Serious Fraud Office

Alex Chalk Excerpts

Tuesday 7th February 2017 Westminster Hall

[Stephen Timms (East Ham) (Lab)]

I beg to move,

That this House has considered funding of the Serious Fraud Office.

It is a pleasure to serve under your chairmanship, Mr Owen. The Serious Fraud Office owes its origins to the work of the fraud trials committee, set up under the chairmanship of Lord Roskill in 1983 after a series of failures to secure convictions in relation to high-profile City of London scandals. The SFO began its work in 1988.

I know from previous discussions on the SFO in the House that the Minister values its work very highly. He said in one debate that the Roskill model on which the SFO operates is

“essential when it comes to this type of offending. It works and it must continue to be supported.”

He also said:

“It is important that we give our full-throated support to the work of the SFO”.—[Official Report, 2 July 2015; Vol. 606, c. 1610.]

I very much agree with the view that he expressed and I hope it will be shared by other hon. Members contributing to this important debate. It was in the spirit of wanting the SFO to do the best possible job that I applied for this debate on how it is funded. However, it is worth just revisiting at the outset the case for the SFO, because the model has had its detractors, including the current Prime Minister when she was Home Secretary, so the case needs to continue to be made and the arguments need to be spelt out.

The SFO is unique among UK law enforcement agencies. Under the model recommended by Lord Roskill at the conclusion of the fraud trials committee in 1985, it is both investigator and prosecutor of the cases that it handles. A string of failed City of London fraud cases undermined public trust and inspired the recommendation and decision to break with the usual division between those two roles that we see in most of the rest of the English and Welsh legal system. I want to return to the issue of public confidence that justice will be done in fraud cases when arguing that the Government need to look again at the mechanisms by which the SFO is funded.

Legal cases are often complex, but the cases that the SFO deals with are frequently an order of magnitude more complex than others. They involve thousands of documents and a huge amount of complex financial data. The SFO requires multidisciplinary teams working under its case controllers: they are made up of lawyers, investigators, forensic accountants and so on. Those multidisciplinary teams ensure that legal scrutiny is applied to investigations from their commencement.

The Roskill model also ensures that there is no hand-off point, when specialist knowledge and insight developed by investigators and accountants who have been studying a case may be lost as it is transferred to the barristers. That does not happen in the SFO model. Institutional memory and continuity are very important in the prosecution of complex fraud cases, and I am concerned that that important virtue of the Roskill model might be being undermined by the way the SFO is funded at the moment.

The Prime Minister, when she was Home Secretary, tried in 2011 and again in 2014 to bring the SFO into the new National Crime Agency. The Financial Times reported on 5 October 2014 that she was

“to revive plans to abolish the UK’s main anti-fraud and corruption agency and bring it into her new FBI-style national crime force, according to officials familiar with the situation.”

I am glad to say that that move was resisted. The director of the SFO from 2012 to the present, David Green, QC, was clear in his statement that it would

“distract and destabilise the SFO in a really bad way at a time when”

it was “grappling with what” was

“probably its heaviest-ever workload and making real headway.”

He was not alone in making the case against abolition of the office. Bond, the umbrella organisation representing 370 international development organisations, which sees the impact of corporate corruption at the sharp end, with millions lost to public services and community wellbeing in developing countries, co-ordinated a letter to the then Prime Minister in 2015 from seven charity chief executives, in which they suggested three key tests for the Government on bribery and corruption. First, they stated:

“Investigation and prosecution teams should be combined in the same agency.”

The Roskill model achieves that requirement, and a number of observers think that moving the work into the NCA would probably end that beneficial arrangement. Secondly, the letter stated:

“Corruption must be a top priority for that agency, and not simply one amongst many.”

Thirdly, it stated:

“There must be specialist corruption teams”

in the agency.

