An interview with Robert Wardle, Director of the U.K.'s Serious Fraud Office

Robert Wardle, director of the UK's Serious Fraud Office, tackles not only the toughest cases but lengthy trials and mounds of evidence. A veteran of the SFO, he juggles it with aplomb. 

Robert Wardle's success often places him in a quandary. The UK's Serious Fraud Office (SFO), which he directs, tackles only the most complex and difficult cases. And since the Office's inception in 1988, it enjoys an 84 percent conviction rate. But those cases often guarantee lengthy trials, expensive costs, and sometimes confused juries. Wardle is determined to solve that problem and bring the worst UK fraudsters to trial.

"There is a real risk that (the SFO cases) become unmanageable because of the amount of evidence we are forced to bring," Wardle said in a recent interview with Fraud Magazine. "We need to look at ways of reducing their length and focusing on the real issues," he said. Electronic presentation of evidence in court simplifies and speeds up trials, he said, and some cases should be tried without juries. "There will be some cases which simply are too burdensome for a jury," he said. "Too often we have seen relevant evidence excluded in order to make a case manageable and that is unfair."

Wardle has seen hundreds of serious fraud cases - manageable and otherwise. He began working at the SFO when it was first established under the UK's Criminal Justice Act of 1987. Wardle, a solicitor, began as a case controller and worked his way up to assistant director in 1992. From 1996 to 2000 he was head of the policy division with responsibility for liaison with Whitehall (center for governmental departments), regulators, the legal professions and the police, and for dealing with all policy matters including proposed legislation. In October of 2000, he moved to an operational division with overall responsibility for about 30 cases and for vetting cases referred to the SFO. He was appointed SFO director in December of 2002 and assumed office in April of 2003.

Wardle spoke to Fraud Magazine from his office in London.

What precipitated the inception of the Serious Fraud Office?
The Serious Fraud Office was set up in 1987 in response to the Report of the Fraud Trials Committee (Roskill) which recommended amongst other things a multidisciplinary organisation combining lawyers, police, and accountants to tackle fraud.

As director, what are your main duties and your mission?
As director I am an Independent Statutory Officer Holder acting under the superintendence of the attorney general. I have to decide which cases referred to the Office should be accepted for investigation and those that do I supervise their progress. In some cases I take the decision whether or not to bring a prosecution after the investigation has been completed. I am also responsible for the SFO's budget and account to Parliament for its expenditure.

Can you briefly describe the SFO's organizational structure?
The SFO is divided into five operational divisions consisting of lawyers, accountants, financial investigators as well as support staff. Each is headed by an experienced lawyer and for each case we form a team headed by a case controller who will be responsible both for the investigation and prosecution. In addition we have a central computer forensic unit, a graphics unit, press office, policy division and exhibits handling store as well as corporate services.

What are the main factors considered when deciding if the SFO will consider a case?
The overriding criterion when deciding if the SFO will consider a case is that the direction of the investigation should be by those responsible for any subsequent prosecution. The factors we take into account when deciding include:

1. Cases in the order of at least £1 million (this is simply an objective and recognisable signpost of seriousness and likely public concern rather than the main indicator of suitability).
2. Cases likely to give rise to national publicity and widespread public concern. These include those involving government departments, public bodies, the governments of other countries and commercial cases of public interest.
3. Cases requiring a highly specialised knowledge of, for example, stock exchange practices or regulated markets.
4. Cases in which there is a significant international dimension.
5. Cases where legal, accountancy and investigative skills need to be brought together.
6. Cases which appear to be complex and in which the use of Section 2 powers might be appropriate.

Who refers cases to the SFO? Can a citizen refer a case?
Cases are referred by the police, government departments, regulators (including the Financial Services Authority and Law Society), other professionals who come across instances of fraud, for example liquidators or solicitors, as well as private individuals. All cases are carefully examined to see whether they come within our criteria and whether the public interest requires that they should be investigated with a view to prosecution.

As I understand it, the SFO not only decides which cases it will take but then investigates and prosecutes them, ostensibly, without having to necessarily depend on other governmental entities. Is that correct, and if so, can you elaborate a bit?
The SFO normally investigates in conjunction with the police although in recent years the ability of some forces to tackle fraud has diminished as other priorities have to be addressed. However, the City of London Police now acts as a lead force in London and the Southeast and I work increasingly closely with the commissioner, Dr. James Hart.

