Serious Fraud Office (UK)
Overview
 
The Serious Fraud Office (SFO) is an independent UK Government department that investigates and prosecutes serious or complex fraud
Fraud
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...

 and corruption
Corruption
Corruption usually refers to spiritual or moral impurity.Corruption may also refer to:* Corruption , an American crime film* Corruption , a British horror film...

. Accountable to the Attorney General
Attorney General
In most common law jurisdictions, the attorney general, or attorney-general, is the main legal advisor to the government, and in some jurisdictions he or she may also have executive responsibility for law enforcement or responsibility for public prosecutions.The term is used to refer to any person...

, it has jurisdiction over England
England
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...

, Wales
Wales
Wales is a country that is part of the United Kingdom and the island of Great Britain, bordered by England to its east and the Atlantic Ocean and Irish Sea to its west. It has a population of three million, and a total area of 20,779 km²...

 and Northern Ireland
Northern Ireland
Northern Ireland is one of the four countries of the United Kingdom. Situated in the north-east of the island of Ireland, it shares a border with the Republic of Ireland to the south and west...

 and assists a number of overseas investigations by obtaining information from UK sources Section 2 of the Criminal Justice Act
Criminal Justice Act
Criminal Justice Act is a stock short title used for legislation in the United Kingdom, the Republic of Ireland and Canada relating to the criminal law...

 1987 grants the SFO special compulsory powers to require any person (or business/bank) to provide any relevant documents (including confidential ones) and answer any relevant questions including ones about confidential matters.

The SFO is also the principal enforcer of the Bribery Act 2010
Bribery Act 2010
The Bribery Act 2010 is an Act of the Parliament of the United Kingdom that covers the criminal law relating to bribery. Introduced to Parliament in the Queen's Speech in 2009 after several decades of reports and draft bills, the Act received the Royal Assent on 8 April 2010 following cross-party...

, which has been designed to encourage good corporate governance and enhance the reputation of the City of London
City of London
The City of London is a small area within Greater London, England. It is the historic core of London around which the modern conurbation grew and has held city status since time immemorial. The City’s boundaries have remained almost unchanged since the Middle Ages, and it is now only a tiny part of...

 and the UK as a safe place to do business.

The SFO’s director is Richard Alderman and its Chief Executive is Phillippa Williamson.
During the 1970s and early 1980s a series of financial scandals in the City of London destroyed the public's trust in the way serious or complex frauds were handled.
Encyclopedia
The Serious Fraud Office (SFO) is an independent UK Government department that investigates and prosecutes serious or complex fraud
Fraud
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...

 and corruption
Corruption
Corruption usually refers to spiritual or moral impurity.Corruption may also refer to:* Corruption , an American crime film* Corruption , a British horror film...

. Accountable to the Attorney General
Attorney General
In most common law jurisdictions, the attorney general, or attorney-general, is the main legal advisor to the government, and in some jurisdictions he or she may also have executive responsibility for law enforcement or responsibility for public prosecutions.The term is used to refer to any person...

, it has jurisdiction over England
England
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...

, Wales
Wales
Wales is a country that is part of the United Kingdom and the island of Great Britain, bordered by England to its east and the Atlantic Ocean and Irish Sea to its west. It has a population of three million, and a total area of 20,779 km²...

 and Northern Ireland
Northern Ireland
Northern Ireland is one of the four countries of the United Kingdom. Situated in the north-east of the island of Ireland, it shares a border with the Republic of Ireland to the south and west...

 and assists a number of overseas investigations by obtaining information from UK sources Section 2 of the Criminal Justice Act
Criminal Justice Act
Criminal Justice Act is a stock short title used for legislation in the United Kingdom, the Republic of Ireland and Canada relating to the criminal law...

 1987 grants the SFO special compulsory powers to require any person (or business/bank) to provide any relevant documents (including confidential ones) and answer any relevant questions including ones about confidential matters.

The SFO is also the principal enforcer of the Bribery Act 2010
Bribery Act 2010
The Bribery Act 2010 is an Act of the Parliament of the United Kingdom that covers the criminal law relating to bribery. Introduced to Parliament in the Queen's Speech in 2009 after several decades of reports and draft bills, the Act received the Royal Assent on 8 April 2010 following cross-party...

, which has been designed to encourage good corporate governance and enhance the reputation of the City of London
City of London
The City of London is a small area within Greater London, England. It is the historic core of London around which the modern conurbation grew and has held city status since time immemorial. The City’s boundaries have remained almost unchanged since the Middle Ages, and it is now only a tiny part of...

 and the UK as a safe place to do business.

The SFO’s director is Richard Alderman and its Chief Executive is Phillippa Williamson.

