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Insights
02/12/2024
Nick Ephgrave, the SFO’s ninth director, appointed in September 2023, has been clear since starting the role that he considers working with both ‘innocent’ whistleblowers and with offenders willing to assist investigations to be an obvious solution to the slow progress of SFO investigations. The SFO’s five-year strategy published in April 2024 pledged to ‘explore incentivisation options for whistle-blowers’.[1] In an article with the Guardian published in October 2024, Ephgrave reiterated again that he was willing to recommend lesser sentences for those who cooperate and, in rare cases, offer full immunity; indeed he wanted to go further and emulate schemes in the United States by providing financial incentives to assisting offenders. [2]
The statutory framework governing such mechanisms was established in the Serious Organised Crime and Police Act (SOCPA) 2005 and has since been repealed in part and replaced with sections of the Sentencing Act (SA) 2020.
Section 71 of SOCPA created the possibility of full immunity from prosecution, with the offender provided with a notice seeing out from which offences the offender would have immunity and on what conditions.[3] In deciding whether to make such an undertaking the Attorney General outlined the following criteria: that the prosecutor must be satisfied it is in the interests of justice for this individual to be a witness rather than a co-defendant; that, in the interests of public safety and security, it is more important to secure the information than the prosecution of this individual; and that the prosecutor must consider whether the information could be acquired without the assisting offender and consider the likelihood of a successful prosecution against them.[4]
Other statutory provisions allow the Crown to undertake not to serve certain evidence against an individual (section 72 SOCPA) and to make disclosure to a sentencing court either before or after sentence about information provided by an assisting offender with a view to a reduction in sentence (sections 74 and 388 of the Sentencing Act). It should be noted however that in relation to sentence, the level of any reduction in sentence remains a matter for the court. In terms of financial incentives, there are currently limited schemes offering a positive reward for whistleblowing in the UK. The Competitions and Markets authority (CMA)
offers a discretionary award for those reporting cartel activity[5] as does HMRC for those who report tax fraud.[6]
Since their introduction, these schemes have been used in limited circumstances.
The SFO have refused numerous freedom of information requests to publish the number of instances in which these powers have been used and so no figures have been published since 2014.[7] As the SFO prosecutes only a small number of large cases, it has taken the view that disclosure of this information might be lead to the jigsaw identification of individuals who had provided assistance.
The CPS however have published their use annually: between 1st May 2022 and 30th April 2023 the CPS made 1 full immunity undertaking, no undertakings not to serve evidence, 7 disclosures of assistance for the purpose of sentence reduction pursuant to s.73 of SOCPA or s.74 of the SA, and 1 application for review of the sentence: a total of 9 such undertakings, representing the highest since 2018, but still a modest number.[8] It is unclear from these statistics whether the use of these mechanisms resulted in charges being brought and ultimately convictions. It is therefore difficult to determine whether this mechanism leads to useful and admissible evidence being adduced.
The amount paid out by HMRC for reports of tax fraud have almost doubled in 2023/24 in comparison to 2022/23 in an effort to fill the gap between tax the treasury expects and what it receives (£39.8 billion). However, the amount is still extremely limited: only £978,256 was paid in comparison to the 151,763 tip-offs it received.[9] As before, more accurate analysis of whether such financial incentives actually work would require determination of how many successful investigations, resulting in criminal charges and convictions, civil recovery or out of court settlement, materialise from financially rewarded tip offs. Since 2017 when the CMA first started offering such rewards, the number of reports has significantly decreased: in 2017 they received 1,442 which declined to 427 in 2022.[10] In 2023, in an effort to boost the number of reports, the CMA increased the potential reward for information from £100,000 to £250,000.
Financial incentives outside the CMA’s and HMRC’s schemes do not exist. In fact, the CPS guidance specifically instructs that no undertaking under the statutory scheme should allow the offender to avoid confiscation or civil recovery proceedings, as it would be tantamount to paying an offender for their evidence.
Does the limited use of financial incentives and immunity simply reflect old-fashioned and overly cautious attitudes of prosecuting bodies and advisers to offenders? Or do the risks of their gains outweigh the potential benefits?
For those advising individual offenders, advising them to positively assist an investigation carries obvious risks. Whilst the SFO is keen to emphasise that self-reporting by potential corporate offenders may militate in favour of non-prosecution options, co-operating individuals are more exposed. The undertakings specify for which offences the offender is immune from prosecution and require full admissions; there is always a risk that further criminality, outside of that envisaged by the undertaking, is uncovered in the course of the investigation.