The current arrangements for the make-up of the SFO meet those requirements, and as a result the UK is one among only four countries that are officially recognised as “active enforcers” of the OECD’s anti-bribery convention. I hope that maintaining that status will be an important concern of the Government and the Minister. Moving the anti-corruption role of the SFO into another agency would undermine UK leadership in this area. I agree with Transparency International UK, which says that it

“strongly opposes the abolition of the SFO unless an alternative is proposed which is demonstrably better. We believe that is highly unlikely given the SFO’s recent success, the instability and damage to caseload that would be caused by abolition, the detailed analysis that went into the creation of the SFO, and the lack of expertise and track record in any other government agencies regarding prosecutions of corporate corruption.”

I therefore hope that the model will be maintained, but how well is the current SFO doing? It is quite difficult to assess its effectiveness. Its case load is deliberately small: under David Green, it has focused its attention, taking the most serious and complicated cases through to prosecution. However, we can say that over the four-year period, 2012-13 to 2015-16, it had a case conviction rate of 81%, although that goes up and down from year to year, and since then it has achieved some important successes, including the first individual prosecutions for LIBOR rigging, which are welcome, and the recent landmark deferred prosecution agreement with Rolls-Royce, which resulted in a fine of £671 million, which was equivalent to the company’s entire operating profits. The SFO is undoubtedly making an impact. The question is whether it is as effective as it could be and as we would all wish it to be.

[Alex Chalk (Cheltenham) (Con)]

I declare an interest as someone who has previously been appointed to the SFO’s “A” panel of counsel. Does the right hon. Gentleman agree that in looking at the SFO’s achievements, it is right to focus also on the sums recovered under the Proceeds of Crime Act 2002 through confiscation? Its track record on that is certainly better than that of equivalent agencies.

[Stephen Timms]

The hon. Gentleman is absolutely right. I certainly do not want to argue that the SFO has not been effective; there is good evidence that it has been. The question is whether it is as effective as it could and should be, and that is why I now want to come to the numbers and my concerns about the way it is funded. It receives its funding as a mix of core costs and what is termed “blockbuster” funding.

--- Later in debate ---

[Stephen Timms]

Yes, it inevitably does. We have seen a big shift over time away from core funding towards blockbuster funding. That inevitably means fewer permanent staff at the SFO and more temporary staff. That raises a serious concern about how the SFO is able to function. In 2008, core funding was £52 million. In 2015-16, the total budget was about the same, but core funding was only £34 million. For each of the last three complete financial years, the blockbuster funding element was large: £24 million in 2013-14, £24.5 million in the following year and £28 million in 2015-16. In 2015-16, the blockbuster funding was more than 80% on top of the core funding. The SFO’s total expenditure has been as much—perhaps rather more—in recent years as it was in 2008, before core funding started to be reduced as part of the Government’s efforts to cut public spending, but a big slice of the funding today is in the form of this one-off, exceptional Treasury grant. I am grateful to the hon. Gentleman for drawing attention to the fact that, as a result of that, a large proportion of those working at the SFO are temporary staff brought in for a particular case and then laid off when it is concluded.

I would be grateful for the Minister’s comments on whether that is an effective way to run an organisation as important as the SFO. Her Majesty’s Crown Prosecution Service inspectorate certainly thinks that it is not. In its view, the current model is not satisfactory, and I think it has an important point. In its 2016 report, it stated:

“The blockbuster funding model is not representing value for money and it prevents the SFO building future capability and capacity. Temporary and contract staff are often more expensive than permanent staff and managing surge capacity is a constant drain on Human Resources (HR) and other staff. Increasing core funding would provide the SFO with the ability to build capacity and capability in-house and lead to less reliance on blockbuster funding.”

That is the case that I want to press upon the Minister this morning. The evidence is on the inspectorate’s side. At the time of the inspection, 21% of SFO staff were temporary. As of March 2016, 106 of the 510 staff were there on an agency basis and another 35 were there on a fixed-term basis. That level of instability and impermanence would damage any major organisation.

[Alex Chalk]

The right hon. Gentleman is making a powerful and important speech; however, the real question is whether the surge that we have seen in demand, which has given rise to the need for blockbuster funding, is likely to be sustained. Can he shed any light on whether that is perceived to be a likely outcome?