History

During the 1970s and early 1980s a series of financial scandals in the City of London destroyed the public's trust in the way serious or complex frauds were handled. In response to this the Government established the Fraud Trials Committee in 1983. This independent committee, under the chairmanship of Lord Roskill, considered how changes to the law and criminal proceedings could lead to more effective ways of fighting fraud. The committee report, commonly known as 'the Roskill Report' was published in 1986. Its main recommendation was to set up a new, unified organisation responsible for detecting, investigating and prosecuting serious fraud cases.

As a result, the Serious Fraud Office (SFO) and its unique powers were created by the Criminal Justice Act 1987. It opened for business in April 1988. The SFO also enforces the new UK Bribery Act 2010.

Noteable cases

Guinness Plc - in 1986. there were rumours that the Guinness takeover of the Distillers Company was tainted by an unlawful share support operation which involved Guinness offering secret indemnities (from its own funds) against losses to people ‘supporting’ the bid which resulted in a dramatic rise in the price of Guinness shares.

Having examined the bid, the SFO opened an investigation which led to the conviction in 1990 of the then chief executive of Guinness and three other defendants.

BAE
BAE
BAE Systems, a British defence, security and aerospace companyBAE may also refer to:*British Aerospace , a UK aircraft, munitions and defence-systems manufacturer...

- in 1999 British Aerospace Defence Systems Ltd agreed a contract with the Government of Tanzania
Tanzania
The United Republic of Tanzania is a country in East Africa bordered by Kenya and Uganda to the north, Rwanda, Burundi, and the Democratic Republic of the Congo to the west, and Zambia, Malawi, and Mozambique to the south. The country's eastern borders lie on the Indian Ocean.Tanzania is a state...

 for the supply of a radar defence system. A local businessman in Tanzania was recruited to advise BAE on its negotiations with the Government on the radar contract.

Between January 2000 and December 2005 around $12.4 million was paid to the local businessman’s two companies. BAE has accepted that there was a high probability that part of this sum would be used to favour it in the contract negotiations with the Tanzanian Government.

The payments were not subject to proper and adequate scrutiny or review and
BAE Systems Plc was subsequently fined £500,000 after admitting that it had failed to keep adequate accounting records of the defence contract with the Government of Tanzania. This outcome followed a settlement by BAE, as part of a global agreement reached in 2010 with the Serious Fraud Office and the US Department of Justice, concerning contracts in a number of countries. The settlement with the SFO relates to the Tanzanian contract. The terms of the settlement include an agreement by BAE to pay an ex-gratia sum (£30 million les any fine imposed by the Crown Court) for the benefit of the people of Tanzania.

BAE was also ordered to pay £225,000 costs to the SFO.

Activities

The SFO is a specialist organisation that investigates only the most serious types of economic crime. As a result a potential case must meet certain criteria before it is taken on. These criteria include whether:
  • the value of the alleged fraud is more than £1 million
  • there is a significant international dimension
  • the case is likely to be of widespread public concern
  • the requires highly specialised knowledge, for example, of financial markets
  • the SFO’s special powers (such as Section 2 of the Criminal Justice Act) need to be used

Fraud

Fraud
Fraud
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...

 is a type of criminal activity. It is defined as 'abuse of position, or false representation, or prejudicing someone's rights for personal gain'.
Investment fraud

Boiler room fraud (share scams)

A boiler room is an operation, usually run from abroad, that sells shares to investors in companies which are usually fakes or are not successfully trading

Scammers typically cold-call people and use hard-sell tactics to sell shares in UK or overseas based companies that prove to be worthless. They profit either by just taking investors' money without providing shares or selling the shares to them at highly inflated prices.

Vintage Wines of St Albans is an example of a boiler room fraud. The convicted defendants received custodial sentences of up to four and half years and were disqualified from being company directors for periods up to 15 years. One was also served with a serious crime prevention order preventing him from conducting any investment and financial management business for four years after his release from prison.

Ponzi or pyramid schemes

A 'Ponzi' or pyramid scheme typically involves an investment offer which promises to provide an abnormally higher rate of return – for example, a 30 per cent return on and investment might be claimed when a more realistic return would be five to ten per cent.

In the SFO’s KF Concept case a fraudster was jailed for10 years for running an unauthorised investment business and stealing investors’ funds through his £34 million KF Concept Scheme. The loss to investors amounted to over £17 million.
Corporate Fraud

Asset stripping - asset stripping is taking company funds or assets of value while leaving behind the debts. Company directors transfer only the assets of one company to another and not the liabilities. The result is a dormant company with large liabilities that cannot be met and it has to be put into liquidation.

Fraudulent trading - fraudulent trading is where a company carries on a business with the intention of defrauding creditors or for any fraudulent purposes. This applies whether the company is trading, has ceased trading or is in the process of being wound up.