Some defendants may have in mind the fate of Nigel Snee, an assisting offender whose co-accused were ultimately all acquitted after trial, although Mr Snee did receive a 75% discount on his sentence.[11] It should also be noted that an offender who only self-reports once the investigation is underway has already significantly undermined their evidence at any eventual trial diminishing the possibility of the prosecuting authority offering an undertaking.
If an assisting offender is unable to satisfy the criteria for full immunity, which few are able to do, then they will have no guarantee of the sentence they will receive under the statutory regime. Although the authorities suggest that one can be confident of a significant discount, a defendant will not necessarily avoid immediate imprisonment. The Court of Appeal in R v Ford [2011] EWCA Crim 1824 noted that there is no automatic rule that a particular percentage discount will apply in ever case in which assistance is given, and that it will be for sentencing court to assess the level of co-operation.
For prosecuting bodies there are also significant reasons not to use such a strategy. An undertaking of immunity should only be made if it is deemed to be in the interests of justice that the offender be a witness rather than a co-defendant: a prosecutor must assess whether on the facts of the case it is right for someone to avoid justice or receive a lesser sentence by outing their co-conspirators. It requires an assessment of their culpability: which is a difficult task at an early stage of the investigation and when one is reliant upon the self-reporting of the assisting offender. The risk of misjudging it is two- fold: public perception that justice can be bargained for if not actually bought; and the potential acquittal of co-defendants by a jury offended by the inconsistent treatment of the different offenders and/or mistrust of the star witness.
Enthusiasm for this mechanism seems to be on the basis that it speeds up investigations. If the investigation is to comply with its disclosure obligations by determining the credibility of the assisting offender, and to provide the independent evidence required to support the assisting offender’s account, the review of large volumes of material cannot be circumvented. The assisting offender’s dealings with the investigative authorities generates more material that will likely fall to be disclosed.
If in the detail of the paperwork trail there is the evidence to prove these offences, why rely on a witness who will inevitably be painted as wholly self-serving?
Before presuming that such schemes are a golden bullet for large scale investigations, it is submitted that prosecuting authorities should carry out a careful analysis of their success: has the review of any material actually been avoided by their use? What is the resulting rate of charge and conviction for cases using assisting offenders as opposed to matters charged purely on documentation? It may be that a problem that is ultimately one of resources can only be solved by further resources. Better resourced and more effective ‘traditional’ fraud prosecutions might provide sufficient deterrent to offenders that the need for their assistance at the stage of a trial falls away.
[1] https://www.sfo.gov.uk/2024/04/18/serious-fraud-office-strategy-2024-2029/
[2] https://www.theguardian.com/law/2024/oct/22/i-can-grant-immunity-from-prosecution-uks-chief-fraudbuster-on-modernising-the-sfo
[3] https://www.legislation.gov.uk/ukpga/2005/15/section/71
[4] https://www.cps.gov.uk/legal-guidance/assisting-offenders-immunity-undertakings-and-agreements
[5] https://www.gov.uk/government/publications/cartels-informant-rewards-policy/rewards-for-information-about-cartels#:~:text=The%20CMA%20offers%20financial%20rewards%20of%20up%20to%20%C2%A3250%2C000,the%20guidance%20set%20out%20here.
[6] https://bmmagazine.co.uk/legal/hmrc-doubles-payouts-to-tax-whistleblowers-amid-calls-for-larger-rewards/#:~:text=HM%20Revenue%20%26%20Customs%20(HMRC),%C2%A3508%2C500%20the%20previous%20year.
[7] https://corkerbinning.com/socpa-immunity-leniency-and-white-collar-criminals/#_ftn5
[8] https://www.cps.gov.uk/information-agreements-made-under-sections-71-74-socpa-2005-and-sentencing-act-2020
[9] https://bmmagazine.co.uk/legal/hmrc-doubles-payouts-to-tax-whistleblowers-amid-calls-for-larger-rewards/#:~:text=HM%20Revenue%20%26%20Customs%20(HMRC),%C2%A3508%2C500%20the%20previous%20year.
[10] https://www.rpclegal.com/press-and-media/whistleblowing-on-illegal-cartels-drops-70-percent-in-5-years/
[11] https://www.gov.uk/government/speeches/stephen-blake-on-the-uk-steel-tanks-criminal-cartel-case
Call: 2019
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