[Stephen Timms]

It certainly has been sustained over a lengthy period, although I think I am right in saying that in the most recent year the funding sharply reduced. For me, that accentuates the problem, because once the funding is sharply reduced, a large number of people get sacked or their employment at the SFO ends and the expertise and experience they have built up is dissipated. It seems to me that we should aim to hang on to that expertise and build up the capacity and skills that the SFO can deploy for its future work.

I am not saying that the 106 people who were there on an agency basis in March 2016 were second-rate or anything like that. I am sure that they were talented people, doing good work. However, as temporary staff they are more expensive than permanent staff and the additional expense does not make sense when the blockbuster funding is consistently high over an extended period—not permanently, but consistently over a long period. Temporary staff will build up skills and expertise during their work with the SFO, which will then be lost as soon as their contracts expire and they leave. That raises concerns about an inability to ensure consistency across the entire duration of a case and build institutional knowledge in the longer term, which was precisely the aim of setting up the Roskill model in the first place 30 years or so ago. Surely we want the SFO to build up its expertise, and having so many people on temporary contracts makes that a great deal harder. At a time when the Government are, for very good reason, pushing for the public sector to spend less on expensive agency staff in areas such as education, Ministers can surely see that the same considerations apply—I suggest even more powerfully—to the SFO.

Managing the human resources implications of blockbuster funding makes it harder, as the inspectorate points out, for personnel staff to do the other things they ought to be doing. The SFO is the only one of the Law Officers’ departments with fewer than half of its staff positions held by women and it has less than half the proportion of disabled people working for it than the civil service does as a whole, at only 3.6% of employees. We know that delivering diversity requires focused human resources effort, but with such high levels of turnover and agency staff at the SFO, HR attention is perhaps inevitably turned elsewhere. That weakens the organisation.

I am sure that the Minister will argue in his response that the director of the SFO has spoken favourably about the blockbuster funding system in the past. To an extent, that is true. Last October, he told the Justice Committee in the evidence session that I referred to:

“There are pros and cons to it.”

The SFO’s submission to the Committee prior to the session stated:

“It is a workable mechanism which allows the SFO to respond flexibly to a demand-led workload.”

That may well be the case, but “workable” is not the same as “optimal”.

I am not arguing that we should not have any blockbuster funding. I entirely accept that such a mechanism can enable the department to cope with fluctuations and ensure that it does not have to turn down a case on the basis of cost, but we have funded getting on for half the SFO’s budget for the last three or four financial years in that way. As a result, it has not been possible to build the expert, permanent workforce that I think we all want to see, so the balance must surely be wrong. Judging from the director’s comments to the Justice Committee, that appears to be his view as well.

There is another important issue. In requiring the SFO to ask the Treasury for additional funding on a case-by-case basis through a pretty opaque process, it is impossible to demonstrate independence about decisions on which cases are prosecuted. I do not want to make too much of that point, but being seen to be independent is important. Making the SFO dependent, case by case, on a Treasury sign-off does not provide that all-important assurance. That problem could be greatly reduced by making core funding a bigger proportion of the overall SFO budget. Another risk presented by the level of blockbuster funding—other Members have raised this matter in the House—is that justice may be delayed if an unnecessary layer of bureaucratic delay is added to the office’s work by its having to apply for blockbuster funding.

The model under which the SFO operates has established the UK as a global leader in tackling corruption, fraud and bribery. That is an important achievement, which we all want to maintain, and I commend the director of the SFO for his progress in focusing the organisation on its core purpose. The recent inspectorate report, however, was right to point out that over-reliance on blockbuster funding makes the SFO less effective than it should be. Will the Minister therefore commit this morning to looking again at the proportion of the SFO’s funding that comes from the blockbuster mechanism? Will he also look again at whether the SFO could do a better job, building up and maintaining better expertise more effectively in the long term, with more permanent staff, if a larger proportion of its funding was in its core budget?

