30 Years of the Serious Fraud Office

The Serious Fraud Office is now 30 years old. The 6 April 2018 marked three decades since the SFO first opened its doors. To mark that milestone, we took a look back at some of the historical moments and notable cases from its history.

On the 9th December 1985 the Roskill Fraud Trials Committee published its report. Set up to look into the UK's efforts to tackle serious economic crime, the Committee called for "a new unified organisation responsible for all the functions of detection, investigation and prosecution of serious fraud cases…" 

The 1987 Criminal Justice Act was passed into law 17 months later and the SFO was born, opening its doors on 6th April 1988 under its first Director John Wood.

With an initial budget of just over £8.7 million, a staff of just over 100 and an opening caseload of 39 investigations, the office began its work. 

Created to lead the UK's fight against serious fraud, bribery and corruption, even the SFO’s very first investigations included well established companies with household names such as Guinness, DeLorean and House of Fraser.

The Guinness case

In 1986, Guinness launched a takeover bid for Distillers, a much larger rival firm. Guinness's share price rose dramatically during the takeover battle following a series of secret back room deals with some of the company's largest investors, which led to the most expensive court action in British legal history at the time of around £7.5m. 

Secret deals

The UK Department of Trade and Industry began its investigation in December 1987 after a tip off from an unlikely source. Ivan Boesky, the infamous US securities trader who originally coined the Wall Street catchphrase ‘greed is good’, as part of an unrelated investigation, informed the US Department of Justice of the  deals that had led to Guinness’s rocketing share price. 

£10 million 'success fees'

It transpired that senior executives at Guinness were promising certain investors secret personal payments or ‘success fees’ totalling more than £10m should the takeover complete, without the knowledge of the board and off the books. The scheme was designed to drive up Guinness’s share price to boost the attractiveness of the takeover bid and create the impression of widespread investor support.

Dubbed the ‘trial of the century’ due to its unprecedented length, scale and cost, the first Guinness trial began on 16 February 1990 and lasted 113 days, garnering extensive media attention. In many ways this was exactly the kind of case the SFO was created for – the broad and complex fraud underpinning the £2.6bn bid for Distillers had widespread implications for the UK’s business reputation and the potential for large financial losses.

Eight senior executives were charged following the investigation, including the former CEO of the company. A series of trials resulted in four convictions, including against the former CEO and each received a fine up to £5m. Three were jailed with one being stripped of his knighthood. Two other trials resulted in acquittals of the remaining four defendants.

The Barlow - Clowes & DeLorean cases

The Barlow-Clowes case

In and amongst the household names which characterised cases taken on by the young SFO was the Barlow Clowes case, the first major financial scandal to hit Britain after the reforms of the Financial Services Act 1986, which had aimed to better protect investors by improving regulations.

Bond-washing

Barlow Clowes offered investors a ‘low risk’ path to making high returns on funds placed with the company. In reality, the scheme amounted to ‘bond-washing’, whereby the company would turn highly-taxed income into lower taxed capital gains by investing in low-risk government bonds before selling them on shortly before payments were due.

When the Financial Services Act of 1986 changed rules to prevent such a manoeuvre, the Barlow Clowes model became unviable and the company began to invest in much riskier assets than government bonds, taking steps to obscure what it was doing by moving much of the business offshore to Gibraltar. 

Black Monday

When global stock markets crashed in October 1987, the UK market fell by 22%, throwing the new Barlow Clowes model into jeopardy as many of the fund’s assets collapsed. While the rest of the stock market rebounded, the post-mortem of Black Monday drew the authorities’ attention to the fact that ‘low risk’ Barlow Clowes had actually invested its clients’ money in assets as diverse as a Welsh brewery and French vineyard.

£100m taken from investors

The SFO case into Barlow Clowes found that nearly £100m of investor money had instead been sunk into the lavish personal lifestyle of its founder. Yachts, his ‘n’ hers Learjets, a French chateau with vineyard, a Whitley Green mansion, nestled in acres of woodland: the founder’s personal wealth and the way it was acquired at the expense of investor returns from the fraudulently advertised ‘low risk’ schemes became a key theme of the trial.

