A Fresh Start for Fraud Fighters: the SFO Under Nick Ephgrave
The Serious Fraud Office (SFO) has entered a new era under the leadership of Nick Ephgrave. As he marks his first anniversary at the helm, the organisation feels refreshingly ambitious.
Bringing a clear vision as well as a wealth of policing experience, Ephgrave has recharged the SFO’s sense of purpose. This is reflected in cheering statistics: in his first six months, it launched more new cases than were begun in the final two years of the previous director’s tenure.
This surge in activity reflects a shift in thinking. Ephgrave has championed proactive measures, including dawn raids and a more aggressive approach to tackling complex fraud. He has spoken of collaborating more closely with partners, both domestically and internationally, and of consulting a broader range of stakeholders. He grasps, too, that fraud has a corrosive effect on the UK’s reputation.
Beyond the Initial Push
While Ephgrave’s stance is a welcome change and has boosted morale within the SFO, the road ahead is bumpy.
The recent General Election and subsequent change in government have created uncertainty, as a multitude of neglected or under-resourced issues clamour for policymakers’ attention. Against this background it is hard for the SFO to secure the full-blooded political support needed to supercharge its efforts.
Increasing the SFO’s activity is expensive. Launching more cases and accelerating investigations require extra funding. Unfortunately, the topic of fraud prevention has barely featured in recent political discourse. Will the SFO receive the resources needed to sustain its current gusto, or will budget constraints pinch?
Haunted by the Past
In the meantime, Ephgrave must confront inherited problems. Chief among these is a dispute with the Eurasian Natural Resources Corporation (ENRC). This relates to a costly investigation the SFO launched in 2013 and closed in 2023, focused on allegations of fraud in ENRC’s winning of African mining contracts. In 2021 ENRC brought a lawsuit against the SFO, which, although largely cleared of wrongdoing, was chided by the judge for ‘bad faith opportunism’. The SFO now faces a civil trial.
Reports have noted the possibility of a multimillion-pound bill.[1] The SFO’s own annual report states that ‘the implications of the case are uncertain in terms of the outcome and value’, and mentions that it has already paid ￡9m toward ENRC’s costs.[2] Should the SFO end up with large liabilities, public criticism would be harsh, raising awkward questions about its future.
Inevitable Overheads
The financial implications of the SFO’s probe into ENRC remain to be seen, but some expenses are unavoidable. One of these is hiring and retaining experienced staff, in particular investigators adept at harnessing the technologies relevant to growing areas such as crypto assets and digital forensics.
Again, there are pressing questions. Can the SFO offer a more competitive salary structure and do more to support and develop its workforce? Can it embed a stronger secondment programme to attract experts from the private sector?
Amid the disheartening talk about costs, it is worth pointing out that the SFO’s effective running should create a virtuous circle: assets recovered from fraudsters can help fund more SFO operations. What’s more, at a time when there are holes in the national finances, the scale of public sector fraud suggests a remedy.
Estimates of such fraud vary, but one oft-cited figure is ￡33bn annually (and the source indicates that the true number could be much higher).[3] If that amount looks eerily familiar, it may be because of its proximity to the sum the NHS needs to make up a critical deficit (￡32bn).[4] In July the new Chancellor of the Exchequer, Rachel Reeves, revealed an additional ￡22bn budgetary shortfall,[5] the sort of disquieting detail that only strengthens the case for novel approaches to boosting the public purse.
In the long term, funding the fight against fraud will stop vital resources leaching away from the public sector – making it an investment, not an extravagance.
The Challenge of Retribution
It is vital to impose more severe sentences for financial crime. Fraudsters commonly regard their activities as inevitable and even mundane, or lucrative, largely victimless, and likely to go undetected and unpunished. It is essential to change that perception, and there can be little doubt that harsher penalties for fraud would discourage potential offenders.
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But the prison service is in crisis. Prisons are routinely operating at more than 99 percent capacity, which makes conditions dangerous. To avert the system’s collapse, the new Lord Chancellor has taken steps which include reducing the number of custodial sentences served in prison and expanding schemes to enable early release.
While this is necessary in the short term, it hardly sends a compelling message about crime and punishment. Can the SFO work with the government to find a solution that balances the need for retribution with the current pressure on prison capacity?
Charting the Course: Solutions Within Reach
Nick Ephgrave has a unique opportunity to reinvigorate the SFO, and one measure that urgently needs exploring is a scheme to incentivise whistleblowing.
Compensating informants, as in the United States, results in more investigations and swifter resolutions. Yet the idea, for all its logical appeal, remains unpopular? in the UK, where whistleblowers tend to be seen as troublemakers. Changing that, as well as finding ways to encourage offenders to assist investigations, feels like a philosophical hurdle as much as a practical one.
The SFO must also stimulate public understanding of fraud’s consequences, both personal and financial. In part, this involves doing a better job of spotlighting the organisation itself, to project an image of pragmatism and confidence. The SFO needs to excel not only at tracking and measuring its performance, but also at communicating it.
The Future Is In Our Hands
The SFO is moving in the right direction under Nick Ephgrave. By securing more funding, advocating for strong deterrents, and fostering a culture of whistleblowing, it can become a more effective force in the fight against financial crime.
Yet success requires political will and public awareness. Working together, we can create a society where fraud is not just tackled effectively but actively discouraged.
The views expressed herein are those of the author(s) and not necessarily the views of FTI Consulting, Inc., its management, its subsidiaries, its affiliates, or its other professionals. FTI Consulting, Inc., including its subsidiaries and affiliates, is a consulting firm and is not a certified public accounting firm or a law firm.
[1] https://www.theguardian.com/law/2024/mar/26/enrc-mining-company-compensation-claim-uk , https://www.cityam.com/uk-fraud-office-faces-hefty-bill-after-court-finds-wrongdoing-led-to-enrc-bribery-probe/