Collapse of fraud case triggers demand for overhaul of UK disclosure rules

It was a humiliating moment for the UK’s anti-fraud agency. More than a year after three men accused of defrauding the government were due to stand trial, the prosecution barrister appeared at the Old Bailey empty-handed.

Crispin Aylett KC entered no evidence against Richard Morris, James Jardine and Mark Preston, former executives at the security company G4S who had been accused of cheating the taxpayer over a prisoner-tagging contract.

After almost a decade of work, spiralling costs and prolonged delays forced the Serious Fraud Office to abandon its case. Aylett said it was no longer in the “public interest” to continue, given the time and resources required. Each man was acquitted.

The collapse of the case in early March has prompted lawyers and anti-corruption campaigners to join the SFO in demanding an overhaul of the disclosure laws that underpin the complex and serious criminal trials it prosecutes in England and Wales.

Last month, a report by the Institute of Economic Affairs think-tank found the SFO was “responsible for a series of expensive and high-profile failed prosecutions”, which demonstrated “the need for reform”.

The SFO denied having a record of failure, pointing to 29 convictions over the past five years. The agency said it had “successfully prosecuted seven people for fraud and one for bribery across five cases worth over £500mn” in the last financial year alone, and “recovered over £100mn worth of proceeds of crime on behalf of the taxpayer”.

However, the agency has previously advocated for overhauling the current legislation on disclosure.

The agency’s outgoing director Lisa Osofsky has repeatedly asked the government to change what the agency claims are unmanageable rules of engagement over how prosecutors share evidence with the defence.

Disclosure has been under scrutiny by the Crown Prosecution Service for more than a decade. A series of high-profile criminal prosecutions — particularly in rape and sexual offences cases — before 2018 collapsed due to evidence disclosure problems, leading to a new national improvement plan.

A revised version of the CPIA Code of Practice and the Attorney General’s Guidelines on Disclosure was published in 2020, with the latter updated in May 2022, marking progress in how cases were handled, according to barristers.

But the collapse of two-high profile SFO cases and three quashed convictions in the past two years have galvanised calls for reform, while the sharp rise in the scale of economic fraud, in part driven by criminals moving online, has added fresh impetus.

In its new economic crime plan published on March 30, the government said it would “re-examine what can be done to make the disclosure process more manageable in the digital age”.

The Criminal Procedure and Investigations Act 1996 requires prosecutors to share with the defence any material that might assist the defendant’s case or undermine the prosecution. But the SFO has highlighted how the need to handle large amounts of digital data can be overwhelming.

Cases involving complex economic crime can rely on millions of pieces of electronic evidence. In a speech last year Osofsky said the material in a standard hearing could “fill up 22 London buses”. She also called for reforms to “level the playing field, incentivising the defence to engage with us sooner”.

She said the agency needed to “focus on the key issues in a case much earlier and avoid pursuing unnecessary inquiries or reviewing and scheduling large volumes of material that is of marginal relevance”.

Defence lawyers are wary of any move to chip away at the SFO’s obligations. But a growing number are arguing that they should be given the “keys to the warehouse”, or access to the available evidence in a case.

Ross Dixon, a partner at Hickman & Rose who represented one of the G4S defendants, said “passing to [the defence] the responsibility and burden of identifying what is relevant [would] result in a far greater likelihood of a fair and just outcome”. 

Critics of this regime, which existed pre-1996, say it would place an undue burden on defendants, particularly those without the funds to pay expensive law firms.

Lloyd Firth, a lawyer at WilmerHale, said: “There is a general consensus that something needs to change in the criminal disclosure exercise as currently conducted by the SFO, particularly in light of recent high-profile failings.” He suggested a “compromise solution” could be to offer defendants, at pre-trial stage, the choice to elect whether they wanted “the keys”.

Such “high-profile” cases include that against Serco, thrown out in 2021 after the agency failed to hand crucial material to the defence. Serco — like G4S — had admitted to defrauding the government over the prisoner-tagging contract, as part of a deferred prosecution agreement.

Three convictions were also unwound between 2021 and 2022 after the SFO’s sprawling probe into oil and gas consultancy Unaoil ended in scandal, partly due to disclosure issues.

Critics have pointed out that in that case, the SFO was found to have deliberately withheld material which had “potential to embarrass” the agency, meaning its decision-making, not the rules, were to blame.

Campaigners have proposed one solution short of legal change — better resourcing. The SFO’s ultimate responsibility for disclosure falls on a “disclosure officer”, who is often a junior or temporary member of staff.

Susan Hawley, executive director at anti-corruption group Spotlight on Corruption, said: “Much-needed reform will only be effective if the SFO is better resourced to invest in its internal disclosure capacity, to pay external counsel higher rates and to attract top talent for the task.”

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