Collapse of UK fraud office case raises resource, disclosure issues

FILE PHOTO: Flags fly outside HMP Birmingham after the British government took over its running from G4S, in Birmingham

By Sam Tobin

LONDON (Reuters) - The collapse of Britain's Serious Fraud Office's prosecution of three former executives at security company G4S on Friday raises serious questions about the agency's resources and criminal disclosure rules, lawyers and campaigners said.

Three ex-employees of G4S subsidiary G4S Care and Justice Services were formally acquitted at London's Old Bailey of seven charges for allegedly defrauding the British government between 2009 and 2012 over an electronic tagging contract.

Former managing director Richard Morris, 47, ex-commercial director Mark Preston, 51, and former finance manager James Jardine, 41, had denied all of the charges.

The Serious Fraud Office's (SFO) lawyer Crispin Aylett told Judge Jeremy Johnson: "While the prosecution considers that there remains a realistic prospect of a conviction against each defendant, we have come to the conclusion that it is no longer in the public interest to proceed with this case."

Jardine's lawyer Jonathan Pickworth told reporters outside court: "I think it's a lazy justification for the SFO's own failings."

Morris said in a statement: "From the outset, the allegations against me were plainly wrong. That it has taken 10 years for the SFO to acknowledge as much is a scandal."

The collapse of the case is the latest high-profile failure for the SFO, which has faced criticism in recent years over repeated issues with disclosing key documents to defendants.

Susan Hawley, executive director of campaign group Spotlight on Corruption, said the failed prosecution "has to be a real wake-up call to the government to get a judge-led review of the disclosure regime".

"Antiquated disclosure rules and serious resourcing issues at the SFO are essentially making it impossible for the agency to do its job properly," she added.


Friday's collapse marks the third time in five years that the SFO has failed to make fraud charges stick against individual employees having reached a deferred prosecution agreement (DPA) with a company.

Two former directors of Britain's biggest retailer Tesco were acquitted of fraud and false accounting in 2018, less than two years after Tesco paid a 129 million pound ($154.57 million) fine.

In 2019, a division of Serco – one of Britain's largest government contractors – agreed to pay a 19.2 million pound fine to draw a line under a long-running scandal over how it billed for electronic tagging contracts.

The prosecution of two former Serco executives was thrown out of court in 2021, also in relation to the SFO’s failure to disclose certain documents to the defence.

With G4S Care and Justice Services, the SFO reached a DPA – a time-limited agreement not to prosecute a company in exchange for a financial penalty and remedial action – in 2020, under which the company agreed to pay a fine of 38.5 million pounds ($46.1 million).

However, despite a nearly decade-long investigation, the SFO was unable to bring the case against Morris, Preston and Jardine to trial – due to what another of Jardine's lawyers Joanna Dimmock described as "a litany of disclosure disasters".

SFO director Lisa Osofsky called for reform of disclosure rules in a speech last September, saying the current rules were "designed before the advent of mass digital data".

Osofsky said the SFO often has to sift through millions of documents for a single investigation, yet the current disclosure regime "still demands manual review and description of documents" which can take years.

"More investment is needed," she added.

Morris’ lawyer Ross Dixon said in a statement on Friday: "As in the cases of Tesco and Serco, this DPA was based on the alleged wrongdoing of individuals, but the narrative on which the DPA was based has failed to stand up to scrutiny."

Morris himself said: "I am of course pleased to be vindicated, but no one should have to go through such an ordeal. Without significant changes to the DPA regime and the SFO, I fear they will."

($1 = 0.8346 pounds)

(Reporting by Sam Tobin, Editing by William James, Sharon Singleton and Susan Fenton)