinvested in the agency there is a danger these kinds of fiascos, which essentially undermine the agency’s ability to conduct fair trials, will happen on a feedback loop,” Hawley said.
Either way, with another high profile case having fallen by the wayside, it seems clear that serious reforms are needed now, more than ever.