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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 740 -i
House of COMMONS
TAKEN BEFORE the
The Work of the Serious Fraud Office
Tuesday 13 november 2012
David Green CB QC
Evidence heard in Public Questions 1 - 56
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Taken before the Justice Committee
on Tuesday 13 November 2012
Sir Alan Beith (Chair)
Mr Robert Buckland
Examination of Witness
Witness: David Green CB QC, Director, Serious Fraud Office, gave evidence.
Chair: Before we start, I have to ask colleagues if they have any relevant interests to declare. No? Good.
Welcome, Mr Green. We thought that you had been in post long enough for us to start asking you how things are going in a number of important respects. We are glad to have you with us today. I ask Yasmin Qureshi to start the questioning.
Q1 Yasmin Qureshi: Good morning, Mr Green. I want to explore with you your assessment of the SFO since you took it over, only about five or six months ago. Published data show that from 2011 to 2012 there have been increases in most aspects of your work. The indicators are good, the sole exception being the decline in the percentage of defendants convicted in cases brought by the SFO. As you are probably aware, that is perhaps the area that most people are interested in, wanting to know why a relatively small number of cases lead to conviction. With that sort of information in the background, I want to ask what changes you have made since taking over as director, and what your plans are for the future. Would you give your overall assessment of the effectiveness of the SFO over the last few years? It is a long question, but it gives you a chance to have your say.
David Green: Thank you very much indeed. As to effectiveness over the last few years, I took over in April, as you know, and my take would be that this is a capable organisation operating on difficult ground and in difficult circumstances-and it is an organisation that needs to improve its performance, without question. You raised the issue of key performance indicators, in the sense of the number of defendants acquitted. The only thing that one can absolutely stand on, in terms of statistics, with the SFO is that we have up to 100 cases on our books, we have between 10 and 20 going to trial each year, we have 300 permanent staff and, historically, the SFO has something like a 70% conviction rate.
Having said that, I am, as you will have gathered, somewhat unhappy about the robustness of the data I have inherited. It is something that I want to look at with care. In fact we had the first meeting of my new senior management team last month, and one of the things that we decided was that we needed to identify new, absolutely reliable and transparent key performance indicators. That we are doing, and we will explain what each one means in due course.
You asked me as well what I have done since I arrived. Essentially, I have made a complete structural reorganisation of the office, building in layers of quality control. By that I mean that the casework is now done by four casework divisions. Within the casework divisions are teams, each led by a team leader. So you have the team leaders and then the heads of division. I have appointed a retired distinguished judge as a special adviser, who deals with quality, training and other such issues, a general council, a chief investigator, and somebody part of whose responsibility is quality assurance. I have deliberately built in layers of quality assurance throughout the organisation to prevent errors, such the one that everyone knows about in Tchenguiz, from recurring. So there is a new senior team. I have also recalibrated the mission and approach of the SFO. I am happy to develop that, but there was perhaps historically a feeling or perception publicly that the SFO was more willing to do deals, as it were, than to investigate and to prosecute.
Q2 Chair: We are going to explore some of that in more detail.
David Green: Indeed, and I am happy to do that in due course. I have looked at our intelligence function with great care because, as I shall say later, it is enormously important to make that proactive rather than simply a vetting capability. We are looking at training and at our external relations, where bridges need rebuilding, and at recruitment. I have opened four major new investigations since April. You will have seen the Oxford University Press civil settlement and the reasons for it. We are moving to a new building in November. We have made significant progress towards a new funding model for the SFO, which is a matter very close to my heart. I like to think that I have improved morale. At the start, of course, it would have been quite difficult not to, because we started from a fairly low base. I hope that that answers your question.
Q3 Yasmin Qureshi: I was going to ask a question about staff morale at the end, but as you have touched upon that already, may I ask what practical steps have been taken to deal with the issue of staff morale?
David Green: My analysis would be this. It is purely my analysis, and it is not meant as criticism of anybody. The structure that I inherited-the management-was perceived as being very remote from the office members. I like to think that I have changed that, with a completely new team. I have addressed staff all together on three occasions, including, latterly, on the day the other week when our accounts were published, so that the staff knew just in advance what was to be said. I am sure that we will come on to that.
It is really all about communication and new leadership within the organisation. As I say, I think that we started from a fairly low base, and the signs are that morale is improving. If I may, I shall give an example. We advertised recently for a small number of senior lawyers. I thought that it was a good idea to approach the criminal Bar, and we advertised through Counsel magazine, expecting a few applicants. We had, I think, 170 applicants. It is a place that people want to come to work in. We can offer the most challenging work, and I like to think that it would be a very important addition to anybody’s CV. I hope that that answers your question.
