Nick Ephgrave QPM, the Director of the Serious Fraud Office (“SFO”), recently marked the end of his first year in office. Ephgrave has brought a renewed energy, sense of purpose and proactive approach to the SFO, opening six new investigations, improving staffing levels and significantly increasing the number of dawn raids and arrests. He has demonstrated ambition and innovation as he seeks to improve the culture, performance and reputation of an agency that has faced more or less continuous criticism since its establishment in 1988. However, as with all previous Directors, Ephgrave’s ability to truly transform the SFO over the remainder of his tenure remains hamstrung by the perennial issue of limited funding.
Inevitable Lag in Impact of Major Legislative Developments
Ephgrave’s first year coincided with the most radical legislative overhaul of the UK corporate criminal landscape in decades, but the real impact of this reform will not be felt for at least several years into the Director’s term. The Economic Crime and Corporate Transparency Act 2023 (“ECCTA”) expands the SFO’s compulsory production powers in cases of suspected fraud or domestic bribery and corruption to the pre-investigation stage. It introduces a new offence of failure to prevent fraud and, most significantly, broadens the “identification doctrine” – the main way in which criminal liability has been attributed to corporate entities in England and Wales – to include the actions of “senior managers”, rather than only those individuals who act as the company’s “directing mind and will.” These measures will help the SFO gather key evidence earlier, speed up case acceptance and make it easier to hold companies to account. As we saw following the introduction of the Bribery Act however, the full impact of the changes, and particularly the new test for corporate criminal liability, will take some time to filter down into the SFO’s case load. We will have to look again at the SFO’s record under Ephgrave in 2026 at the earliest to form a more reliable view, in particular whether the Director’s prediction that deferred prosecution agreements may “come back with a bit of a vengeance” once the failure to prevent fraud offence comes into force.
Dynamic and Innovative Approach to Case Work
The SFO’s investigations have been characterised by dynamism under Ephgrave, with 17 arrests and dawn raids in four of the six investigations opened since he took charge, and it is hard to argue with the Director’s assertion that this aggressive approach imbues the investigations with much-needed momentum.
A developing criticism of the SFO’s case load under Ephgrave, however, is that it appears to reflect a shift towards domestic fraud with domestic victims and away from more traditional SFO cases of overseas bribery and corruption, and that these new fraud cases are in some way less serious or complex. Leaving aside that Ephgrave leads the Serious Fraud Office and that cases of fraud have been systematically underreported, underinvestigated and underprosecuted in the UK for at least a decade, there seems little substance to the assertion that high-value corporate collapses are somehow by default more straightforward to investigate and prosecute and less serious than overseas bribery cases.
The SFO is largely reactive to the cases that come to it, whether by means of corporate self-report, whistleblowers or collaboration with its international partners. Ephgrave has in fact recognised this as a problem and proposed various fixes to increase and improve the SFO’s case flow, most notably adopting the US model of paying whistleblowers, increasing the SFO’s use of covert evidence-gathering techniques (under the Regulation of Investigatory Powers Act 2000) to interrupt crimes in action, and making increased use of cooperating witnesses (under the Serious Organised Crime and Police Act 2005). It would be absurd to suggest that Ephgrave is electing not to investigate overseas bribery and corruption in favour of domestic fraud. The narrative could change in the space of a day with the announcement of one or more new multijurisdictional SFO investigations into allegations of bribery at large UK companies. Moreover, it is worth remembering that not all SFO investigations are immediately publicly announced.
Funding Issues
Ephgrave has shown himself to be both ambitious and innovative, but his desire for the SFO to be recognised as “the pre-eminent […] agency which leads the fight against serious and complex fraud, bribery and corruption” will require significant funding. This was emphasised by HM Crown Prosecution Service Inspectorate’s SFO report published in April this year which highlighted various issues affecting disclosure, including an outdated document review system, a lack of staff continuity, poor record-keeping, and ineffective planning. Although most of the report’s recommendations suggested direct improvements to be undertaken by the SFO, notably and sensibly it called for the government to “develop a long-term funding strategy to support the SFO to discharge its disclosure obligations and allow it to compete in the open market to secure enough experience to deal with its cases.”1
A Bright Future?
The Director of the SFO is often assessed on results in court outside their direct control. While it remains crucial to avoid cases collapsing before or during trial due to disclosure failures, or failing to get beyond half-time once begun, the remainder of Ephgrave’s tenure will be better judged by his ability to avoid any reputational self-harm, take aggressive and pragmatic case decisions, set a strategic direction and improve the agency’s culture.
1 https://www.justiceinspectorates.gov.uk/hmcpsi/wp-content/uploads/sites/3/2024/04/SFO-Disclosure-Report-2.pdf.
