Yahoo Finance Serco tagging trial collapses after SFO declines to bring evidence
The Serious Fraud Office faces fresh embarrassment after the trial of two former Serco executives accused of “fraud on the taxpayer” collapsed because of blunders in evidence disclosure.
The white-collar crime agency admitted it had “uncovered errors made in the non-disclosure of certain materials” in relation to the trial of Nicholas Woods and Simon Marshall, who worked on Serco's contract to electronically tag offenders for the Ministry of Justice (MoJ).
Mr Woods and Mr Marshall were alleged to have defrauded taxpayers by hiding £12m of profits made from Serco’s contract with the MoJ between 2011 and 2013.
SFO officials incorrectly classified board minutes that showed the pair were working with the knowledge of their superiors.
Mr Woods’ solicitor, Andrew Katzen, said: “The fact that the SFO pressed on with its doomed prosecution despite this should be a matter of grave concern for everyone concerned for justice in this country.”
The trial at Southwark Crown Court collapsed Mrs Justice Tipples said she had "real concerns, in relation to the nature of the prosecution case against these defendants".
She refused the SFO’s request to adjourn the case so that it could conduct a comprehensive review of all the evidence pending a possible retrial.
The SFO had offered no evidence, prompting Mrs Justice Tipples to direct the jury to give a verdict of not guilty after years of investigations and preparation.
She said: “The defendants were interviewed five years ago and here we are midway through the prosecution case and a major failing in disclosure has been recognised by the Serious Fraud Office.
"It is wholly unclear when this matter can be resolved but, given the time it has taken to get to this stage, it could well be over a year before the review process has been completed by the prosecution and the matter listed for a retrial."
The prosecution began the trial last month by alleging that Mr Woods and Mr Marshall concealed the high profits made on Serco’s contracts with the Government so that Whitehall officials would not seek rebates.
But the SFO subsequently realised that it had failed to disclose crucial evidence to the defence.
Investigators conducted a review of their own work, uncovering further mistakes in how information had been marked. Prosecutors then sought an adjournment to conduct a more thorough review of the evidence.
The verdicts will heap pressure on the SFO, led by US lawyer Lisa Osofsky, after a string of high-profile failures. Last year three Barclays bankers were acquitted on allegations they handed Qatari investors generous fees in return for emergency funding during the credit crunch.
It may also renew calls for the SFO to be reformed or disbanded. Theresa May failed in her bid to abolish the agency and fold it into the National Crime Agency to create “Britain's FBI”.
Neil Swift, a partner at Peters & Peters, which represented Mr Marshall, said: “Mr Marshall is of course very relieved that he is vindicated. At the same time there is a sense of real indignation that the Serious Fraud Office’s case should fold in this manner, after putting our client through eight years of unfounded criminal allegations.
“A narrative was… created in which the responsibility of Serco and its senior officials were marginalised, and blame was instead cast on Mr Woods, a small cog in a big wheel.”
Serco accepted that it had defrauded the Ministry of Justice in 2019 in relation to the electronic monitoring of prisoners. It paid a penalty of £19.2m and the SFO’s costs of £3.7m.
The FTSE 250 company agreed to enter into a deferred prosecution agreement (DPA), a controversial form of corporate plea bargain that suspends criminal prosecution typically in return for heavy financial settlements. Ms Osofsky has insisted that DPAs are “not a get out-of-jail-free card”.
Mr Swift said: “It is hard to avoid the conclusion that, once again, the narrative created by the DPA drove this investigation, and did so in defiance of the facts.”
A spokesman for the SFO said: “We are considering how best to undertake an assessment to prevent this from happening in the future.”