Q4 Yasmin Qureshi: I have a final question in relation to the annual report and the accounts for 2011-12. They were published only recently, on 1 November. Is there a particular reason why the accounts were late?
David Green: I took office on 23 April this year, and on my second day I learned of payments that had been made around the former chief executive officer’s voluntary redundancy. She had taken voluntary redundancy on 16 April, the week before I arrived. Having explored those payments a little, my actions were to approach my predecessor for an explanation and then to commission the Treasury Solicitor to do an inquiry for me. I obtained legal advice on the enforceability of the contracts around this agreement, and I told the National Audit Office that I would not seek retrospective approval of these payments because I considered them to be unjustified.
Also, it is right to say, I wanted to be satisfied that our accounts, particularly my statement in the accounts, properly covered and described liabilities, actual or potential, around costs and damages. I think that I am right in saying-you will know far better than I do-that these accounts are conventionally laid by the end of July, but in fact they have to be laid by the end of January of the following year. We ended up, for the reasons I have given, laying our accounts very recently.
Yasmin Qureshi: Thank you.
Q5 Chair: Is there anything left over from that very regrettable incident of the irregular payments? Are there still some continuing consequences from that?
David Green: There is another such agreement relating to an individual who will be leaving in the period covered by this year’s accounts. What I have done is to ensure that proper procedures are followed, and, if that is the case, I am given to understand that the National Audit Office will not have concerns about this year’s accounts.
Q6 Chair: That sort of thing seems to be going on in various organisations at the moment.
When the Attorney-General came to give us evidence recently, he talked about your root-and-branch review of the SFO’s operations. I do not know whether that was a phrase that you approved of or welcomed.
David Green: It sounds very exciting.
Q7 Chair: He described some of the changes that you have made. One of the things that I want to explore is how that leaves your relationship with other domestic and international agencies involved in serious economic crime detection and prosecution. What mechanisms are you considering that will enable the SFO to work effectively with the Financial Conduct Authority and the National Crime Agency?
David Green: I like to think that last summer, in June, the debate on the future of the SFO was, for all intents and purposes now, settled and that it should continue. After that debate the name of the game, in my view, is co-operation between all the different elements in the counter-fraud landscape, if I may use that expression.
The National Crime Agency will obviously, over time, build an overall intelligence picture and facilitate co-operation between the various players and actors in the landscape. I like to think that the NCA’s job will be to ensure that any particular job is done by the organisation best equipped to do it. I am happy that we have very good relations with the nascent NCA and with Keith Bristow, who is in charge of it. I have appointed a very experienced senior civil servant, Kristin Jones, to head up our external relations with a view to rebuilding bridges, which I am led to believe certainly need rebuilding.
A very good example of the kind of co-operation that I am talking about-it is not just talk, I assure you, Sir Alan-is the LIBOR investigation. That is obviously an SFO case, but we are working very closely with our colleagues in the FSA. In fact, we have taken on board a huge amount of its data, and we have had people over at the FSA ensuring that that is done. Colleagues at the CPS have provided some additional manpower, and I am very grateful to the Director of Public Prosecutions for that. We also have the City of London police, and also close liaison with the Department of Justice in Washington. That is a very good example of how, in the new landscape, we simply cannot work in silos, or whatever. We’ve got to work together, and that is happening.
Q8 Chair: Clearly, market manipulation is a major issue.
David Green: Yes.
Q9 Chair: Have you been asked to consider whether you can take on gas market manipulation?
David Green: It is a matter that we will consider, as with any other case.
Q10 Chair: I thought that we might get the official reply. The Attorney-General reminded us-I know that you say very much the same thing-that your priority is to involve the SFO in the prosecution of the most serious and complicated cases that affect the UK nationally, and not to be diverted into doing less significant but none the less important work.
David Green: Yes.
Q11 Chair: Is there a danger that work will fall into the cracks, or are you confident that whatever SFO does not pick up will be picked up by the National Crime Agency or another body?
David Green: I am confident that the NCA, once it is fully on its feet and with its economic crime command operating properly, will ensure that that is done and I am very happy to play my part in it.
Q12 Chair: My anxiety is that you would spend some time perhaps considering whether something fell into your now stricter criteria but that, at the end of it, there would be no automatic mechanism for it to be taken over by somebody else.
David Green: I have powers to take over a case from somebody else, and I can also pass a case to somebody else. I see no reason at all why that should not happen. Everybody is very much aware of what, certainly at the time of the debate over the economic crime agency, were referred to as "orphaned" cases-cases that did not seem to have a home. I am pretty confident that we now have the mechanisms in place to stop that happening.
