SFO’s case against former Serco executives collapses

The Serious Fraud Office’s case against two former Serco executives collapsed in dramatic fashion on Monday after it emerged the agency had made mistakes when disclosing documents which jeopardised the trial.

On Monday, Judge Amanda Tipples refused the agency’s application to adjourn the case and directed the jury to return not guilty verdicts against Nicholas Woods and Simon Marshall, bringing a humiliating end to the SFO’s seven-and-a-half year investigation into prisoner tagging contracts.

Woods and Marshall, former finance director of Serco home affairs and operations director of field services respectively, were accused of defrauding the government out of £12m by understating the true profitability of the company’s prisoner tagging contract. 

On Monday, it emerged that the SFO had failed to disclose certain documents to the defence, resulting in issues which, according to Tipples “undermine the process of disclosure to the extent that the trial cannot safely and fairly proceed until they have been remedied”.

The SFO asked to adjourn the trial — which began in March and concerns allegations dating back to 2011 — in order to resolve those issues. However, Tipples said it was not in the public interest to do so.

The disclosure issues meant the SFO could not offer any evidence against the defendants in a case that was set for as long as 12 weeks but abandoned just a third of the way through. Some 1.3m documents had been produced for the trial.

In a statement the SFO said: “We are considering how best to undertake an assessment to prevent this from happening in the future.”

Andrew Katzen, a partner at Hickman & Rose representing Woods, said the decision was a “welcome vindication of his client” but said the multiyear criminal investigation should be a matter of “profound concern to everyone concerned with justice”.

“Nicholas Woods was accused by the SFO of devising a serious fraud by which false charges were created to reduce Serco’s profit margin on government contracts,” he said. “However, the evidence in this case clearly showed these charges were, in fact, company policy. Mr Woods was directed by senior management to implement them, and trusted his bosses believing the practice to be completely legitimate.”

The collapse of the case is a stinging defeat for the SFO, which also attracted criticism from the judge for the way it constructed the case.

“It seems to me there are . . . real concerns in relation to the nature of the prosecution case against these defendants,” Tipples said on Monday.

Neil Swift, a partner at Peters & Peters representing Marshall, said of his client that it “was deeply shocking that he’s been dragged through this for eight years of his life, only for the SFO’s case to collapse in such ignominy”.

The case is the latest in which the agency has settled allegations of wrongdoing with a company but failed to secure convictions in prosecutions it pursued against connected individuals. The SFO secured a £19.2m fine against Serco in 2019 and £3.7m in costs after the outsourcer took responsibility for fraud in relation to prisoner tagging contracts.

The agency has signed nine plea deals with various companies including Tesco but not convicted any individuals in relation to the agreements. 

Susan Hawley, executive director at anti-corruption group Spotlight on Corruption said: “The UK has yet to successfully prosecute any individuals where a deferred prosecution agreement has been agreed with a company. We need an urgent review of why this is.”

Serco declined to comment.