Chapter Six:
UK Enforcement Developments

Former Senior Police Officer Announced as New SFO Director

In June 2023, the UK Attorney General announced Nick Ephgrave as the new Director of the Serious Fraud Office. He started his role in September 2023 for an initial term of five years.[1] He replaces the previous director, Lisa Osofsky, whose five-year tenure ended in August 2023 and was not renewed.

A former police officer with more than 30 years of experience, Ephgrave served as one of London’s most senior officers in his capacity as Assistant Commissioner of the Metropolitan Police Service. As the first non-lawyer to hold the SFO’s directorship in its 35-year history, Ephgrave’s appointment represents a break in convention. The Attorney General stated that Ephgrave’s experience “as a leader in law enforcement and across the wider criminal justice system” makes him “the ideal candidate to drive the SFO forward in continuing its fight against economic crime”.[2] Since taking over the post, Ephgrave has initiated three new investigations, two of which were kicked off by dawn raids: fraud at a collapsed law firm[3] and a global aviation supplier.[4]

Ephgrave’s previous experience includes establishing (alongside the Director of Public Prosecutions for England and Wales) and implementing the United Kingdom’s first cross-organisational nationwide plan to improve the disclosure process in criminal proceedings.[5] His experience is likely to assist the SFO, following the extensive criticism of its disclosure failings that led to the individual convictions in Unaoil being overturned on appeal in 2022 and to the collapse of the prosecutions of two individuals in connection with the Serco deferred prosecution agreement in 2021 and of three individuals in connection with the G4S Care and Justice Services (UK) Ltd (G4S) DPA in 2023 (discussed further below). These failings were the subject of two separate reviews, the Calvert-Smith and Altman Reviews, published in 2022.[6] With first-hand knowledge of large-scale disclosure reform, Ephgrave may be well placed to tackle this issue for the SFO.

The Calvert-Smith and Altman Reviews highlighted “systemic problems of real concern” within the SFO, such as low morale, high staff turnover, concerns with staffing and resourcing, and inadequate technological capabilities.[7] The SFO has also faced allegations of misconduct in litigation with Eurasian Natural Resources Cooperation (discussed further below). While the SFO claims to have already broken ground in dealing with these issues[8], Ephgrave will have significant work to do in reinvigorating his staff.

SFO Considers Future Monitorships

The SFO’s joint head of Bribery, Fraud and Corruption, Sara Chouraqui, has indicated that the agency may consider introducing monitorships in connection with future corporate resolutions.[9] While the SFO has required compliance oversight in previous cases—for example, by mandating an external reviewer as part of a DPA with British security company G4S in 2020—it has never imposed a US-style monitor in connection with a DPA.

DPA Between Entain Plc and the Crown Prosecution Service

On 5 December 2023, a historic DPA between Entain Plc and the Crown Prosecution Service was granted judicial approval.[10] The first DPA that the CPS has entered, and the only one agreed in the United Kingdom in 2023, it closes an investigation initiated by HM Revenue and Customs into Entain’s Turkish business, which was disposed of in 2017. The HMRC alleged that Entain failed to have in place adequate procedures to prevent bribery between 2011 and 2017. Entain accepted that it breached section 7 of the UK Bribery Act 2010 four times. The company also agreed to the second-highest financial penalty in the history of UK corporate criminal cases. The penalty totals £615 million and comprises a financial penalty and disgorgement of profits of £585 million, a charitable donation of £20 million, and a contribution of £10 million to the CPS and HMRC’s costs.