Q13 Jeremy Corbyn: Thank you, Mr Green, for coming to talk to us this morning. I want to raise questions about SFO resources. The highest point of SFO expenditure was in 2008-09, when the organisation had a budget of £53 million. This year it is down to £31 million, and next year it will be down to £30 million. Do you think that with such a massive reduction in resources you are able to do the work required of the SFO?
David Green: I think, Mr Corbyn, that I would put it this way. When I took on the job, and as of today, I am happy and content that the existing resource is sufficient for what I might call our day-to-day work. That does not mean to belittle any of our cases, all of which are extremely challenging. The existing resource is sufficient, as well, to maintain, as it were, a core staff of around 300. The problem comes when one or more exceptional cases come along. LIBOR is a very good example, and-who knows?-there might be two or three more LIBORs, or the equivalent, around the corner. To give you an example, I now have a team of 40 people working on that.
Of course, the SFO can never refuse to conduct an investigation on the ground that we cannot afford it, nor will I do that. We therefore need what I suppose would fashionably be called a surge capacity. LIBOR is a good example of that. I am very grateful that the Treasury has underwritten us up to £3.5 million, should we fail to absorb those costs, in order to cover LIBOR. That is in a sense, I hope, the new model-obviously, to be developed. If you like, it is a return to what used to be called blockbuster funding or something like it.
In saying that, I recognise that of course all departments need to contribute to deficit reduction, and we need to account for how we are spending blocks of money on specific cases. I am happy to do that. The money is, of course, ring-fenced and we must continually check our case load to ensure that it is not cluttered up with cases that are going nowhere, and which might absorb resources.
You drew attention, quite rightly, to the reduction of deficit. I would put a slight health warning on those stark figures, just in this respect. First, the larger sum of £53.3 million in 2008-09 included £9.2 million in blockbuster funding. Thus, it was not a permanent addition to the balance sheet.
Q14 Chair: Would you just explain what blockbuster funding was?
David Green: Blockbuster funding was in the past when huge cases came along such as Oil for Food-you will remember those cases-or Operation Holbein, to do with procurement of pharmaceuticals. When such a case came along, previous directors recognised that the SFO was without the resources to deal with a case so demanding, and investigations so demanding, so agreement was reached with the Treasury for ring-fenced funding to cover that case in any particular year. Does that assist?
Q15 Chair: Yes. In fact, indications have been given by the Attorney-General that should cases like that arise again, the resources would be available.
David Green: Exactly right. I have given LIBOR as an example, where we are underwritten to the tune of £3.5 million if we cannot pay it ourselves. The Treasury has done that.
The first thing is that those high figures included blockbuster funding, which was never a permanent addition to the bottom line. Secondly, we have to an extent benefited from receipts under ARIS-the Asset Recovery Incentivisation Scheme-whereby prosecutors, investigators and other actors get a cut, if you like, of amounts that have been confiscated. I would like to dispense with ARIS funding as a part of our budget. I think that £2.3 million in ARIS receipts is assumed to be part of our bottom line, and I would like to do away with that. I hope to consolidate our budget, for the following reasons. First, as has been pointed out, the SFO does a small number of cases. Therefore, there is not the turnover of confiscation. Secondly, a lot of the money that we recover goes in compensation to victims, rather than confiscation, of which we get a share, with the balance going elsewhere. Thirdly, I know that elements among the judiciary, for very good reason, are concerned about the possibility of conflicts of interest being perceived when a prosecutor receives money from confiscated assets.
Having said all that, in principle and provided that the right mechanisms are in place, I have no particular problem with prosecution authorities being, in part, funded by confiscated assets from criminals. I hope that that answers your question.
Q16 Jeremy Corbyn: Thank you very much for that. As a second question from me, have you suffered from a loss of talent or a brain drain from the organisation? How do you compare the resources that you have with those of the FSA or its successor, the FCA, which now has £75 million for enforcement? There seems, from the outside, to be a bit of an imbalance. The Serious Fraud Office has massive responsibility and a job to do. I go back to my previous question: if you are short of resources, will you start speaking sharply to Ministers?
David Green: If I am short of resources, I will say so. The bottom line for me is that, as I said earlier, the SFO cannot refuse to take on an investigation because we cannot afford it. That would be completely unacceptable. I believe that it would be unacceptable to Ministers; it would certainly be unacceptable to me and, I am sure, to the public. That is one point.
