The Serious Fraud Office (SFO) came under serious fire this week in a highly-critical report that condemns its 'pass the buck risk-adverse culture, lack of focus and skills'.

A review of the SFO, which was set up 20 years ago to investigate and prosecute major frauds, found that its senior managers lack skills, knowledge and perseverance.

The review also criticises the organisation’s success rate, which compares unfavourably with similar agencies in the US. SFO prosecutors charged seven defendants in five years, the report said, compared with 50 in the same period by the US Attorney's Office for the Southern District of New York (SDNY).

The SFO’s conviction rate for 2003 to 2007 was 61 per cent, compared with 92 per cent for the Manhattan District Attorney’s Office, it adds.

“A criminal justice system that produces this little cannot be said to be effective in deterring, detecting or punishing criminals who commit serious white-collar crimes,” the report by a former US prosecutor, Jessica de Grazia, said.

The report claims that “insufficient innovation” was one reason why the SFO enjoyed lower productivity and conviction rates compared with its US peer.

The lack of focus in SFO investigations is “a matter of grave concern”, it added.

“While there are some very capable senior managers in the SFO, there are others in key positions on the senior management team who lack the operational knowledge, experience and perseverance required to supervise, mentor and problem-solve, and to command the respect of the troops,” it said.

“These leadership deficits will need to be tackled if the SFO is to deliver to the public the high quality of service required from an elite prosecution agency.

“As a consequence of the leadership deficits described above, a 'pass the buck, risk-averse, complaint culture' has developed in the SFO.

“This culture discourages robust decision-making and innovative and effective use of powers.”

Ms de Grazia proposes changes to the “cumbersome” system under which defence lawyers are granted access to prosecution paperwork in the run-up to a case - known as “disclosure”.

She notes that in one transatlantic case prosecuted in the UK and the US, disclosure took prosecution legal teams six weeks to complete in the US, while in the UK it took the SFO two years.

The Attorney-General Baroness Scotland, QC, immediately rejected the recommendation to change disclosure rules.

“We keep the disclosure regime under active review and will work with practitioners and stakeholders to identify and implement improvements,” she said.

“Tackling fraud effectively is a matter of the highest priority.

“The new director of the SFO, Richard Alderman, is taking forward a programme of significant reforms to the SFO, addressing issues of leadership, skills, structures and working practices.”

Mr Alderman said: “I want the SFO to be the most effective prosecutorial agency in the country.

"We want to encourage more people to plead guilty at an earlier stage of proceedings. To do s we must have better staff training, providing them with the necessary skills to do the job and a management team that empowers them to do it. I am determined to bring about the changes necessary to achieve these aims,” he said.

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