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BLOG: The SERCO that broke the SFO’s back


Mark Watson considers the acquittal of Nicholas Woods and Simon Marshall in the light of the Serious Fraud Office’s history, along with the history and consequences of Deferred Prosecution Agreements.

On 26 April 2021, the Serious Fraud Office (“SFO”) was forced to offer no evidence against Nicholas Woods and Simon Marshall after it emerged that the SFO had made serious mistakes in relation to disclosure.

Mrs Justice Tipples ruled that the issues flowing from the failure “undermine the process of disclosure to the extent that the trial cannot safely and fairly proceed until they have been remedied”.

Following the ruling, the SFO applied for an adjournment to address and resolve these issues.

The application was refused as Mrs Justice Tipples did not see that it was in the public interest to do so, in relation to a trial which had begun in March 2021 and concerned allegations which dated as far back as 2011.

The SFO was put in a position where it could do nothing but offer no evidence against Mr Woods and Mr Marshall. The jury was directed to return not guilty verdicts in respect of both defendants.

However, that was not the only embarrassment suffered by the SFO. Tipples J commented “It seems to me there are…real concerns in relation to the nature of the prosecution case against these defendants”. 

The SFO has commented

We are considering how best to undertake an assessment to prevent this from happening in the future.”


The background is neatly summarised by the SFO itself:

Serco Geografix Ltd devised a scheme to defraud the Ministry of Justice by hiding the true extent of the profits being made between 2010 and 2013 by its parent company, Serco Limited, from its contract for the provision of electronic monitoring services. By dishonestly misleading the Ministry of Justice in this way, Serco Geografix Ltd prevented the Ministry of Justice from attempting to limit any of Serco Limited’s future profits, recover any of Serco Limited’s previous profits, seek more favourable terms during renegotiations of contracts, or otherwise threaten Serco Limited’s contract revenues.” 

The received wisdom in the media, including the legal press, is that the SFO lurches from one disaster to another. This analysis is not entirely fair.

On 28 April 2021, just two days after the Serco trial collapsed, GPT Special Project Management Ltd pleaded guilty to corruption between December 2008 and July 2010 in relation to contracts awarded to GPT for work carried out for the Saudi Arabian National Guard. The company was ordered to pay a confiscation order of £20,603,000, fine of £7,521,920, and costs of £2,200,000.

Even before that, in March 2021 the Unaoil trial prosecuted by the SFO concluded with the sentencing of Paul Bond, who was sentenced to three years’ six months’ imprisonment for conspiring with others to bribe Iraqi public officials in order to secure lucrative oil contracts in Iraq. The investigation and subsequent trials secured the conviction of all four defendants accused in that conspiracy.

Further, of course, the SFO has since its early days faced and overcome negative headlines from unsuccessful prosecutions. These are high-stakes cases against often well-resourced defendants, and the SERCO saga is not the only time that the SFO has failed to secure convictions in a high-profile and embarrassing way.

Deferred Prosecution Agreements (“DPAs”)

DPAs were introduced on 24 February 2014 pursuant to Schedule 17 of the Crime and Courts Act 2013.

They are currently only possible in cases prosecuted by the Crown Prosecution Service and the SFO pursuant to paragraph 3 of Schedule 17.

A DPA is an agreement between the prosecutor and defendant, which is supervised by, and subject to the agreement of, a judge. They only apply to organisations, never individuals and are used in relation to allegations of economic crime. The organisation must fully co-operate with the SFO.

In order to secure the agreement and approval of a judge, the DPA must be in the interests of justice and the terms fair, reasonable and proportionate. 

Should the conditions of the agreement be breached by the defendant, a prosecution would resume immediately.

The key benefits of these sorts of agreements are that they enable reparation to take place without a conviction, which would have reputational and economic consequences to the defendant and the agreements avoid lengthy and costly trials.

There have been nine DPAs reached between companies and the SFO to date. These are: 

  1. Standard Bank, 2015.
  2. Sarclad Ltd, 2016.
  3. Rolls-Royce , 2017.
  4. Tesco, 2017.
  5. Serco Geografix Ltd, 2019.
  6. Güralp Systems Ltd, 2019.
  7. Airbus SE, 2020.
  8. G4S Care & Justice Services (UK) Ltd, 2020.
  9. Airline Services Ltd, 2020.

No individuals have ever been convicted in a trial where a DPA has been agreed by a defendant company.

Under the Juries Act 1974, amended by the Criminal Justice and Courts Act 2015, save for in exceptional situations, it is an offence for jury deliberation to be scrutinised, let alone reported on to the wider public. 

As such, we cannot know the factors that played upon the minds of the juries who acquitted Michael Sorby, Adrian Leek and David Justice in 2019 in relation to Sarclad or Cansun Güralp, Andrew Bell and Natalie Pearce in relation to Güralp Systems Ltd.

One can imagine a landscape in which the word “scapegoating” or similar notions were not far from the lips of defence counsel and/or minds of jurors, knowing that the company has avoided prosecution, but that often mid-ranking individuals are facing imprisonment and personal ruin in the light of corporate failure.

It is an interesting correlation that so far there have been no convictions of individuals where DPAs have been agreed.

Change of approach

More troubling are the comments made by Tipples J in the Serco trial about the nature of the case against the defendants and the fact that in the Tesco trial Mr Justice Royce withdrew the case against the defendants at the conclusion of the Crown’s case, commenting “I concluded that, in certain crucial areas, the prosecution’s case was so weak that it should not be left for a jury’s consideration”, and “one of the major issues has been whether the prosecution could prove the defendants were party to that [conspiracy].”

Obviously, Royce J concluded that the Crown could not prove that the jury’s satisfaction.

Arguably then with the comments made by the judges in both the Serco and Tesco trials and the acquittal in the Sarclad and Güralp Systems cases, senior minds at the SFO will be taking a careful and considered approach to how trials and DPAs are dealt with in the future.

There seem to be two possible outcomes. 

The first is an SFO which essentially doubles down on cases where DPAs have been agreed and ramps up the investigation and procedures surrounding any prosecution, such as enhancing disclosure teams and review processes, in order to endeavour to secure the safe conviction of an individual, or individuals, in order to demonstrate to the world that the Agency can achieve individual convictions after a DPA.

The alternative is a more cautious SFO where either DPAs are agreed resulting in no individuals being prosecuted or the pursuit of DPAs falls away and the SFO seek to prosecute defendant companies in the future.

The proposed extension of the ‘failure to prevent’ jurisdiction more widely into areas of financial crime beyond tax evasion and bribery may have an effect on this. Beyond that, an interesting discussion is to be had on the issue of a ‘corporate death penalty’ which has been raised in the United States. But for the moment, the SFO will continue to pursue these high-stakes cases, and will win some and lose others.

Mark Watson is a member of Carmelite Chambers who specialises in financial crime and was called to the Bar in 2011. He defended in the largest counterfeit cigarette production operation that HMRC has ever prosecuted and is developing an early practice in Covid related payment frauds. He is also an elected member of the Criminal Bar Association Executive Committee.


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