On 5 July 2023, Attorney General Victoria Prentis KC MP announced that Nick Ephgrave QPM will be the next director of the Serious Fraud Office (SFO), and the former police officer took up his new role on Monday 25 September 2023.
A. Background
Lisa Osofsky was director of the SFO from 2018, and even though the agency achieved remarkable successes under her leadership, such as the widely reported and highest value €3.5 billion deferred prosecution agreement (DPA), her tenure was also plagued by a series of botched investigations and trial collapses.
In particular, the SFO repeatedly struggled with disclosure issues, leading to failed prosecutions and damning reports into these investigations. The acquittal of Serco executives, which was compounded by the Unaoil case, saw the SFO sharply criticised by the Court of Appeal, which noted that the defence had been ‘handicapped’ by the SFO’s failure to comply with its disclosure obligations, resulting in three convictions from the bribery case being overturned and a damning report from Sir David Calvert-Smith KC.
Following those incidents, Osofsky indicated that the agency would conduct a detailed review into disclosure with a review conducted by Brian Altman KC publishing its recommendations in June 2022. In the wide-reaching review, Altman identified a number of key operational deficiencies within the SFO, such as resource pressures, inadequate training and inexperience within review teams.
It was then announced in November 2022 that Osofsky would leave the SFO after completing her five-year stint at the agency.
B. Nick Ephgrave
Ephgrave’s background is a key differentiator from his predecessors, with the SFO typically being led by lawyers with prosecutorial experience. Ephgrave, however, is a former assistant commissioner of the Metropolitan Police Service, where he led over 21,000 officers and staff in delivering frontline operational activity.
Ephgrave joined the Met Police in 1990, prior to which he worked as a psychiatrist in the National Health Service. During his time at the Met Police, Ephgrave worked in multiple roles, including time spent in Special Branch and various investigative roles. He was also responsible for designing and implementing the National Counter Terrorism Coordination Centre at New Scotland Yard. He stepped down from his role at the Met Police in September 2023 and held a position as the chair of the National Police Chiefs’ Council Criminal Justice Coordination Committee prior to taking up his role at the SFO.
On Ephgrave’s appointment, Attorney General Victoria Prentis KC MP stated: “Nick’s years of experience as a leader in law enforcement and across the wider criminal justice system make him the ideal candidate to drive the SFO forward in continuing its fight against economic crime.”
Detractors may say that his experience will shift the SFO’s focus to the prevention, detection and investigation of crime rather than the intricacies of prosecuting it and pursuing convictions. Others may say that his appointment will lead to the SFO being folded into the National Crime Agency (NCA) and/or the Crown Prosecution Service.
C. Outlook
The clear view is that Ephgrave is a highly experienced and well-regarded individual, having successfully led numerous complex investigations, and he is held in esteem by his colleagues. Bearing in mind the choppy waters the SFO now finds itself in, experience in investigating, preventing disclosure problems and improving toxic atmospheres are all skills that are needed to right the ship.
Ephgrave’s contacts in law enforcement and his expertise in managing a large law enforcement agency should lead to much greater collaboration between the SFO, the NCA and Met Police, more resource sharing and better case allocation. His experience on the Criminal Procedure Rule Committee and the Sentencing Council, giving him a clear grounding in criminal processes, adds a further dimension to his tenure.
Amidst the current economic turbulence, the new director may not have the ability to increase the SFO’s bottom-line budget. However, these problems should not be a substantial barrier if he is able to recruit or second experienced investigators and lawyers into his team. This will place the SFO in a strong position to deal with any uptick in financial crime should economic worries deepen.
Ephgrave may well have new tools at his disposal in the form of the Economic Crime and Corporate Transparency Bill. The proposed bill will include the “failure to prevent fraud” offence, the reformed “identification principle” that will make companies criminally liable for the actions of some of their senior managers, and expanded powers on ‘Section 2’ notices.
If these proposals become law, they will have an enormous impact on companies, with the expanded scope of corporate criminal liability increasing compliance pressures and forcing them to review and improve their policies, procedures and training to prevent fraud and minimise the risk of criminal prosecution. Whether this then leads to increased self-reporting and more deferred prosecution agreements will become clear over time, but any increase would place the SFO in a strong position to secure additional funding.
These sweeping changes to the SFO and the laws underpinning its powers could not come at a more crucial time. The Global Economic Crime Survey 2022 revealed that 64% of companies in the UK experienced some form of fraud or economic crime in the preceding year, with only South African businesses experiencing a higher level.
This context demonstrates why the reputation of the SFO as a formidable enforcer of corporate criminal laws has never been more key, with a need for the agency to restore public faith and act as a credible deterrent against criminal activity.
On his first day in his new role, Ephgrave stated: “Fraud wrecks lives and undermines the economy. I am committed to building the strong, dynamic and pragmatic authority the UK needs to fight today’s most heinous economic crimes.”
Whether we will now see the Age of the Investigator at the SFO or the eventual folding of the agency into others, it is clear that the appointment of Ephgrave signals a refocus of the agency onto the investigation of offences at a time when the SFO faces a true crisis of confidence. Ephgrave will have to hit the ground running if he hopes to tackle the mountain of issues facing the SFO, but it is clear that his appointment and the broad changes in the law that are on the horizon are providing much-needed momentum.
As Ephgrave looks to chart the course of the agency in his crucial first months, onlookers are keen to see whether he can translate his experience and expertise into tackling the opportunities and challenges currently facing the SFO. Companies, meanwhile, will wait to see whether new laws on failure to prevent fraud and increased corporate criminal liability come into force and whether the SFO will start to pack the punch that has always been promised.
Client Alert 2023-223