[Sir Edward Garnier (Harborough) (Con)]

I congratulate the right hon. Member for East Ham (Stephen Timms) on initiating the debate. I listened to him with great care and gratitude, because he spoke as a critical friend of the Serious Fraud Office. As he gently pointed out, when the current Prime Minister was Home Secretary, she was perhaps not a friend, even if she was critical, of the SFO. Possibly—who knows?—one reason I remained a Law Officer for two and a half years, but no longer, was because I fell out with the Home Secretary over the independence of the Serious Fraud Office.

There is a misunderstanding among politicians about the Roskill model and its value. However, before I go on further, I declare an interest—as must be obvious—in the SFO and all that it does. I also declare an interest in that, like my hon. Friend the Member for Cheltenham (Alex Chalk), the SFO instructs me from time to time as a member of the private Bar. One of the most recent cases that I have been instructed in was that of Rolls-Royce, which the right hon. Member for East Ham spoke about. Although I do not want to talk too much about my wonderful case load, I want to use the case of Rolls-Royce to illustrate the successful way in which the organisation deals with criminal activity at the corporate and most complex level.

It is a given, certainly among those who know anything about the Serious Fraud Office, that the Roskill model of having a joint investigating and prosecuting system in the organisation works. Although plenty of people criticise the SFO—as the right hon. Gentleman said fairly, it is not beyond criticism, and there are things to be said about the blockbuster system and so forth—it is remarkably successful, given the limited resources under which it has to operate.

When I was shadow Attorney General in the lead-up to the 2010 election, I made quite a study of the way in which the Serious Fraud Office operated, not least because it was one of the most important aspects of our prosecuting system that came under the supervision of the Attorney General and the Solicitor General. When I got into office in 2010, it was clear that the comprehensive spending review that the new Government introduced would have a pretty direct and possibly damaging effect on the SFO’s ability to carry out its important work. That persuaded me that we needed to find other pragmatic ways of allowing the SFO to get on and catch villains, both human and corporate. I was particularly concerned that we were underperforming on—that we were inhibiting—the prosecution and conviction of corporate crime.

Of course we were, and still are, beset by the Victorian identification principle: in order for a company to be convicted of a crime, a directing mind of sufficient seniority has to be able to be identified in order to fix criminal liability on the company. That was fine in the 1860s, 1870s or the 1880s, when companies had a board of two or three and operated within a town or a county—or possibly even within the country as a whole—but the vast international conglomerates that there are now, with offices in several jurisdictions and boards, sub-boards, national and international boards, make it extremely difficult for the Serious Fraud Office to attach criminal liability for a crime to the company. Individual financial directors, country directors, or country managing directors can be prosecuted, as the SFO has—we have seen that happen in a number of the cases that the right hon. Gentleman referred to—but that has proved difficult when dealing with international companies that misconduct themselves.

That is why—this is a slight diversion, but an important one—this House and the Government should develop the “failure to prevent” model. Under section 7 of the Bribery Act 2010, it is a criminal offence for a company to fail to prevent bribery by one of its associated people or bodies. The first deferred prosecution agreement—in which I appeared, as it happened—dealt with the failure of a bank to prevent bribery by one, or a number, of its staff in Dar es Salaam in Tanzania. Under the terms of the deferred prosecution agreement, that brought in from the errant bank about US$25 million in costs and penalties.

As the right hon. Gentleman correctly identified, the Rolls-Royce case brought in something in excess of half a billion pounds sterling, which will be paid by that company over the next five years. Beyond the penalty, it will have to pay interest on the delayed payment. More importantly, as far as funding the Serious Fraud Office is concerned, part of the deferred prosecution agreement is that the respondent company pays the SFO’s costs, which, at the time of the announcement of the agreement before the President of the Queen’s Bench division, Sir Brian Leveson, 10 or so days ago, amounted to about £13 million. Sadly, that £13 million did not go into the Edward Garnier special holiday fund; it went into reimbursing the Serious Fraud Office for what was essentially the biggest investigation that it had ever done since its inception. That investigation required huge international co-operation with the United States Department of Justice and with investigators and prosecutors in a number of other jurisdictions—the criminal allegations against Rolls-Royce covered the company’s activities within seven jurisdictions.