The FSA, as you will know far better than I do, is funded by the industry itself, so it has lots of money. What I can offer people, as I touched on earlier, is this. I do not necessarily want people for the whole of their careers. I would like a good lawyer, a good investigator, a good forensic accountant or a good computer person. I would like them for maybe three or four years. What I can offer them is probably the most stimulating and interesting work in criminal litigation-and, as I said earlier, a superb addition to people’s CVs. People are, believe it or not, queuing up to join the SFO, and I am delighted that that is the case.
Q17 Jeremy Corbyn: I hope that you will recruit some from this morning.
David Green: Who knows? I am genuinely optimistic about the SFO’s ability to attract very good people. They are not going to get huge riches. You don’t get that in Government service-nor, indeed, in politics, do you?-but that is where we are.
Q18 Yasmin Qureshi: I have a very quick supplementary question. Maybe I should know the answer to this one, but is your £31 million budget just for the 300 staff you employ, or does it include money for using external advocates for trials?
David Green: That is all our costs. You touched upon external advocates. Obviously, our work is very different from that of the CPS, with which I know you are very familiar. I would not wish-it would not be appropriate-to employ in-house advocates, because it would be a wrong use of resources, so I am very happy to use the independent Bar. Indeed, the relatively small number advocates who have the necessary skill set to do our sort of work, which is extremely-
Q19 Yasmin Qureshi: I am sorry, but maybe I did not express my question properly. Does your £31 million budget include the cost of the lawyers that you use externally?
David Green: Yes. That is the whole lot.
Q20 Chair: I am going to ask about a number of policies that you are either pursuing or have revised in important ways. Would it be right to say that the net effect of what you are planning to do will be a greater use of prosecution, and that at the end of your term of office the proportion of matters coming before the SFO that are resolved by prosecution rather than by other means will have risen significantly?
David Green: I cannot give you that promise, Sir Alan. What I have done is, I like to think, to restate the purpose of the SFO, which had become a bit woolly and a bit blurred over time, for all sorts of reasons. The SFO was set up, as you know, to investigate and prosecute serious complex fraud, and now also bribery and corruption. We are primarily a crime-fighting agency. The perception seems to have arisen in the past that the SFO was anxious to do deals, and more willing to do deals, because it had no real stomach for prosecutions. That cannot be right, although I can see why that perception, or that desire-if indeed it was manifest in the SFO-came about. All our cases are very high profile and very high risk, so it is inevitable that people might look around and be attracted by other things-things that might amount to something that has been described as fools’ gold.
In my view, we should do cases that call for the SFO’s unique set-up. By "unique", I mean having all those skills that I described earlier-accountancy, prosecution, investigative and computer expertise, and so forth-all under one roof, working together. That was the original Roskill vision, and it works. I have therefore restated the purpose of the SFO and, while I was about it, I restated and tried to encapsulate the kind of cases, the absolute top end of fraud, bribery and corruption that I think the SFO was set up to do, and the public want the SFO to do.
I have tried to describe those as follows: cases that undermine UK financial plc in general, the City of London in particular, and cases that have elements such as a strong public interest dimension-perhaps cases that are the first of a new species of fraud, cases where very high values are involved, and serious bribery and corruption by British companies acting abroad as well as at home. That is why and how I have restated the purpose of the SFO. For the result of all that, we will have to wait and see. I have described the sort of cases that I want to do, but at the same time that has a knock-on effect in terms of our policies around bribery and corruption. However, it all comes from the same root, and I am happy to develop that, Sir Alan, if you would like me to.
Q21 Chair: We are going to ask you some more questions to bring that out, but I am not sure that you have quite answered my question. Of those cases that you will have taken by the end of your period of office, will the proportion dealt with by prosecution, rather than by non-prosecutorial means, have increased?
David Green: I would have to end as I started: I am not sure; we will have to wait and see. It is probably inevitable that there will be more prosecutions, and hopefully we will have other tools in our toolbox to deal with our cases, such as deferred prosecution agreements. Our turnover will be greater, but that is as far as I would go at the moment-although certainly no one would be happier than I would be if we had more prosecutions.
Q22 Chair: I am not asking about successful or unsuccessful cases; I am asking about prosecution versus other mechanisms. I sensed from some of your earlier comments and from comments that you made when you first took office, including, "Don’t get me wrong, but we’re here to prosecute people", that you thought there was a danger of non-prosecutorial routes being taken in too many cases.
David Green: It is wrong for all sorts of reasons. I dare say that the public are unhappy if they think that serious fraud is simply not dealt with. This is what we are supposed to do.
Q23 Chair: Or dealt with in ways whereby the fraudster organisation keeps a lot of its ill-gotten gains?