Conviction & compensation

More than 100 witnesses testified for the prosecution in the Barlow Clowes trial and following conviction, its founder was sentenced to 10 years’ imprisonment. Given the involvement of government bonds in the scheme, a Parliamentary Commissioner investigated the matter and in 1989 concluded that the Department of Trade and Industry had failed to regulate and administer the investments of Barlow Clowes. The government of the day agreed to make £153m ex gratia payments to the 14,250 investors who had lost money in Barlow Clowes – the government went on to recover this money through liquidation of the company’s assets, but it was not until 2011, more than 20 years after the collapse of the company that taxpayers were finally repaid.

The DeLorean case

DeLorean was an iconic car brand immortalised as a time machine in the popular film, ‘Back to the Future’, but after the collapse of a DeLorean factory in Belfast, in 1988 it became one of the first companies the SFO ever investigated. The case quickly became one of Northern Ireland’s most serious corporate scandals.

2,000 jobs for Northern Ireland

In the context of 1970s Belfast, the agreement between DeLorean and the then UK government to build a new car factory in the city seemed like an excellent opportunity. Not only would it create 2,000 jobs in and around the plant, but by helping to tackle unemployment in Northern Ireland – which was twice the national average – it would also provide an economic boost to deprived areas at the height of The Troubles. The personal charisma of Detroit-born founder John DeLorean and the global brand of his cars no doubt helped to secure the deal.

£77m in four years

The government provided a £77m taxpayer grant to DeLorean over four years to build the plant in Northern Ireland. In 1982, less than a year after it opened, the factory collapsed, having only ever produced 9,000 cars, after the entire DeLorean Motor Group faced severe financial difficulties. A 1984 House of Commons Public Accounts Committee report later described this as “a shocking misappropriation of public and private money.”

"Mortgaged to the hilt"

Internal letters at the Department of Commerce, now declassified, detail the determined efforts of John DeLorean to save the floundering factory and secure a government rescue. Officials refused his offer to mortgage ‘everything he owned’, noting that ‘he was mortgaged to the hilt already’. Memos at the Department revealed the scale of the problems at the plant which had become plagued by technical issues within months of opening, exacerbated by a lack of staff training. By the time Back to the Future was released in 1985, the Belfast DeLorean plant had closed its doors.

The SFO case

DeLorean himself avoided extradition from the United States where he was facing separate charges of defrauding investors and cocaine trafficking. Though later acquitted of those charges, John DeLorean was still wanted for fraud at the time of his death in 1999. The SFO charged a former finance director of Lotus Cars, a design company which had been used to move the misappropriated government funds. He later pleaded guilty to conspiracy to defraud and was sentenced to three years imprisonment, fined £1,548,000, and ordered to pay £702,000 compensation and costs.

The Polly Peck case

In 1990 the FTSE 100 trading conglomerate Polly Peck International collapsed, wiping more than £1.7 billion off the UK stock market. Transformed from a struggling textile manufacturer in the early 1980s and then simply called Polly Peck, the company had become the darling of the City by the end of the decade. With the CEO at the centre of the scandal on the run from 1993 to 2010, the case became the longest running SFO investigation to date. The main trial finally concluded in August 2012, 22 years after the case was first opened.

A rocketing share price and stratospheric profits 

At its height, Polly Peck International was the largest listed company on the Turkish stock exchange and the only European company listed on the Tokyo stock exchange. It owned the biggest electronics manufacturer in Europe, hotels and tourist complexes across the continent and even global fruit producer Del Monte.

Posting stratospheric profits quarter after quarter, investors piled into the shares, hoping to benefit from the company’s success. The share price then rocketed, with the company value rising from £300,000 to £1.7 billion.

The SFO began an investigation in August 1990 and raided premises at the heart of the Polly Peck empire in Mayfair the following month. Rumours of opaque accounting practices and boardroom rows had already been circulating and the initial investigation looked into allegations of insider trading, but the evidence pointed to a more serious crime: the investigation quickly focused on evidence that the company’s CEO had stolen millions of pounds from shareholders, using the money to fund pet projects that included racehorses, antique purchases and property.