While the Rolls-Royce matter was being brought to an end a fortnight or so ago in this country, it was also being brought to an end in the United States and in Brazil, where the company had to pay the authorities about $176 million and $25 million respectively. That illustrates how the Serious Fraud Office can be pragmatic, efficient and effective now that it has the deferred prosecution agreement model and can use its money wisely to bring international companies to book for international criminal conduct.

[Alex Chalk]

Now that the SFO has more tools at its disposal, including the DPA model, does my right hon. and learned Friend believe that its workload will increase? Does that make the case for a larger underlying capacity, as the right hon. Member for East Ham indicated?

[Sir Edward Garnier]

Yes. The DPA system is a new tool—there have been three DPA cases—but if the Serious Fraud Office is to carry out its international investigative work at the highest and most complex level, it will need a bigger budget. That was clear to me when I became Solicitor General in 2010 and it remains clear to me now. In 2010, as I understood it, the revenue budget was about £40 million and was set to go down over the course of the Parliament, under the comprehensive spending review, to something like £29 million.

When I went to the United States to discuss international corporate crime and learn from American prosecutors about the system for prosecuting corporate crime there, one of the federal prosecutors in Manhattan asked me how much our budget was. I said, “It’s about £40 million, going down to just under £30 million.” He laughed and said, “Is that just for one office?” I said, “No, it’s for the entire jurisdiction: England and Wales, and Northern Ireland”—unusually for a prosecuting agency in this country, the Serious Fraud Office covers England, Wales and Northern Ireland, but not Scotland. The American prosecutor found it unbelievable that one of the centres of the financial world had a serious fraud office that ran on that amount of money. He went on to joke that he spent more than that on flowers at home; I do not think that that was quite true, but I would not be at all surprised if he lived pretty well. Good luck to him.

What I want the House to understand is that there is no perfect way to sort this out. The right hon. Member for East Ham is entirely right to say that there are uncertainties and, to some extent, an absence of transparency—or at least prospective transparency—in how the blockbuster system works. There is retrospective transparency, because the Justice Committee, Parliament, the National Audit Office and non-governmental organisations such as Transparency International—to pick one organisation at random—can delve into the SFO’s financial workings. I accept that although the blockbuster system works up to a point, it is not ideal, but the best is often the enemy of the good; I would rather the SFO could apply to the Treasury for blockbuster funding than its being constantly in danger of having its budget slashed and slashed again. The SFO is unusual and not very well known and therefore not terribly politically popular. Obviously its work is often private, because if its investigations are not conducted in privacy, the villains get away—I take the right hon. Gentleman’s point about that.

To assist the SFO in its complicated and difficult work, we need to think hard about how to nail corporate misconduct. Will we be brave enough to move to the American system of vicarious corporate liability, so that when an employee commits in the course of their work a crime that has a benefit for their company, the company should be liable in criminal law—just as it would be in civil law for the negligence of one of its drivers, for instance? If not, we will have to extend the failure-to-prevent model. The Criminal Finances Bill that is going through the House at the moment will enact a failure-to-prevent tax offence; I have tabled some amendments that would extend the list of failure-to-prevent offences to a far wider collection of financial crimes. My amendments will not be agreed to, but Parliament needs to debate the issue. I look forward to co-operating with the right hon. Gentleman, who not only has experience as a Treasury Minister but can no doubt see the City of London across the road from his constituency office. I hope that the question of developing the criminal law to meet the increased sophistication with which business is done internationally will be cross-party and non-partisan.

On the right hon. Gentleman’s point about staff, I agree that any form of threat to any organisation from the promise or threat of change is distracting and destabilising. Now that the SFO is doing good work and building on its record of success with LIBOR, with the three deferred prosecution agreements and with the cases against Barclays bank, GSK and others, the one thing that it does not need is to be subjected to further interference. That would be destabilising and cause the employment equivalent of planning blight. Imagine a bright young lawyer in a City firm who thinks that it might be good to go and work for the Serious Fraud Office for a while. It would be, and it is, but if they know that the Government want to pull up the pot plant every 20 minutes and have a look at the roots, the SFO is not going to seem like a very stable place to go and work.

