Trial of former Serco executives collapses as SFO fails to disclose evidence
The trial of two former executives at Serco has collapsed after the Serious Fraud Office (SFO) failed to disclose evidence to the defendants, in a major blow to the UK’s anti-corruption agency.
A judge at Southwark crown court on Monday instructed jurors
to return a verdict of not guilty for Nicholas Woods and Simon Marshall, two
former directors of the Serco subsidiary Serco Geografix Ltd, after the SFO
offered no evidence following its identification of its error.
The executives had been charged with using fraud and false
accounting to artificially reduce Serco’s profit margins on a contract for the
electronic monitoring of offenders on behalf of the Ministry of Justice.
The SFO found a mistake this month which meant that material
had not been disclosed to the defence. The SFO had sought an adjournment to
seek a retrial, but the judge refused the application.
In a statement, the SFO said: “We are considering how best
to undertake an assessment to prevent this from happening in the future.”
Serco, an outsourcing company that runs part of the
government’s coronavirus test and trace system, in 2019 paid £22.9m in fines
and costs after taking responsibility for three offences of fraud and two of
false accounting on electronic monitoring contracts. Serco agreed a deferred
prosecution agreement (DPA), which allowed it to avoid criminal charges.
Serco had already paid another £12.8m in compensation to the
MoJ as part of a £70m civil settlement made in 2013.
In a written statement after his acquittal, Marshall said he
was “extremely relieved”. “Over the last eight years I have made clear that I
acted properly and honestly in all my work at Serco,” he said. “The allegations
against me were entirely without substance, as is now clear.”
Marshall said the DPA between Serco and the SFO was “no
doubt convenient” for the company and the government, but “did not reflect the
reality of what occurred”.
“It is clear to me that I was prosecuted, not as a result of
a fair assessment of the evidence, but because I was collateral damage in the
deal that was done by Serco with the SFO,” Marshall added.
Woods’s lawyer, Andrew Katzen of Hickman & Rose, said
the SFO’s decision to drop the prosecution was “a welcome vindication of my
client” but that the eight-year investigation was a “matter of profound concern
to everyone concerned with justice”.
“The evidence in this case clearly showed these charges were,
in fact, company policy,” Katzen said in a statement. “Mr Woods was directed by
senior management to implement them, and trusted his bosses, believing the
practice to be completely legitimate.”
Katzen said the defendants “were singled out for prosecution”.
The trial’s collapse is a blow to the SFO, which has been
led since June 2018 by the former FBI lawyer Lisa Osofsky.
The case will probably heighten scrutiny of DPAs, an
innovation introduced in 2014 to mimic similar deals used regularly by US
authorities. The SFO has made numerous DPAs with large companies, including
separate deals with Tesco, the jet engine maker Rolls-Royce, and the plane
manufacturer Airbus. However, 11 individuals charged in cases involving DPAs
have been acquitted.
Susan Hawley, the executive director of Spotlight on
Corruption, a campaign group that tracked the trial, said it was “a disaster
for the SFO and for the UK’s deferred prosecution agreement regime”. “The UK
has yet to successfully prosecute any individuals where a DPA has been agreed
with a company,” she said. “We need an urgent review of why this is.”
Serco declined to comment.
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