A jet plane to Cyprus

Facing mounting charges, the CEO called on a pilot friend to fly him out of the UK. He fled London with a wig and false moustache as a precaution, flying from a Dorset airfield to Beauvais in France before taking an executive jet back to a villa in northern Cyprus. The case remained open until he returned 17 years later to face the courts.

A stack of banknotes "taller than Nelson"

In court the defence claimed that the money withdrawn from Polly Peck was deposited in local banks in northern Cyprus with suitcases of cash ferrying the money to be deposited to ‘balance the books’. During cross-examination the prosecution showed that the number of banknotes needed to achieve this would have reached 300 times the height of Nelson’s Column. The CEO was convicted and sentenced to 10 years in jail for stealing £29m from Polly Peck shareholders. Whilst Polly Peck’s CEO was on the run, two other individuals were prosecuted as accomplices, though both had their convictions overturned on appeal.

The Bank of Credit & Commerce International case

A decade after first opening in 1972, Bank of Credit & Commerce International (BCCI) was the 7th largest private bank in the world with more than 400 branches across 78 countries. By 1991, BCCI was in the sights of investigators around the world as the biggest banking fraud in history began to unravel. The Bank of England closed down all UK branches – the largest intervention of this kind by the financiers at Threadneedle Street to date and £250 million worth of deposits were frozen impacting all of BCCI’s 120,000 UK customers. The SFO began its investigation into the fraud that July.

BCCI began as the brainchild of Pakistani banker Aga Hassan Abedi, who dreamed of creating a financial institution that could rival western banks, but would also cater to the developing world. That meant targeting wealthy customers who could make substantial deposits with the bank, which soon began to specialise in labyrinthine ways of avoiding regulation to become a personal piggy bank for its owners and favoured customers, money was stolen from millions of depositors around the world. Their biggest customer was Gulf Group, a shipping and trading conglomerate that had opened accounts with BCCI when it first started.

£800m of unsecured loans 

In 1976 Gulf Group began borrowing heavily from BCCI to finance larger purchases, but by 1978 the company faced serious financial trouble. With substantial loans already made by BCCI, the bank looked for ways to hide its losses and funnelled money from elsewhere in BCCI into Gulf Group to make it appear that loan repayments were up to date.

Despite knowing that the group was insolvent, BCCI continued to secretly pay out millions to the Gulf Group and its Chairman throughout the 1980s and falsified documents on a vast scale to hide the £800 million of unsecured loans.

A ‘Special Duties Department’ – a unit dedicated to fabricating documents, inventing commercial histories for non-existent business and falsifying loan agreements was created and headquartered in London. Tasked with hiding the extent of BCCI’s losses from auditors, it set about creating a huge number of independent companies to make it appear that genuine third party commercial activities were taking place, when in reality they were facades to enable BCCI and Gulf Group to move money between them.

Regulators began to take note, and BCCI’s apparent fondness for doing business with customers who dealt with hot money from arms and drug sales led to the nickname ‘Bank of Crooks & Criminals International’. Investigations after BCCI's collapse revealed it had maintained secret accounts for an array of unsavoury characters, including Saddam Hussein.

£5.6bn in losses

Hundreds of thousands of people around the world lost their savings when BCCI finally collapsed and the state of the bank’s finances were described by a Bank of England internal memo as at risk of creating the ‘financial equivalent of the SS Titanic’. Thirty local authorities lost around £82m of taxpayer money in accounts with the bank and at least £1bn was stolen from the personal account of the ruling Sheikh of Abu Dhabi by BCCI in an attempt to keep Gulf afloat. By the time the bank finally closed it owed an estimated £5.6 billion.

The Bank of England’s decision to close BCCI led to later controversy with BCCI's liquidators being given unprecedented permission to sue the regulator, alleging the Bank of England had acted with malicious recklessness. Never in its 300 years history had the Bank faced a lawsuit and the case, which began in 2004, was a costly failure for the liquidators, though not before the Bank’s defence counsel delivered the longest speech in British legal history at 119 days.