I want to see people from the private sector—the big City firms that have expertise in dealing with corporate crime, mergers and acquisitions and the highly complicated banking law that is sometimes involved—coming to work for the SFO for two or three years. I also want permanent members of the SFO staff to go into the City firms and other banking organisations, so that there is proper cross-fertilisation. What I do not want is for the current Whitehall fascination with sticking things with nice initials into great pots of alphabet soup to destroy David Green’s valuable work or distract him from it. I am proud to say that he is a personal friend of mine; he and his organisation have a proud record of demonstrating to the Government that it is worth every penny it gets and that it ought to get yet more money, so that it can catch more and more villains.

The reputation of our country is to a large extent built upon our financial services industry. Our corporations that sustain that industry—be they banks, be they insurance companies, be they whatever—and the people who work in it need to know that if they step beyond the line of honesty and acceptable behaviour, there is an investigating prosecuting authority that will not only come and get them but will make sure that they are convicted. That is what our constituents want. They want a vibrant financial services industry, but they also want an honest one, which attracts business, taxation and employment to our constituencies, whether they are in East Ham or Harborough.

Mr Owen, thank you for your patience. I hope that my hon. and learned Friend the Solicitor General can give me the reassurance that the SFO is safe from interference and distraction, and that we can look forward to another period of success, and well-funded success, for this most impressive organisation.

[Mark Field (Cities of London and Westminster) (Con)]

In congratulating the right hon. Member for East Ham (Stephen Timms) on securing this overdue debate on the workings of the Serious Fraud Office, I register my concern that the regular reliance of the SFO on special funding facilities from the Treasury lays it open to the charge that it lacks full and proper independence.

As we know, we live in financially straitened times for those agencies that depend on the public purse. Nevertheless, the sight of the SFO repeatedly having to go cap in hand to the Treasury for supplemental income opens up the Government to the potential accusation that they at least have the ability to close down what might be politically sensitive inquiries by the simple expedient of refusing the SFO funding.

I am not suggesting for one moment that the Government are behaving improperly. However, they must see that there is an inherent conflict of interest, which will persist unless and until the SFO’s funding is placed on a more sustainable and arm’s length basis.

[Alex Chalk]

Is it not important in this debate to keep a measure of context as well? The sums of money that we are talking about, while not insignificant, need to be set against a wider context. They are less in total, even including blockbuster funding, than the cost of one joint strike fighter and, given the ability of the SFO to protect British interests at home and abroad, that context is worth considering.

[Mark Field]

My hon. Friend makes a fair point, although in the comparison he draws he also possibly makes a point about the expense of defence procurement.

Those of us of a certain age cannot help but be transported back in time when we learn of the SFO’s requests for so-called blockbuster funding to pay for major investigations. Some Members will know that I am a keen pop music fan, and it is exactly 44 years ago today that the glam rock anthem “Blockbuster” by The Sweet was at No. 1 in the UK charts. Now, I am not sure that the 17-year-old future right hon. Member for East Ham was a great glam rock fan, but I am sure that his hair was fashionably longer back in 1973.

The cost of funding the SFO’s blockbuster investigations now invariably takes the SFO well beyond the Treasury’s year-on-year allocation of funding, as we have heard from other Members. Last year, the SFO’s spending reached some £65 million, which was a 12% uplift on the 2015 figure. Blockbuster funding has been applied for, not on an exceptional basis but for four of the last five years, so presumably that form of funding is here to stay permanently, at least in the eyes of the Solicitor General. I would be interested to hear what he has to say about that.

