On 26 April the agency’s trial into two former executives of Serco Geografix Limited (Serco) for hiding £12m in profits collapsed following the Serious Fraud Office’s (SFO) failure to disclose evidence to the defendants.
SFO Investigation | Rosenblatt’s Financial Crime Team
The SFO offered no evidence against Nicholas Woods and Simon Marshall forcing the Judge at Southwark Crown Court to instruct jurors to return a verdict of not guilty.
The two individuals, who were former directors of Serco, being Serco Limited’s UK subsidiary, were charged with using fraud and false accounting to artificially reduce Serco’s profits on a contract for the electronic monitoring of offenders on behalf of the Ministry of Justice (MoJ).
The decision to acquit follows the prosecution’s review into its disclosure process for the trial which uncovered errors with regard the non-disclosure of certain documents. The SFO requested an adjournment to remedy the position allowing it to pursue a retrial but this was rejected by the Judge, Mrs Justice Tipples. Justice Tibbles told jurors on Monday that the SFO took the view that issues identified had “undermined the process of disclosure in this case to the extent that the trial cannot safely and fairly proceed”.
This brings an end to the SFO’s investigation launched in October 2013, which saw Serco hit with a fine of £19.2m in 2019 as part of a Deferred Prosecution Agreement (DPA). It was the SFO’s case that between October 2010 and September 2012 Serco allegedly reduced its apparent profits from £27m to £15m concealing an extra £12m. A condition of this DPA required Serco to take responsibility for three offences of fraud and two of false accounting arising from the scheme to dishonestly mislead the MoJ. This payment is in addition to the £12.8m compensation that Serco paid to the MoJ as part of a £70m civil settlement made in 2013.
Following his acquittal Simon Marshall stated the DPA which was agreed between Serco and the SFO was “no doubt convenient” for the company and the government, but “did not reflect the reality of what occurred”. He added that, “it is clear to me that I was prosecuted, not as a result of a fair assessment of the evidence, but because I was collateral damage in the deal that was done by Serco with the SFO.”
This decision will likely heighten scrutiny of DPAs, an instrument introduced in 2014 to mirror similar deals used regularly by US authorities. The SFO has made numerous DPAs with large companies, including separate deals with Tesco, Rolls-Royce, and Airbus. However, 11 individuals charged in cases which involved DPAs have been acquitted.
Rosenblatt can help
Rosenblatt has a wealth of experience in financial crime and is uniquely placed to support clients’ that are the subject of a Serious Fraud Office investigation and prosecution having being involved in high profile investigations into a global pharmaceuticals company, a multi-million pound affordable property investment scheme, a multi-million pound pension fraud scheme and a world leading global security company.
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