In the realm of fraud investigation and prosecution, a case involving the UK Serious Fraud Office (SFO) serves as a poignant reminder of the complexities and nuances that surround Deferred Prosecution Agreements (DPAs).

The SFO is currently attempting to enforce against a company for breaching a DPA, the first time this has happened since DPAs – a corporate settlement tool – were introduced in England and Wales.

DPAs allow a corporate entity charged with an economic crime to reach an agreement with a prosecutor and avoid the reputational and financial damage from a conviction. Certain conditions have to be adhered to and the matter is supervised by a judge.

Gürlap Systems Ltd had struck an agreement with the SFO in 2019 over allegations of bribery in South Korea. It has since emerged that the seismic testing company hadn’t paid the cash agreed by the DPA by the time the five-year agreement ended in October last year. The SFO applied to the High Court in November 2024 to have the DPA terminated on the basis that Güralp had breached its payment obligations.

Complex fraud cases

Speaking as a former fraud squad detective, and now Head of Investigations for a globally active law firm specializing in the investigation and litigation of complex fraud cases, I remain puzzled why the SFO appears to be embracing DPAs as a means of effectively clearing its case load.

The SFO seems to be (finally) reinventing itself as a prosecuting agency under the leadership of its latest director, Nick Ephgrave, but it should be investigating and prosecuting those who have been dishonest and acted in a criminal fashion.

I ask the question, therefore: should DPAs remain in the SFO toolbox? To my mind, establishing the difference between an “out-and-out” crook and those who have been negligent is vitally important.

I am not naive enough to suggest that the SFO and the rest of law enforcement can prosecute every fraud and corruption matter that crosses their desk (they can’t). As a former intake officer who regularly met with victims of fraud, I had to decide whether a case was viable and whether our force had the resources to launch an investigation. Far too often I had to disappoint victims.

The two facets that should take precedence here are public interest and political sensitivities.

Indeed, it was often a thankless task. Aggrieved victims would sometimes launch complaints against me, because they felt let down by the system. It was a difficult and at times upsetting position to be in, witnessing first hand the damaging effect that fraud has on individuals.

The SFO is no different. It will not be able to pick up every referral. It must cherry pick cases. In my opinion, the two facets that should take precedence here are public interest and political sensitivities. While the public interest angle is self-explanatory, the political element may not be as clear. Imagine being a police officer investigating a fraud where effectively one arm of a government has somehow defrauded another nation-state. The politics involved means that ordinary officers are vulnerable to the political pressures that can be brought from both sides. This is where the SFO comes into its own.

Should we consider establishing a new and distinct wing of the SFO, which primarily prioritizes DPAs? My concern is that DPAs are diluting the image of the SFO as the UK’s specialist counter-fraud and counter-corruption agency.

Stronger deterrent

If you are masterminding a complex fraud that has devastated victims, you should go to prison. You should not be overseeing your scam, knowing that if the SFO comes calling you can pay a ‘fine’ under a DPA and walk away. To my mind that sends out the wrong signal and diminishes the deterrent.

We once had a saying in the Fraud Squad: if you are going to commit fraud, make it as big and as complex as possible and insert elements such as corporate entities, offshore companies and trusts. The mere mention of a case like this nowadays has the police hiding in their bunkers. There is no way your average police force can touch a case like this.

In effect, if you insert all those elements, you can defraud at your leisure – with no thought to the consequences. These are the cases the SFO was once renowned for tackling.

Regulatory professionals, lawyers, and investigators alike must navigate intricate legal frameworks while maintaining vigilance against corporate malfeasance. The role of DPAs, in this context, remains contentious. While they offer potential benefits, such as avoiding lengthy trials and minimising economic fallout, they also risk diluting the severity of corporate wrongdoing.

I personally see DPAs as a “soft” approach to addressing the problem of fraud. I suspect that if the public understood the context of the process, the system would generate challenges in maintaining public trust.

New approach

This is why I believe that introducing two wings to the SFO may be the way forward. Fire-walling the criminal investigation team of the SFO from any DPA wing would make sense to me. I firmly believe that criminal prosecution, jail and subsequent proceeds of crime confiscation hearings remain the only real deterrent that makes rich fraudsters think twice.

In conclusion, while DPAs offer a pragmatic mechanism for resolving complex fraud cases, their application must be considered within the context of public interest. But public interest is not limited to financial considerations in terms of investigative costs. Sometimes law enforcement has to bite the bullet and commit to doing the right thing. This means putting those who deserve it behind bars and stripping them of their illicit gains, regardless of how inconvenient this may be to law enforcement.

Tony McClements is Head of Investigations at BVI asset recovery law firm MKS Law.