Bloomberg Businessweek - USA (2019-11-18)

◼ FINANCE Bloomberg Businessweek November 18, 2019

Aboutsevenyearsago,theU.K.agencysetupto

prosecuteerrantexecutivesandpubliclytradedcom-

paniesstartedtakingonsomemeatycases.TheSerious

FraudOfficeinvestigatedeverythingfromderivative

traderstotopbrassat blue-chipdarlingsBarclaysPlc

andenginemakerRolls-RoyceHoldingsPlc.

Nowsomeacademics,anticorruptionactivists,

andlawyersarewonderingwhethertheSFO’szeal

forthebiggestcaseshaswanedoverthepasttwo

years.“It’sfocusingonsmallcases,andyou’releft

asking,‘Whereis theambition?’” saysSusanHawley,

executivedirectorofSpotlightonCorruption,a trans-

parencygroup.“Itfeelsa bitlikeit’slostitsmojo.”

TheconcerngoesbeyondtheSFOtootherinves-

tigativeagenciesandprosecutors.Inoneofthe

SFO’smostsensitivecases—involvingallegationsof

bribestoSaudiroyalsbyemployeesofa military

contractor—theattorneygeneralhasyettoapprove

chargesorrejectthemaftertwoyears.White-collar

crimeenforcementintheU.K.is “atotaldisaster,”

saysBillBrowder,a London-basedhedgefundman-

agerturnedanticorruptioncampaigner.“Thisis

thebestcityintheworldtoliveinif you’rea white-

collarcriminal,becauseyou’llneverbeprosecuted.”

A turningpointfortheSFOcamein2017,when

then-PrimeMinisterTheresaMaymadeanelection

pledgetofoldtheSFOintothebroaderNationalCrime

Agency.Sheultimatelydidn’tdothat,butwiththe

office’sfutureunderreview,theU.K.’sattorneygen-

eraldelayedreplacingtheoutgoingdirector.

Inthespringof2018,seniorstaffapproachedthe

interimheadoftheSFO,proposingitinvestigate

commoditiestraderGlencorePlcforallegedcor-

ruptioninCongo.Glencorewasthebiggest-ever ini-

tial listing on London’s stock exchange, so it would

make sense for a U.K. agency to take it on. The SFO

decided to leave the case to the U.S. Department of

Justice. Glencore has said it’s cooperating.

That was the environment Lisa Osofsky stepped

intowhenshestartedasdirectoroftheSFOinlate

August2018.Osofsky’srésuméincludesstintsasa

U.S.prosecutor, at the FBI, and with Goldman Sachs

Group Inc.—and the confidence that goes with it. About

a year into a five-year term, she has time to deliver.

Newcasesrangefroma suspectedpropertyfraud

innorthernEnglandtowhetherLondonCapital&

Finance,alittle-known marketer of unregulatedmini-

bonds, misled investors. Observers arguethatwhile

these cases are worthwhile, they lack thecomplexity

31

CARD: COURTESY APPLE. OSOFSKY: CHRIS J. RATCLIFFE/BLOOMBERG

� Osofsky

● Activists worry that the U.K.’s Serious

Fraud Office has lost its old ambition

or global reach that was once the SFO’s hallmark.

Osofsky takes issue with this portrayal. “I have

every interest in prosecuting big-ticket cases,” she

says. “We want to take bad guys off the street, whether

they have a blue-chip name attached to them or not.

I am 100% sure that London Capital & Finance is a

top-tier case. If we’ve got thousands and thousands

of people losing their life savings, what could be a

morevalidreasontoinvestigate?”Administratorsfor

LC&F,whichcollapsedthisyear,declinedtocomment.

TheSFOhasa budgetof£54million($69.5million),

about the same amount the government is spending

to prepare athletes for the next Summer Olympics.

The SFO is also able to get ad hoc funding for big

cases to support its staff of 450. But the task before

any financial regulator in London is enormous: The

U.K.believesabout£150billionofdirtymoneyis

cyclingthroughitssystemannually.

TheU.K.hastougheneditslawssincethefinancial

crisis. Companies are now accountable for bribes

paid by their employees. Investigators can freeze

the property and cash of wealthy individuals who

can’t account for their riches. And the three offshore

British crown dependencies this summer promised

torevealthetrueownershipoffirmsregisteredthere.

Osofskyhassaidthat,wherewarranted,she’s

willing to use plea deals involving financial settle-

ments with corporations. Since these agreements

became a tool in 2014, the SFO has concluded six.

It’s working toward more. The test, for some, is

whether the agency can settle with companies but

alsoholdindividualsresponsible.�FranzWild

THE BOTTOM LINE The U.K.’s top corporate crime watchdog got

caught up in uncertainty about its place in the bureaucracy, and

some wonder if it still has an appetite for the biggest cases.

Watching the

Financial Detectives