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Out-Law News 2 min. read

Concerns over SFO funding as few whistleblowing reports lead to investigations


The UK's Serious Fraud Office (SFO) only opened 12 new investigations into suspected fraud or corruption over the year ending 31 March 2014, despite receiving over 2,500 reports through its confidential whistleblowing service over a similar period.

White collar crime expert Barry Vitou of Pinsent Masons, the law firm behind Out-Law.com, said that the figures could indicate that the department did not have sufficient resources to pursue all available leads. The SFO received 2,508 reports through its 'SFO Confidential' service over the year to 30 June 2014, according to figures obtained by Pinsent Masons.

"Obviously not all reports will contain sufficiently high quality information needed to justify a full investigation – some may be without foundation – but the data does suggest that the SFO may lack the resources to pursue all the leads on criminal cases that are available and that it is having to prioritise cases," said Vitou.

"Funding problems mean it is unlikely that the SFO is able to carry out comprehensive checks on all information received. It is possible that very large numbers of credible cases could effectively be being shelved," he said.

SFO Confidential was set up in 2011 to provide a clear point of contact to allow those suspecting serious fraud or corruption to raise their concerns with the authorities.

The SFO is responsible for investigating and prosecuting the most serious cases of economic crime, although its budget has fallen considerably since the 2008 financial crisis. It is, however, able to apply to the UK Treasury for additional 'blockbuster' funding on a case by case basis, to cover the costs of particularly high profile investigations.

Vitou said that the City of London Police force, which works alongside the SFO in the investigation of serious corporate crime, has also experienced an increased number of fraud and white collar crime reports against a backdrop of substantial funding cuts. National fraud and cybercrime reporting centre Action Fraud, which has been operated by the City of London Police since April 2014, received more than 210,000 reports in the financial year 2013/14. City of London Police opened 544 financial crime investigations over the same period, according to figures obtained by Pinsent Masons.

Recent research by Pinsent Masons found that the number of whistleblowing reports received by financial services regulator the Financial Conduct Authority (FCA) increased by 44% over the course of 2014. The FCA created 1,367 cases after receiving information through its whistleblowing processes and went on to open intelligence reports in 73% of these cases.

"Both the City of London Police and the SFO need stable and, frankly, increased funding if white collar crime is to be tackled effectively," said Vitou. "The sheer volume of reports to SFO Confidential and the police in the last year makes it clear that employees, business contacts and members of the public are coming forward to provide potential leads - what is now needed are the means to undertake effective investigations."

Several of the SFO's most high profile recent investigations have followed tip-offs from whistleblowers, including those into the Olympus accounting scandal and Rolls-Royce bribery allegations, he said.

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