Libor Verdicts Might Not Save SFO as May Becomes Prime Minister

  • Home Secretary proposed merging SFO with National Crime Agency
  • Convictions may strengthen Serious Fraud Office reputation

The U.K. Serious Fraud Office may have secured more headline-grabbing convictions last week, but its future remains uncertain as the politician who once tried to shut the agency down becomes Prime Minister.

As Home Secretary, Theresa May suggested rolling the white-collar crime prosecutor into the three-year-old National Crime Agency. Only opposition from other cabinet members kept her from closing the embattled agency years ago, said Andrew Katzen, a lawyer at Hickman & Rose in London.

“May has been doggedly pursuing the SFO, trying to bring it under the umbrella of her FBI-style National Crime Agency,” Katzen said. “If SFO director David Green is not worrying about his future, he should be. The new PM will be inheriting an enormous budget deficit and the NCA is simply cheaper to run than the SFO.”

May’s sole opposition for the post of Conservative Party leader dropped out at the start of the week, and she will become Prime Minister Wednesday. Her ascension comes only a week after the 28-year-old SFO scored one of its most important victories when a London court sentenced four former Barclays Plc traders to as much as 6 1/2 years in prison for rigging the London interbank offered rate.

Buying Time

“The government’s review of the overall law enforcement response to bribery and corruption is ongoing," and recommendations are currently being considered by ministers, the Home Office said in a statement. The SFO declined to comment specifically on recent developments.

The verdicts, along with May’s bigger priorities negotiating the country’s exit from the European Union, will likely buy the SFO more time, said Patrick Rappo, the agency’s former head of bribery and corruption.

“In general terms, both the SFO and David Green have been given a two-year extension,” said Rappo, who now works at law firm Steptoe and Johnson. “She will have a lot on her plate with disentangling the U.K. from Europe or pursuing a mandate from a general election.”

The NCA was founded almost three years ago under May’s leadership at the Home Office, and its responsibilities have expanded. The NCA -- often dubbed “Britain’s FBI” -- employs over 4,000 and is responsible for serious criminal activity across the country, with the power to direct various lower-ranking law enforcement agencies.

Independence, Focus

A merger may compromise the SFO’s focus and independence because of the larger command structure of the crime agency, according to a blog by Emma Brooks, a senior solicitor specializing in corporate fraud, white collar crime and regulatory work at Byrne and Partners.

Before recording courtroom victories in a pair of Libor cases -- including the conviction of former UBS Group AG Tom Hayes trader last year, the SFO had a checkered past. The agency had been criticized for botching high-profile cases, including an investigation into property tycoons Robert and Vincent Tchenguiz and failing to pursue a case against the London unit of Bernard Madoff.

Green took over the SFO in 2012 and has slowly righted the ship with the Libor verdicts and a successful prosecution of a former hedge-fund boss -- which his predecessor had dropped. He was given a two-year contract extension in February.

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