And example case is Engineering with Excellent (EWE), later known as the InterGB group, the collective name for a number of companies that between 1996 and 2000 that extracted large amounts of money from three financial institutions by submitting over a thousand false invoices totaling more than £85 million. The fraud enabled the defendants to enjoy a successful business lifestyle, including corporate entertainment, good salaries and expensive company cars. The chairman of the group was jailed for seven years, while three associates each received two-year jail sentences.

Share ramping – also known as 'pump and dump' or 'book ramping', is where criminals influence the share price of a company and then take advantage of it. It is commonly perpetrated by bringing a company to the market with false expectations of its profitability or alternatively by buying shares in a company when the price is low and then starting a rumour that the company is being taken over. When the share price rises, the shares are sold at a profit.

Publishing false information – publishing false information is a type of fraud committed when a criminal creates, destroys, conceals or falsifies an account, record or report which deliberately misleads people about the company's financial position. This is usually done to mislead investors and creditors and to keep a failing company trading.

Bribery & corruption

Corruption is where the integrity of a person, Government, or company is manipulated and compromised for personal gain.

There are two main types of corruption:

Political corruption – is the dysfunction of a political system or institution in which government officials, political officials or employees look for illegitimate personal gain through actions such as bribery, extortion, cronyism, patronage and embezzlement

Corporate corruption – is where, for example, bribes are offered to agencies/ institutions/individuals in order to win a contract.

Innospec Limited, manufacturers of a fuel additive, pleaded guilty to bribing employees of an Indonesian state-owned refinery and other Government officials in Indonesia. In a settlement co-ordinated with action taken in the United States, the company was fined $12.7 million. It also agreed to pay the costs of an independent body to monitor its conduct for three years.

Organisation

As one of the Law Officers’ Departments, the SFO reports to the Attorney General of the UK.

The SFO employs around 300 people. The cost of running the SFO in the financial year 2010-11 was 64p for each member of the British public.

The SFO is unique in that its role is to both investigate and prosecute. Its case teams are therefore made up of investigators, lawyers, law clerks and forensic accountants.

Over 80 per cent of staff are specialist caseworkers. When deciding what action to take, lawyers in the SFO must bear in mind the Prosecutors Code.

Overseas Assistance

The SFO has a dedicated International Assistance team which regularly assists law enforcement agencies worldwide with their investigations. In 2010-11 the SFO assisted over 30 different jurisdictions.

Victim Support

Victims are at the core of the SFO’s strategy. They include any person, organisation, or Government both in the UK and abroad, which has suffered direct financial loss from the most serious and complex fraud, or corruption.

The SFO tries to get justice for victims by recovering as much recompense as possible for victims and by placing criminals behind bars. In April 2011, £64 million of funds were, or were due to be returned to victims and the average jail sentence handed out in SFO cases was over 30 months.

For example, in 2011 three fraudsters running the online Xclusive ticket fraud (that failed to deliver tickets to the Beijing Olympics and various music festivals) each received prison sentences of up to eight years. The SFO had also started confiscation proceedings to recover money for victims.

Criticisms

Al-Yamamah arms deal – the al-Yamamah deal during the 1980s was a large scale aircraft and weapons deal between the UK and Saudi Arabia
Saudi Arabia
The Kingdom of Saudi Arabia , commonly known in British English as Saudi Arabia and in Arabic as as-Sa‘ūdiyyah , is the largest state in Western Asia by land area, constituting the bulk of the Arabian Peninsula, and the second-largest in the Arab World...

. The deal was extended throughout the 1990s and saw thousands of UK citizens living and working in Saudi Arabia representing £40bn worth of business. BAE Systems Plc was the primary contractor.

In 2004 the SFO began to investigate the contracts within the al-Yamamah deal on the grounds of suspected false accounting but the investigation was controversially dropped in 2006. The decision was made following concerns about national security amidst reports that the Saudi Government would stop sharing counter terrorist information with the UK if the investigation continued. This drew criticism from number of sources, not least from the Organisation for Economic Cooperation and Development (OECD).
A High Court
High Court
The term High Court usually refers to the superior court of a country or state. In some countries, it is the highest court . In others, it is positioned lower in the hierarchy of courts The term High Court usually refers to the superior court (or supreme court) of a country or state. In some...

 review in 2008 ruled that the SFO had acted unlawfully by dropping the corruption investigation but was later overturned on appeal by the SFO to the House of Lords
House of Lords
The House of Lords is the upper house of the Parliament of the United Kingdom. Like the House of Commons, it meets in the Palace of Westminster....

.

External links

The source of this article is wikipedia, the free encyclopedia.  The text of this article is licensed under the GFDL.
 
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