David Green: I would never be in favour of that. That is one of the reasons why we have boosted our confiscation capacity and expertise within the SFO. No, I would certainly not be in favour of that; I want to produce results for the public, within our area of expertise and operation.
Q24 Steve Brine: Thank you for coming in this morning, Mr Green. I have been very interested in listening to what you have said thus far, and I am sure that that will continue. I want to ask you about the notes that I have been reading about facilitating payments, business expenditure and corporate self-reporting. What is your intention behind the revision of policies on those three areas? Are they really a radical departure from the previous guidance, or is there a bit of spin there?
David Green: It is not my spin. What you might call the bribery and corruption industry-by which, I suppose, if I was being unkind, I might mean lawyers who make an enormous amount of money out of it, advising corporates-wants to put it that way. In fact, it is not that. What I have done, as you know, is to withdraw policies in relation to bribery and corruption, and they have been replaced with a statement that we are subject to the joint guidance agreed with the Crown Prosecution Service. In other words, all I have done is to remove what is actually a unilateral gloss placed on that joint guidance by my predecessor at the SFO. It was also done in order to comply with the recommendations of the OECD which, as you will know, are about being careful how a self-report is defined.
What I have done most specifically, which certainly excited some-perhaps they are easily excited-is to withdraw the exclusive pledge that the SFO would not prosecute if you self-report. Why did I do that? In my view, it is not something that a responsible prosecutor should be saying, simply because you have no idea what kind of facts or combination of facts you might be presented with when somebody comes through your door with an expensive lawyer. You have no idea, so you cannot cater for it in advance. What you can say, without question, is that the fact of a genuine self-report-by a genuine self-report I mean, in its purest form, telling us something that we did not know already, and the corporate acting proactively to investigate it-must be very significant as a factor in weighing up the public interest limb of the decision to prosecute; that is the code test. That is what I am about. That is why I did that.
There is one other thing. I have said that I wanted to restate the SFO’s role as a crime-fighting agency. In addition, frankly, so far as I am concerned, we are not there to give advice to people. They can get their advice from their lawyers and their other experts, which they have in spades. I am not there, nor are my staff there, to give advice. We are there to investigate and prosecute serious fraud, bribery and corruption.
Q25 Steve Brine: It almost seems as if, when you took over, you looked at the job title and thought to yourself, "The clue’s in the name. It’s the Serious Fraud Office", and that gave you your lead.
David Green: That is exactly true.
Q26 Steve Brine: Your written evidence was very helpful. At paragraph 6.10 you say that there is "considerable public interest"-I am sure there is-in the use of powers under the Bribery Act 2010. Without specifying details, would you give us some indication of how many investigations you are currently undertaking into potential offences under the Act?
David Green: Under the new Act?
Q27 Steve Brine: Yes, because you are also bringing cases under old bribery legislation, are you not? Let us just look at the new Act. It is not retrospective, if I am correct.
David Green: That is exactly right. We are just concerned with stuff after July 2011. It is important to understand that section 2A of the Criminal Justice Act 1988 added a pre-investigation power in relation to bribery and corruption, which enables us basically to look at the facts and assess them, and to see whether there is material that would justify, in law, my launching a full-scale investigation. If I may, for the sake of clarity, I shall call those pre-investigation investigations "projects".
From recollection, we have seven cases that are in the project phase. What will come of them I cannot tell you; I really do not know, but if we can we will turn them into investigations if we are justified in doing so. We have another half dozen cases that relate to pre-Bribery Act law; again, they are in the same phase.
Understandably, legislators, journalists and, indeed, members of the public may say, "Well, you have this marvellous new Bribery Act. What are you doing about it?" As a kind of private project, I have been looking at the fortunes of the FCPA-the Foreign Corrupt Practices Act of the United States. That was enacted in the late 1970s, and the first prosecution was in 1981. It did not get any teeth, in a really meaningful way, until the penalties were enhanced, and so forth, in the 1990s. I am not saying for a moment that you are going to have to wait 20 years for your first Bribery Act prosecution, but things are in hand and no one would be keener than I would to see a good, solid Bribery Act prosecution. We are working on it.
Q28 Steve Brine: Should I infer from that that when you next come to see us you might have more evidence to put before us-including written evidence-that might lead us to make recommendations that the legislation needs revising?
David Green: I certainly would not be asking that at the moment. I shall let you know. In a sense, everybody needs to see how a case under the Bribery Act will work out-everybody does. A number of things might need further definition.