Evidence from every continent 

The SFO charged three men in relation to the UK fraud, the head of Gulf Group and two accountants that ran and assisted BCCI’s Special Duties Department. Two were charged with offences alleging conspiracy to falsify accounting records and one with conspiracy to supply false information. One fled the country, whilst the other was convicted and sentenced to more than 5 years. The trial of the Gulf Group’s head became one of the largest ever with more than 80 witnesses, and evidence from every continent, except Antarctica. He received 14 years in prison and was ordered to pay nearly £3 million by confiscation order.

The Morgan Grenfell & Operation Holbein NHS price-fixing cases

The Morgan Grenfell case

The SFO investigation and prosecution of Morgan Grenfell fund managers was a significant case with a distinctly unorthodox ending. The case hinged on an alleged fraud perpetrated by two former fund managers who the SFO claimed had breached company rules by investing clients' money in volatile companies well outside the European geographical area which the fund was limited to investing in. Routing transactions through a Luxembourg shell company the funds were diverted to high risk investments as far away as Canada. The SFO charged four individuals with conspiracy to defraud investors, conspiracy to create misleading information and dishonestly concealing misleading facts. One was also accused of having misused investor funds to buy a £350,000 home in Buckinghamshire.

Web of cross-holdings

Prosecutors alleged that the two fund managers and their two accomplices obscured their activity by siphoning the invested funds into a number of shell companies based in Luxembourg which they managed together. Another defendant accused of being involved in that mismanagement also faced charges. Of the four individuals eventually charged, only two made it to trial.

Ill health and trial of the facts

Ill health meant that the main defendant charged was declared 'unfit to stand' and proceedings were dropped against the other after a judge ruled that there was 'no case to answer', the remaining defendants was acquitted.

A later 'trial of the facts' was conducted in June 2003 in which a jury voted 11 to one to declare that the main defendant had in fact orchestrated the fraud. No criminal conviction resulted, however, as the man was still unfit to stand trial.

Operation Holbein - the NHS price-fixing fraud

Beginning in early 2000 after a whistleblower tipped off investigators, Operation Holbein looked into allegations that a group of pharmaceutical companies responsible for supplying more than 50% of the generic drugs used by the NHS had formed a cartel to fix the price of drugs.

Price increases of 800%

Focusing on misconduct that occurred between January 1996 and December 2000, the alleged cartel plot would see drug prices massively increase with members of the cartel controlling the supply and buying off any competitors. This behaviour became obvious after the prices of 32 drugs began to spiral, in some cases by as much as 800%.

The seven year investigation saw several of Britain's leading pharmaceuticals coming under the SFO’s spotlight, accused of defrauding the NHS of more than £120 million. Nine former and current directors were charged, with several of the companies they worked for already having settled with the NHS over the allegations, paying out more than £34 million to the health service.

The prosecution was abandoned before the trial began after a ruling by the Law Lords in the House of Lords, then the highest Court of Appeal in the UK. The ruling, on a separate case, determined that price fixing, without aggravating conduct, was not an offense until after Parliament explicitly made it so (which it did when it passed the Enterprise Act 2002). A High Court judge then ruled that the SFO's prosecution be stopped and later refused the SFO permission to appeal the decision.

The Mars factory fraud & Beijing Olympics cases

Ironfirm Ltd - the Mars factory fraud

Thames Valley Police Economic Crime Unit referred this case to the SFO in summer 2002, following a tip-off from the new owners of Ironfirm Ltd.

Ironfirm Ltd was a machine maintenance and repair company that shared an industrial estate in Slough with one of confectioner Mars’ factories. The factory was a major account for Ironfirm until it was sold to new owners in 2001, who discovered irregular payments in poorly wiped computer records.

False invoices, overcharging & bribes

Investigations revealed that the owners of Ironfirm had been bribing two employees in the Mars factory, responsible for procurement of maintenance services and oversight, to secure maintenance contracts and authorise payments for work not carried out.