There have been occasions where we have investigated or prosecuted in conjunction with the Inland Revenue or HM Customs & Excise.

Once you decide on a particular case to investigate how do you form a case team? Who are the participants and how does the investigation proceed?
The case team is formed from the members of the division to which it is allocated. The case controller is always an experienced lawyer who will be responsible for prosecuting it. There will always be a senior financial investigator - often a qualified accountant - on the team together with other financial investigators of various seniority. Sometimes there will be an investigating lawyer; usually there will be police officers attached to the team and there will be a case secretary responsible for maintaining the papers. Sometimes, especially in a large case, we will bring in outside accountants from those firms who have forensic departments - or we may hire individuals through agencies or companies. These will include, for example, former police officers. The team will draw up an investigation plan and will meet regularly - usually at least once a month - to review progress. The investigation plan will be reviewed and, if necessary, amended to take into account where the investigation is going. Our aim is to concentrate on the key players, to complete the investigation as quickly as possible, and to produce a prosecutable case in court. All meetings are minuted and the minutes are seen both by the assistant director and by myself and I will attend some of the major case conferences myself.

I know that the SFO takes 20 to 30 new cases per year and has about 80 cases under investigation at any one time. How closely are you involved in investigations?
My involvement in investigations will vary from case to case. Although all our cases are large and difficult - they would not come to us if they were not - some are larger and more difficult than others and it is my job to try and make sure they continue to go in the right direction.

In the past, say, five years have you seen a pattern in particular types of serious frauds? Are there some that are increasing more than others? What is the percentage of cases successfully prosecuted?
It is difficult to point to trends when we take on so comparatively small a number. Criminalising certain forms of cartel activity as well as extending jurisdiction in cases of overseas corruption have broadened the type of case we would see. We still see traditional cases - for example, high-yield investment frauds or advanced fee frauds, offences arising out of company liquidations and market abuse. Probably one of the biggest growth areas although not one which very often comes to us has been exploitation of new technology - for example phishing, attacks on automated teller machine and identify theft. What I think we can say is that the incidents of fraud are not decreasing. I would certainly like to see research carried out to try and establish better figures on the amount of and the impact of fraud in the United Kingdom and we are working with the city police and the Financial Services Authority to achieve this.

Which cases were you particularly satisfied with?
The cases I have been most satisfied with are those where we have managed to get the case in front of the court, before a jury, explained it to them in a comprehensible way and the jury have come to what appear to be rationale decisions.

Which cases were notably frustrating?
The most frustrating cases are those where we have been unable to obtain the evidence, particularly from overseas, or where delay in obtaining it has meant that we have been unable to prosecute.

In what ways do you work with your counterparts in other countries to hasten SFO cases?
We work very closely with our counterparts in other countries and have excellent relationships with judicial and prosecuting authorities. We are able to use our powers under Section 2 Criminal Justice Act 1987 by which we can require individuals to answer questions or furnish information and individuals and companies to produce documents on behalf of overseas authorities for an investigation they are carrying out into an offence of serious or complex fraud.

In the past you've mentioned a common lament among UK police fraud units - that frauds have to be put on the back burner when a crime like murder occurs and fraud investigators have to be reassigned. The SFO has received more funding in the past few years to help alleviate this problem. Do you see more being allocated for personnel and investigations?
Our funding has increased over the last two years and we are putting the additional resources into more staff as well as technology to enable the staff we have to do their work better, quicker, and more effectively. This is vital if we are to exploit our arrangements with the City of London Police Economic Crime Bureau. We intend to co-locate with them; although finding suitable accommodation has proved less than easy. We have, of course, always worked with the City of London Police ever since the Office became operational in 1988. Expanding their role to act as a lead force in London and the Southeast recognised a number of changes that had occurred. For example, a lot of financial institutions had moved out of the Square Mile to Docklands (both areas of London - ed.). Other forces were unable to devote resources to fraud because of other responsibilities. The City of London Police is the only force that has fraud as a priority. Interdepartmental committees had looked at improving the response to fraud and one of the options was a Lead Force. In discussions with Commissioner James Hart and Detective Chief Superintendent Ken Farrow, who heads the City of London Police Economic Crime Bureau, we worked together to secure additional funding in order to make the vision possible. Eventually we may see a National Fraud Squad although I think it more likely that we could develop the concept of Lead Forces throughout the country to ensure that there is a regional capability and expertise available for these cases.