Q29 Jeremy Corbyn: I welcome the point you reiterate-that you wouldn’t necessarily not prosecute somebody who self-referred to you. That is a very important step forward. In the past, the SFO has been put under huge political pressure. For example, former Prime Minister Blair stopped the investigation into the al-Yamamah arms contract. Are you completely independent of Government? Could the same awful thing happen, with the Prime Minister intervening and saying, "You can no longer pursue this", because it was not in the interests of what was then British foreign policy?
David Green: First, I would say very clearly that I have never ever, in this job, been subjected to any kind of political pressure-absolutely not. Of course, I am subject to the superintendence of the Attorney-General, who is entitled to probe, test and question my decisions, and I welcome that. Certainly, there has been no political pressure whatever. Indeed, for the avoidance of doubt, the opening of the LIBOR investigation was entirely and exclusively my decision. You mentioned events of previous years, and the BAE case. As I understand it, the position is now, after that, that I cannot be directed by a Minister to cease an investigation, except where national security is concerned. If I receive such a direction, the Attorney-General must make a statement in the House explaining it.
Chair: Thank you very much for making that clear.
Q30 Mr Buckland: May I move on to the question of deferred prosecution agreements? I have read very carefully the memorandum and evidence that you have submitted to the Committee, and it is clear that the SFO supports the Government’s proposals to amend the current Crime and Courts Bill and to bring in DPAs. I do not know whether you or your office have troubled yourselves with the potential impact assessment, in terms of financial benefit and whether the SFO directly would receive either a share or the entirety of any receipts from financial settlements pursuant to DPAs.
David Green: As I understand it, all funds from DPAs will go directly to the Treasury, to avoid concerns over conflicts of interest.
Q31 Mr Buckland: So there is no hypothecation. Would it be fair to say that the SFO would have a legitimate expectation that, even though the moneys were not hypothecated, you could end up receiving some additional funding to help deal with the work that you are doing?
David Green: It has always been my view, Mr Buckland, that the SFO is here to stay, but that it needs to prove itself. Assuming that it proves itself-I hope fervently that it does-I would be the first to join any negotiation on an enhanced budget to get us more resources to do more good work. But I would say that, wouldn’t I?
Q32 Mr Buckland: I would expect you to, and I am glad to hear it. Having looked at the impact assessment prepared by the MoJ on DPAs, I was a little concerned. My reading of it is that there was an assumption in the document that there would not be an overall increase in the number of cases dealt with. In other words, there would potentially be a shift from early guilty pleas to DPAs, meaning no overall increase in the number of cases dealt with. Would that be your expectation, or would you hope for something more ambitious?
David Green: I would be far more ambitious. I would expect our case load-including cases dealt with under DPAs-to increase significantly once they kick off. I hope, as I am sure you do, that we will have our first DPA in place in early 2014.
Q33 Mr Buckland: Obviously, public perception is very important. Two aspects of DPAs as currently proposed may cause some concern. The first is having the preliminary hearings in private, as opposed to having all hearings in public. Does the SFO have a view on the reasons for that proposal?
David Green: I do not, as I sit here, have a particular view on that. What I would say is that later on, as the process develops, it does of course become public. Obviously a big difference between our DPAs and the US model is judicial involvement from day one. I would not be happy in expressing a particular view on that. It is something that I would have to think about, but I would be happy to let you know in due course.
Q34 Mr Buckland: I would be very grateful, Mr Green. Thank you. Again, public perception is important. The idea that you are doing some sort of niche job is wholly wrong, I think. The public are genuinely concerned about a culture of impunity that is perceived to have grown up around corporate and serious fraud. Is there a danger, with DPAs, that we could end up with white-collar crime somehow being seen as less serious than other types of crime?
David Green: That is obviously something that I have thought about a lot-indeed, it has troubled me-and I think that the answer is this. It is important that DPAs are seen as just one additional tool in the prosecutor’s toolkit. They are certainly not, in any sense, a universal panacea for corporate misconduct. They will be used in the right circumstances only. An example of what I think would be the right circumstance is where an incoming board chooses to self-report past misconduct by a previous board, which it has unearthed and proactively investigated. That would be just the sort of challenge to be met, in my view, by a DPA. It would certainly not be appropriate if, for instance, the corporate had been set up and used as a vehicle for fraud. That would be quite wrong. Obviously our first principle, as I hope I have made clear, is that serious fraud, bribery and corruption must always be prosecuted where that is possible-always.
Q35 Mr Buckland: Do you see this as having the potential to deal with the common scenario of when a legitimate business becomes dishonest? I am sure that, like me, you have had plenty of experience of that sort of scenario.
David Green: Of course, we would only be dealing with the corporate itself, under a DPA.
Q36 Mr Buckland: Not the individual.
David Green: Indeed. If there was a case against individuals, we would obviously prosecute if we could.