Collapse of G4S Trial

The SFO agreed to enter into a DPA with G4S in 2020 after a criminal investigation into allegations that G4S had defrauded the UK Ministry of Justice over electronic monitoring service contracts.[11] Three executives were individually charged and, following not guilty pleas, listed for trial in January 2022. The trials were adjourned until March 2023 to give the SFO time to rectify disclosure issues. However, in March 2023, the SFO decided the prosecution was ultimately not in the public interest and abandoned the case, citing insurmountable delays in resolving the issues with disclosure and the potential unfairness that this would cause to the defendants who had been under investigation for 10 years. This came in the wake of the collapse of the prosecution of two individuals connected to UK defence, justice, and security company Serco Geografix Ltd in 2021 and the overturning of three individuals’ conviction in connection with the Unaoil corruption scandal in 2022—both also as a result of disclosure failings.

To date, the SFO has not successfully prosecuted a single individual in connection with misconduct underlying a DPA. It is possible that the speculative element of the evidential test that the SFO is required to satisfy to obtain a DPA may have contributed to these failings. The SFO is merely required to demonstrate that it “could”, at some point in the future, establish a realistic prospect of securing convictions for the underlying wrongdoing. As a result, the SFO still has considerable work to do once a DPA has concluded to bridge the gap and identify the necessary evidence to bring charges. It is possible that this may have led to premature individual charges, creating the evidential pitfalls and disclosure failings that have ultimately marred those prosecutions. This could have far-reaching consequences for the success of the DPA programme in the United Kingdom. If the SFO cannot secure convictions for the underlying misconduct, companies weighing whether to enter into a DPA may choose to take their chances in court. The SFO has been vocal in pushing for ambitious reform of the disclosure process, referring to the burden of reviewing “tens of millions of pieces of data” and noting that the system is “really showing its age”.[12] Ephgrave’s appointment may be seen as a sign that the agency is taking the issue of disclosure seriously.

Closed Investigations into ENRC and Rio Tinto

In August 2023, the SFO closed two of its longest-running, highest-profile investigations into mining companies ENRC and Rio Tinto.

1. ENRC

Following a 10-year investigation into ENRC’s alleged payment of bribes for access to mining contracts in the Democratic Republic of the Congo between 2009 and 2012, the SFO announced in August 2023 that it would take no further action. According to a press release on the SFO’s website, the decision was made following a review that concluded that there was “insufficient admissible evidence to prosecute”.[13]

For years, ENRC relentlessly contested the SFO’s decisions in the investigation, with the SFO suffering reputational damage in subsequent parallel litigation. After ENRC brought proceedings against the SFO, its officials, and ENRC’s former legal team, the High Court of England and Wales ruled in 2022 that the SFO had induced a former Dechert partner to leak information in an example of “bad faith opportunism”.[14] A lawsuit due to be heard in autumn 2024 was also filed against a current senior investigator and former ENRC case controller, alleging that they leaked confidential details about the investigation to journalists.[15] Notwithstanding the closure of the investigation, ENRC has continued its litigation against the SFO, including trying and failing to force disclosure of the SFO’s internal investigation report into alleged press leaks.[16]

2. Rio Tinto

The SFO also dropped its investigation into Rio Tinto. Following a self-report made by Rio Tinto, the SFO initiated an investigation in 2017 into “suspected corruption in the conduct of business in the Republic of Guinea”.[17] It had previously been reported that the SFO and the mining company had been exploring a DPA[18]; however, the SFO confirmed that, following a “comprehensive investigation exploring different lines of enquiry in cooperation with international partners”, it was no longer in the public interest to proceed.[19] This comes after the mining company was fined $15 million (almost £12.18 million) by the US Securities and Exchange Commission.[20] While the SFO will continue to support the live investigation maintained by the Australian Federal Police, this will likely have been disappointing for the SFO.

Glencore Charges Delayed

In June 2022, the SFO secured the conviction of Glencore Energy UK Ltd. for multiple counts of bribery. Following the corporate prosecution, the SFO had indicated that it would be in a position to make charging decisions in relation to at least 15 individuals connected to the offences by April 2023. However, in June 2023, it delayed the decision until the end of the year. Four months later, in October 2023, it postponed that decision until July 2024, citing the need for more time to review recently received material for evidential and disclosure purposes.