Mars aimed to keep production outages to a minimum and equipment failures required urgent repairs, often with no time to secure multiple bids. The discretion given to local employees to contract repairs allowed the Ironfirm and maintenance staff free rein to commit their fraud.

Bribes were normally made as cash payments or gifts, such as electrical goods, furniture, domestic boilers, and even a new conservatory. Over a 10 year period £1m was dishonestly extracted from Mars, though the actual amount was likely to have been much higher. The five conspirators were convicted in 2005/6 and received total jail sentences exceeding 36 years.

Xclusive Tickets - An Olympic Investigation

No other event attracts the same global profile as the Olympics and around 4.7 billion people watched the games in Beijing in 2008. For a group of fraudsters it was an opportunity too good to miss. Following complaints from the public, the SFO opened an investigation into online ticket company ‘Xclusive Tickets’.

Xclusive Tickets claimed to specialise in supplying “hard to get tickets to sold out events’ including music festivals, pop concerts, sporting events and even the Beijing Olympics. Individuals were ‘sold’ tickets which then never arrived. By the time the company collapsed in August 2008 more than 10,000 people had paid for £6m worth of non-existent tickets.

Even the parents of gold medal-winning swimmer Rebecca Adlington were caught out by the scam, which saw some would-be customers charged up to 48 times the price of event tickets.

A global fraud

With the fraud conducted online, people as far away as China and Australia were victims. The SFO took to the internet to appeal for victims to come forward, with the then Director even making an unlikely appearance in NME as part of that appeal.

The case closed in mid-2011 with two directors of Xclusive Tickets and their accomplice jailed for a total of more than 17 years and ordered to pay compensation and fines of over £1.7m.

LIBOR - the global benchmark fraud

The London Interbank Offered Rate, or LIBOR investigation was the first case opened by David Green in 2012 on becoming Director of the SFO. 

$450,000,000,000,000

LIBOR is a benchmark rate, which is an average of interest rates, in a particular currency, as estimated by each of the banks on a panel to set the base rate for banks to borrow money from one another in the London finance market. LIBOR underpins an estimated $450 trillion worth of transactions across the world, not to mention its use as a ‘health indicator’ for banks and the financial system.

Personal mortgages, loans and savings rates all depend on LIBOR. The traders stood accused of fraudulently manipulating the LIBOR rate, ignoring their banks’ estimated borrowing rates in an attempt to change the rate to benefit their market positions. The case spanned multiple financial institutions and saw 13 traders and brokers charged with fraud.

The four trials received extensive media coverage throughout and proved controversial in the City. Five former traders were eventually jailed for a total of more than 27 years for their part in the crime and each received confiscation orders totalling hundreds of thousands of pounds.

The Rolls-Royce case

In December 2013, the SFO announced an investigation into Rolls-Royce, the single-largest investigation ever undertaken by the office spanning over 30 million documents and resulting in record penalties of nearly £500m. The investigation into individuals continues.

Seven jurisdictions, 25 years 

Early on in the investigation it became clear that the bribes and corrupt payments were not simply one-offs or the actions of a handful of Rolls-Royce intermediaries – these practices were identified in Indonesia, Thailand, India, Russia, Nigeria, China and Malaysia and dated back to 1989.

Silver Spirit & hotel entertainment 


Rolls-Royce plc was charged with 12 counts of conspiracy to corrupt, false accounting, and failure to prevent bribery. The nature of the bribes varied from case to case but included a Rolls-Royce Silver Spirit purchased for an intermediary representative in exchange for an aerospace deal in Indonesia and $5m provided to employees of a Chinese airline to enjoy four-star accommodation and lavish ‘extracurricular activities’.

30 million evidence documents

Rolls-Royce was a pioneering case in many ways: it was the largest case undertaken by the SFO, requiring a dedicated team of 70 staff. The sheer volume of documents needing review led to the SFO’s use of artificial intelligence to process 30 million documents, the first use of AI in a UK criminal case. AI allowed the case team to process the documents 2000 times faster than human lawyers could do which speeded up the conclusion of the UK’s third Deferred Prosecution Agreement in early 2017 and resulted in a record penalty of nearly £500m against Rolls-Royce.