SFO boss Lisa Osofsky demands new powers to help prosecute corporate "bad guys" after collapse of Barclays Qatar trial

Today, Lisa Osofsky, director of the Serious Fraud Office, said the case had highlighted the lack of a “failure to prevent” offence that would make it illegal for companies not to stop wrongdoing, adding that the judgement “confirmed a narrow application of the “controlling mind” test, making it very difficult to hold companies with complex governance structures to account for their fraudulent conduct.”

During the case, the accused successfully argued that the payments were approved by Barclays’ board

Under UK law, unlike in the US, prosecutors must show the “directing mind” of a company was involved in alleged criminality to secure a conviction.

Osofsky said if she “had a magic wand” she would shift the law to copy the US version.

She added that she would also like to see new rules that would allow the SFO to order someone to answer questions before she opens a formal investigation for fraud or domestic bribery, as they can in overseas corruption cases.

“It may sound technical, but it would solve a problem that our intelligence division repeatedly faces, where we strongly suspect criminal activity but don’t have quite enough evidence to open an investigation.”

More latitude for preliminary enquiries under these so-called Section 2 powers would enable the SFO to make a quicker decision whether to proceed or abandon, “saving scarce resources if we’re not on the right track,” she said.

She also called for new rules making it an offence for those who have received a Section 2 notice to tip off the subjects of the investigation.

Osofsky on Coronavirus

She added that Brexit and Covid-19 would create more criminal activity, saying the already-huge spike in investment fraud would rise further.

“People who face the stress of a difficult investment climate may consider placing their pensions and savings into high risk schemes, some of which will be outright fraudulent.

“We’ve previously witnessed the ethical investments and property schemes that are subject to fraud. We, alongside our partners, are continually horizon scanning and analysing intelligence to identify the next-Gen versions of schemes like these.”

She added that the stresses the pandemic was causing to businesses would put more pressure on people to win contracts through bribery.

Osofsky on Brexit

Osofsky said if the UK government cannot agree a trade deal with the EU, she had “well-rehearsed plans in place”. The SFO would use Interpol, the Council of Europe Conventions and bilateral channels.

“Of course, there’s also the natural bond of those who fight crime regardless of where they’re located, to band together to make sure the bad guys pay.”