Are investigators in the SFO and in other fraud-fighting entities being encouraged to become CFEs and/or attend conferences of the Association of Certified Fraud Examiners? Have you seen how UK fraud examiners benefit from ACFE training?
There is a need to develop greater expertise in investigating fraud both in the private and public sector. We support investigators in taking a range of professional training, principally as accountants but we also support other courses such as post-graduate certificate courses in fraud management, Asset Recovery Agency accreditation, etc. Some of our case workers are members of the ACFE but we don't promote any particular course of study or membership outside the accountancy institutes.

What are other ways can the judicial system hasten the fraud prosecution process?
As to trying the cases we deal with there is a real risk that they become unmanageable because of the amount of evidence we are forced to bring. We need to look at ways of reducing their length and focusing on the real issues - whether the defendant has behaved dishonestly. Recently guidance has been handed down by the Lord Chief Justice on how these trials should be approached and it is vital that judges actively manage the case and don't let it get out of control. But there will be some cases which simply are too burdensome for a jury. Too often we have seen relevant evidence excluded in order to make a case manageable and that is unfair.

We find that using electronic presentation of evidence consistently saves time at trial and we are working energetically with the Court Service and with other prosecutors to promote such systems.

You've also pushed for trials without juries to speed up proceedings. The 2003 Criminal Justice Act provided for jury-free trials but reportedly is so controversial that it won't be enforced until further debate. What's the status on that?
The government has announced that it intends to implement the 2003 Criminal Justice Act by asking for affirmative resolutions of both Houses of Parliament.

In interviews and speeches you've talked of offering fraudsters a "discount" for admitting their role, helping to retrieve the stolen money, and divulging conspirators. How far have you gotten with that proposal?
You talk about offering fraudsters discounts for guilty pleas. This is perfectly normal and a recent case in the Court of Appeal has changed the law so that judges can give indications of what sentence they would impose. I think that will be very helpful in persuading people to plead guilty, when they are guilty, and I think they should be given credit if they cooperate in recovering the money that has been lost.

Can you explain the SFO's DOCMAN system and how it assists investigations?
Docman is simply an evidence management system which scans the material we obtain either from searches or using our powers under Section 2 Criminal Justice Act or voluntarily so that we can make it available to investigators, on their screens, much more quickly than if it was in paper form. It enables them to search the material much more effectively. It enables the prosecutors to access it much more quickly and effectively and eventually it enables the court to have the material presented electronically. Electronic presentation of evidence is vital if our cases are going to be made comprehensible and our graphics unit is second to none in the way it produces explanatory material. Indeed, they frequently help in cases outside the SFO where their skills are highly thought of.

Are there any developments on the Fraud Bill, which would introduce offences of "fraud" and "obtaining services dishonestly"? What are your thoughts on the bill?
The Fraud Bill is before Parliament. I greatly welcome this since it will simplify the law and concentrate on the dishonesty in the conduct rather than the technicality of the conduct. For example, a person who dishonestly makes a false representation, or who fails to disclose information, which he is under a duty to disclose or abuses a position, ought to be the subject of the criminal process and courts should be concentrating on those factors rather than, for example, whether a chose in action has been created or extinguished. The Fraud Bill has been presented to Parliament as part of the government's legislative programme and I hope it will be passed into law. It ought to catch those responsible for identity theft.

Beside the obvious loss of money (which is probably indeterminable) what are the other costs of unreported and unpunished fraud in the UK?
It reduces faith in the financial services industry which is critically important to the UK economy.

Can you describe how the powers under Section 2 of the 1987 Criminal Justice Act help the SFO?
We could not operate without these powers which enable us to override the duty of confidentiality owed by solicitors, lawyers, and banks to their customers.

What are the provisions of the UK's Criminal Justice Act 2003 that are helping the SFO?
The Act has not yet been in force long enough to see the benefit in SFO cases, which are, by their nature, long running.

Though the UK has had a number of large fraud cases it hasn't yet experienced an Enron, WorldCom, or Parmalat. Why do you think that is?
We prosecuted the Bank of Credit and Commerce International, which was comparable. It is probably coincidence that of the three cited two were in the U.S. and one in Italy.

What does the SFO do right? How does it need to improve?
The SFO obtains convictions in the most difficult fraud cases which, in our absence, would probably not be investigated let alone tried.

I have set a clear strategy for the SFO to reduce the time taken for investigations and for trials; that is the key area for improvement at present.

Dick Carozza is the editor of Fraud Magazine.

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