As my right hon. and learned Friend the Member for Harborough (Sir Edward Garnier) has pointed out, at the end of last year the SFO successfully secured funding to pursue criminal investigations against the Monaco-based Unaoil, which stands accused of securing complex corrupt contracts for a range of multinationals, including Rolls-Royce. I understand that the ongoing investigations over Barclays in Qatar and a range of potential fraud cases involving foreign exchange may yet have to be subject to special blockbuster funding appeals. Although I accept the Government line that that sort of mechanism allows the SFO great flexibility in the allocation of work, I trust that, as large and complex investigations become the norm, a serious re-evaluation of the pros and cons of the funding system for the SFO will be carried out.

I have to say something else, which I know will lead to my parting company with my right hon. and learned Friend in his paean to how wonderful the SFO is: I deeply regret that the reform of the entire workings of the SFO is overdue, and I believe that was yet another missed opportunity for the coalition Administration who were in office between 2010 and 2015.

For my part, as long ago as the autumn of 2009 I wrote two essays for the ConservativeHome website in the immediate aftermath of the financial crisis, setting out what I regarded as a proposed blueprint for the SFO. Then as now, I contend that an effective financial enforcement system requires the promotion of deterrence and competition, in order to boost consumer protection. Even at that time, a year after the financial crisis began, it seemed clear that, despite grandstanding galore from politicians, there was—indeed, there remains—a growing unease at the paucity of substantial change in the aftermath of that crisis.

Nowhere did that feeling resonate more than in the field of enforcement, where the prospect of adopting US-style powers to prosecute alleged wrongdoers in financial services has of course been dashed. Although over the past year or so the SFO has finally secured LIBOR convictions, it is in all honesty a body that I am afraid has long lacked clout and the respect of those who are most engaged in the financial industry.

As the right hon. Member for East Ham has said, the SFO has been operational since 1988 and the Roskill reforms. It is responsible for the detection, investigation and prosecution of serious fraud cases in England, Wales and Northern Ireland. Although it is operationally independent—as it should be—the SFO comes within the remit of the Attorney General and is given the power to bring criminal prosecutions directly. In contrast, the FCA is able to impose civil sanctions and launch criminal cases on matters such as market abuse, working in tandem with the City of London police and the Crown Prosecution Service.

There are some lawyers—perhaps those who are less close to the SFO’s workings—who continue to lament the difficulties associated with securing convictions for fraud, especially given the collapse of a number of highly complex jury trials. For that reason, many people feel that the introduction of a system of plea bargaining similar to that in the USA would not work. No one will risk blowing the whistle or turning themselves in when the likelihood of a successful prosecution being brought is—at least in recent years, as we have seen—so slim.

The SFO’s problems are not necessarily personnel problems; I agree with what was said earlier. However, having spoken to experts in this field, I have come to believe that one of the organisation’s main problems is in finding cases to investigate. Only when the police or the Attorney General have firm cause to believe that a criminal act has occurred is the SFO permitted to get involved. Moreover, when a case does get under way, its prosecutors routinely face months of battling defence lawyers before they can even get to trial. Of course, the defence has a strong incentive to engage in a war of attrition, in order to derail a prosecution on legal technicalities.

As a result, I think we have faced this task of reforming the financial services system and inculcating in the minds of its participants that sense of right and wrong, with an “umpire”—the SFO, in this case—that too often has lacked the tools or the respect from the market to do its job properly. I am not making any personal criticism of David Green, who, while at the helm, has developed a number of improvements to the SFO in the last three or four years.

Instinctively, I support a more robust economic crime policy, which would place the promotion of commercial competition at the heart of a new code of enforcement designed to deter fraudulent, anti-competitive or criminal activity. Such a policy should centre upon a new agency in place of the SFO, which would combine the SFO and the FCA’s enforcement division.

It is perhaps incongruous that the SFO stands under the jurisdiction of the Attorney General, although I very much appreciate that the right hon. Member for East Ham put that arrangement into some sort of historical perspective. Nevertheless, we should now look to place the SFO’s responsibilities within the remit of the Department for Business, Energy and Industrial Strategy, so that the SFO would work alongside the Competition and Markets Authority. By associating consumer protection with fraud and trust-busting, we would give competition its correct place as a central priority in the future commercial landscape.