Q37 Mr Buckland: One concern that has been put to me about DPAs is that we have looked to the United States as an example, but that the US has a very big stick in terms of how they-I won’t say aggressively, but certainly robustly-police their free market, and the penalties available under the criminal justice system in the various US states to deal with wrongdoers. Do you think that the British scenario, where the stick is much less potent, is a good parallel to draw with the United States?
David Green: Just as we have adapted the US model for our circumstances, so we have adapted the carrot and stick equation. I have touched on this twice, but I cannot overemphasise the importance of our decision to enhance our intelligence capability. I really mean business on that. At the moment, our intelligence capability-the one I inherited-is really a sort of vetting process. I want to be far more aggressive in our intelligence activities, not to run it ourselves but to buy it in from, say, the City of London police or external agencies, going up to all sorts of exotic intelligence. The intelligence capability being built up-that is the stick. These people may well be found out, and they need to understand that. The carrot, of course, is often said to be certainty. Actually, it is not really certainty, because when they come along to self-report, they are not sure how they are going to end up. What they mean, I think, is finality. In other words, a line will be drawn in the sand under previous corporate misconduct, under certain conditions, and a company can then move on. Having thought about it quite a lot, I think that that is really what a corporate wants.
Q38 Mr Buckland: So you are hoping for more of what we could characterise as the Eliot Spitzer type of approach that we saw some years ago in New York. Is that something that you would aspire to? I know that the SFO cannot do it all on its own.
David Green: Didn’t Mr Spitzer come to a sticky end?
Q39 Mr Buckland: He did, which is why I described it as a "type of approach"-but to be fair to him, it was unrelated to that particular approach.
David Green: I would not want to link myself to caricatures. I simply want the SFO to get to the top of its game, where it should be, in investigating and prosecuting serious fraud.
Q40 Mr Buckland: Thank you; I shall move on. You have already touched upon LIBOR and the importance of the investigation. Would it be overdramatic of me to say that the way in which the SFO will be judged over the next couple of years will be through the prism of the LIBOR investigation?
David Green: That is often said, Mr Buckland; to be fair, I have said it myself. It is important to realise that LIBOR is of course a very important case, but it is not the only show in town for the SFO, by any means. As I have said, we have taken on four significant cases since April, and every one of them is an extremely challenging high-risk, high-profile case. We shall see.
Q41 Mr Buckland: The postscript to the Tchenguiz judicial review judgment, which I am sure you have read many times, was issued earlier this year. I hope that you have a copy in front of you, because I want to take you through it, if I may. It made a number of points. I accept that a lot of this relates to an investigation that began as long ago as 2007 or 2008, and that you came in at a later stage. This obviously relates to past performance. It might be helpful to run through the advice given by the court. Several points were made. The first was about the need for "a team with a proper understanding of the financial markets in which the transactions have been effected". Are you now satisfied that you have a team that matches up to that advice?
David Green: I touched on this in an earlier answer to Mr Corbyn. The model I have for the SFO is to have a core of highly competent staff with a surge capacity. That surge capacity involves buying in the very best expertise as and when required. Why would I want to do that? Because I would not want that very expensive expertise sitting around on my payroll when we do not have a case that suits that expertise. So, yes, I am confident that we can do that.
Q42 Mr Buckland: You will be able to draw upon that understanding.
David Green: Yes.
Q43 Mr Buckland: This is almost axiomatic, but it still bears repeating, because this is the advice that was given, about how to set out matters in a clear and analytical way in documents being drafted relating to financial markets. Lawyers with great skills and experience are required, are they not, to prepare such documents? Are you confident that you are able to draw on such a resource?
David Green: Yes, I am.
Q44 Mr Buckland: The court expressed concern about the role and position of Grant Thornton. Are you now able to say that the SFO will not be put in a potentially compromising position by relying upon an independent firm that may itself have perceived conflicts of interest?
David Green: The key phrase is "relying upon". Certainly we are happy to receive such information. The problem in the Tchenguiz scenario was that that information was not independently checked, taken apart and examined and double-checked-and it should have been.
Q45 Mr Buckland: Then we have the general principle of equality of arms. We have all seen this-to put it bluntly, a competent prosecution being overwhelmed by a very expensive defence. Are you confident now that you are able to deal with such scenarios, and fulfil the principle at the heart of article 6-and, indeed, at the heart of everything that we do in the criminal justice system?
David Green: It is strange, isn’t it, that one normally hears the idea of equality of arms expressed the other way round-that it is the defence that does not have adequate equipment? But I entirely agree. This is something that I am fully conscious of, and one of my concerns in relation to LIBOR, for instance, has been to engage highly competent counsel at an early stage. Obviously one difficulty is that expertise in this sort of area is fairly limited, and people can easily be either "conflicted out" or pre-booked, so one must move in fairly quickly.
