Lisa Osofsky should be having a good year. In January, the Serious Fraud Office landed a record €3.6bn (£3.3bn) settlement with Airbus alongside US and French authorities for endemic bribery in its international business.
Since then, Britain’s chief fraudbuster has sealed a settlement from a crooked Government contractor and secured the convictions of three businessmen who paid bribes to win oil industry contracts in post-occupation Iraq.
But the SFO boss is under a cloud after a February court ruling released this month criticised her for making herself vulnerable to “flattery” from an agent acting for suspects in the multimillion pound scandal over Monaco-based Unaoil.
Judge Martin Beddoe said the SFO’s conduct should be reviewed after retired US law enforcer David Tinsley offered to secure guilty pleas from defendants in the case in the hope that the SFO would drop arrest warrants for his clients.
The judge said the SFO should have dealt with the defendants’ lawyers and not with Tinsley, who sent Osofsky a message saying: “Mercy means valuing relationships over rules.” She replied: “Inspiring.”
One SFO investigator advised colleagues they should have nothing to do with Tinsley but the communications continued, the judge found. The revelations stunned lawyers. “I’ve never seen anything like that,” says one former SFO investigator. “It’s quite extraordinary [and] not a great look… It’s the style of a completely naive lawyer.”
“I can accept the criticism of the way the office handled the contacts,” Osofsky says, adding that a protocol has been introduced on contact with non-lawyers on cases.
She refuses to be drawn on the details of the Tinsley communications pending a review and a forthcoming retrial of one defendant.
“The judge found nothing unlawful here, he found no bad faith,” she says. “The defence argued there was an abuse of process. That means his client should get off. That’s his job. I don’t begrudge him trying to make the argument in as strong terms as he possibly could.”
Suella Braverman, the attorney general, backed Osofsky but has been criticised for not taking a role in the review, which will be conducted by independent counsel engaged by the SFO. Osofsky insists the probe is a “review”, not an “investigation”, but will be robust: “What would be truly independent, more than independent counsel?”
Did she consider resigning or standing aside until the review is complete? “Let the review evolve. We’re moving on with business. We’ve got phenomenal things to talk about… I am not in a position where I’m going to be distracted.”
The furore threatens to overshadow successes such as the Airbus settlement. Osofsky lights up when she discusses the deal, which she calls “my baby”.
“That was such a win. That is something I’m so proud of,” she says. “It really is one of a kind in terms of the size. It is the biggest resolution of a corruption case there has ever been.”
The €3.6bn fine for the European plane maker for corruption in securing contracts around the world included €991m paid to UK authorities, or double the total of all criminal fines in England and Wales in 2018.
It is by far the biggest deferred prosecution agreement (DPA) entered by the agency but not for too long, Osofsky thinks.
DPAs allow companies to avoid criminal conviction if they admit wrongdoing, pay a fine and clean up their operations.
For government contractors, a DPA is especially valuable because a conviction would result in them being barred from winning public work. Serco and G4S have both cut deals during Osofsky’s tenure.
Critics say DPAs allow companies to buy their way out of a conviction. Osofsky disagrees: “It’s not a get out of jail free card.”
The requirements to admit to criminality and to root out problems are just as important as the fine, she says. Breach the terms of the DPA and the SFO can immediately prosecute the company and use its admission against it.
“When we’ve got a co-operative company that really is serious about making a change… I think that is a very good news story for the criminal justice system, for our country, for the economy, and for our global competitiveness,” she says. Is any criminality so severe that she would not consider offering a company a DPA?
“No… It’s not black and white, like ‘this is just so bad [I’d] never, ever, ever make an agreement’. I’m going to be guided by the rules and the rules tell me all the things I need to look at.”
A naturalised Brit born in the US, the former FBI investigator is often portrayed as a deal cutter seeking to impose an American way of doing business on the UK agency. She rejects that characterisation.
“I think it’d be a little bit misguided to think ‘she just wants to be American’. If I wanted to be American. I could have stayed in America.” The British legal system is the “most envied copied legal system in the world”, she adds.
The SFO ran aground in the High Court this year as a jury acquitted three former Barclays executives of breaking the law when raising money from Qatar at the height of the financial crisis. It had already lost cases against another banker and Barclays itself.
Because of her previous work, Osofsky had to recuse herself from the case, which was under way when she took over from Sir David Green in 2018. After starting out in the US Department of Justice and the FBI, a move to the private sector took her to Goldman Sachs and later to a regulatory firm where she acted as a court appointed monitor to clean up big banks.
The Harvard graduate admits the Barclays acquittals were chastening.
“I have to take a lesson learned from the level of success we’ve had in that case and be realistic about the kinds of matters we’re going to bring,” she says.
She also argues that fraud cases are complex making it difficult to convince juries. “We don’t have people running away from the scene with blood on their hands and knives dripping. We’ve got businessmen in suits and figures that don’t add up.”
Eager to get away from some of the cases foisted on her when she arrived, Osofsky has dropped probes where she judges the chances of success to be low, including investigations into banknote maker De La Rue and executives at Rolls-Royce and GSK. “I’m not throwing good money after bad. I’m going to be brave enough to say ‘we are not going to pursue this.’”
The SFO’s caseload has been trimmed from 70 to 65 in the 12 months to March.
The prosecutor opened only five new investigations in that time but says probes into London Capital & Finance, the collapsed minibond firm, and Patisserie Valerie, the cake chain hit by an accounting scandal, “are going somewhere”.
Economic downturns often drive a boom in fraud and Osofsky says she is up to the task. “If people have been harmed in the wake of this pandemic and there are cases for us in that, I will be very, very keen to take them on.”
Right now the SFO faces a logistical rather than a legal battle due to coronavirus.
Social distancing has meant interviews and searches have had to be stopped and the focus has shifted to documentary evidence. Defence lawyers say most big cases are still progressing at a reasonable clip.
Osofsky does not think that her teams need more resources even though the SFO got by on £66m last year and every penny of the Airbus fine went straight to the exchequer.
“Rather than take some of that money for our own, I would say, give me the laws I need in the areas where it would be more helpful.”
To prove a company guilty of most crimes in the UK, the SFO must prove a human who was the directing mind of the company was part of the wrongdoing, which is a tall order for a sprawling multinational where misconduct may occur at middle-management level.
Bribery and tax evasion rules have been changed so that companies can be held liable merely for failing to prevent criminality in their organisations.
“Give that to me in the fraud cases and I believe I can deliver even better results,” Osofsky says.