SFO boss predicts more plea-bargain-style deals under new UK fraud law

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New legislation that puts companies on the hook for employees committing fraud could lead to a significant increase in plea-bargain-style deals with the prosecutor, according to the head of the UK Serious Fraud Office.

SFO director Nick Ephgrave said deferred prosecution agreements — or DPAs — could come back with “a vengeance” once a new offence that puts the onus on businesses to prevent fraud comes into force, which is expected to be next year.

Under a DPA, first introduced in the UK a decade ago, a criminal prosecution against a company is suspended if the business approaches the SFO and agrees to terms — approved by a judge — such as co-operating with investigations against individuals, paying a fine and abiding by certain conditions. This allows companies to avoid criminal convictions and long trials.

“DPAs I think are a really helpful and useful tool in the armoury,” said Ephgrave, who took over the helm a year ago this month.

“I think they could really come back with a bit of a vengeance when we have the duty to prevent fraud offence active.” The new rules “could lead to an uptick in DPA-type referrals”, he added.

“DPAs . . . avoid what is often going to be a very costly and lengthy trial, and get the benefit for victims . . . and or the benefit to the country of enormous fines, which then go back into the coffers,” he added.

The SFO has previously secured a dozen DPAs against companies including Rolls-Royce and Airbus.

A former police officer and the first non-lawyer to run the SFO, Ephgrave is trying to resurrect the agency’s reputation after a number of high-profile failures.

Under previous director Lisa Osofsky the prosecutor closed several investigations against blue-chip companies, saw convictions quashed in cases after mis-steps, and struggled to recruit staff.

The SFO is currently embroiled in a lawsuit with Eurasian Natural Resources Corporation, formerly the target of an investigation, that could see the agency forced to pay potentially millions of pounds to the mining group in compensation.

Ephgrave said the SFO was “disappointed” by the court’s decision over its liability in the case and “will enter into the quantum negotiations resolutely”, but declined to comment further while the litigation is still live.

Ephgrave is also pushing to introduce payment for whistleblowers in the UK, which may require new legislation.

While he has yet to discuss the plans directly with new government, he said he hoped such an initiative would be introduced during his five-year tenure.

His comments come the day after the chair of the UK’s financial regulator faced calls to resign over his mishandling of whistleblower details.

Ashley Alder from the Financial Conduct Authority refused to quit on Thursday despite protest groups criticising him after an internal review that cleared him of wrongdoing for forwarding messages from two whistleblowers inside the business.