Q46 Mr Buckland: Understood. Finally, you mentioned speed. The Tchenguiz investigation was of inordinate length, frankly. In terms of speed of investigation, are you confident that, with regard to LIBOR for example, you will be able to avoid the somewhat depressing time scale that we saw in Tchenguiz?
David Green: I would certainly intend to, but I am not going to, as it were, break our necks, or compromise the investigation by hurrying. It will happen at the right time, but that is not to say that I am not hopeful of significant developments in due course.
Q47 Mr Buckland: It is subject to the fact, is it not, that as a prosecuting or investigating authority you are obliged to follow all reasonable avenues of defence, whether they point towards or away from-
David Green: Yes, all reasonable lines of inquiry. Absolutely, yes.
Q48 Chair: You obviously do not believe in giving hostages to fortune, Mr Green.
David Green: I prefer not to.
Q49 Rehman Chishti: Mr Green, I have a number of questions for you, which are all interlinked. The first is about the quality of work carried out by case workers. Did you receive a copy of the report of the review of Her Majesty’s Crown Prosecution Service inspectorate in spring this year on the quality of SFO casework?
David Green: I received the report yesterday.
Q50 Chair: Yesterday?
David Green: Yes. Forgive me, but I should make it absolutely clear that this is a report to the Attorney-General, and the Attorney will deal with it in due course. I know that he has said publicly that he will make as much of it public as he possibly can. I am fully supportive of that.
Q51 Rehman Chishti: I have a question linked to that. Having received the report only yesterday, are you in a position to share with us certain conclusions from that report, and also what actions you will be taking in relation to its findings?
David Green: I hope, Sir Alan, that you would agree that it would be inappropriate for me to report to the Committee now about the contents of a report to the Attorney, which he will, I am sure, comment on in the right place at the right time. I can, however, say this. We co-operated fully with the chief inspector. We welcomed the inspection. I find the report extremely helpful as a management tool. I can also say-I hope without appearing remotely smug, because I am not-that almost everything, if not everything, that has been recommended is already observed, and has been taken on board and in hand as a result of our own examination of the SFO.
Q52 Chair: I think that we were quite surprised to discover that you got the report only yesterday. I think that Ministers had seen it some time before that, and I am surprised that it was so late coming to you.
David Green: I think that it has been around in various forms-what civil servants call "iterations"-for some time.
Q53 Rehman Chishti: May I ask a linked question, as I believe that you have commented on this? An article appeared in The Daily Telegraph saying, "The Serious Fraud Office is suffering from quality failings in staff, training and results according to a hard hitting Government report to be published this month." Obviously, the papers knew before you did what was in that report. Linked to that, the inference is drawn that if those improvements are not made, the Serious Fraud Office could be "subsumed within another crime fighting agency".
David Green: I am not quite sure where that came from. One is used to certain sectors of the media coming out with a bit of a litany about the SFO, which usually involves the word "failings" or whatever. It is not all like that at all. I recognise that the SFO does a very difficult job in very difficult circumstances. We need to up our game on performance, and I am all for that.
Q54 Rehman Chishti: There is one final point linked to that. The article also quotes you as saying, "I expect much of its contents will refer to changes or suggestions that we have got in hand." That clearly implies that you know that there are a number of failings in governance and casework, which have to be improved.
David Green: There are certainly things that I would like to improve, yes. As I say, I welcome the report, but the tone that I would strike is perhaps rather more positive than the tone one sees in some sections of the media.
Q55 Rehman Chishti: Finally, in terms of the things that you would like to improve, specifically on the quality of casework, what improvements would you like to see?
David Green: To give an example, I saw the whole Tchenguiz fiasco, and I see it now, as a failure in quality-quality of decision making, quality of checking and quality assurance-within the SFO. In reaction to that, I have completely changed the structure to make sure that these things do not slip through, and there are various levels of checking and scrutiny.
Q56 Rehman Chishti: Is that the same for governance? Apart from casework, is it the same for governance?
David Green: Yes, absolutely.
Chair: Mr Green, we wish you well. We want the Serious Fraud Office to be a very successful organisation, for all the reasons implicit in your description of the kind of case that it ought to be pursuing, and because of the public interest. We are grateful to you for coming here this morning. We shall keep an eye on what is happening, and we may see you before us again. Of course, we will be talking to the Attorney-General and the Solicitor-General about their views on the progress that is being made. Thank you very much.