Nick Ephgrave has the air of a copper under siege. A former Metropolitan police officer who once pounded the pavements of Brixton in south London, the ninth director of the Serious Fraud Office can be forgiven for feeling claustrophobic in his office overlooking Trafalgar Square.
The SFO’s offices in Cockspur Street, near the tourist-thronged square and its barrage of buskers, are a far cry from the glass and steel headquarters of the companies it takes on.
Even to enter Ephgrave’s attic room – a small, corner office looking down on the gun-metal lions beneath Nelson’s Column – he must first go through the security of the Canadian High Commission. Shabby carpet, struggling house plants and chipped mugs give an impression that is more Slough House, in the TV drama Slow Horses, than the UK’s premier anti-fraud squad.
At least he has a view; some of its staff work in its basements, taking vitamin D tablets to compensate for the lack of natural light. There, the majority of the SFO’s historical case files are stored in a former swimming pool.
Its dilapidated offices and soundtrack are distractions he could do without. Running the SFO is one of the highest-pressure jobs in law enforcement. His predecessors have faced heavy criticism, so much so that the body was nicknamed “The Nightmare on Elm Street”, referring to a series of failures when it occupied its former offices. Being forced to set aside £250m for potential damages has earned it a new nickname among some senior Treasury officials: “The Cockups on Cockspur”.
In his most candid interview yet, Ephgrave goes further than any of his predecessors, admitting that the SFO has granted immunity from prosecution to an individual who helped it to snare white-collar criminals.
While he says the organisation welcomed him, Ephgrave also has to bat away preconceived notions of who ought to be running the SFO, given that the role is often done by someone with a legal background.
“Clearly, I’m not a lawyer,” he says. “One of the things I think I bring, which I think my predecessors maybe hadn’t, was experience of progressing investigations in all sorts of different ways. Introducing new tactics, new methodologies.”
Ephgrave says he faced resistance, a sense of: “‘Who is this fella that’s come in from policing into this rather specialist world?’” People were worried that this lack of legal experience might affect the “quality of decision-making”, he adds. “Getting over that hump was a bit of a challenge, initially.”
Ephgrave may face more such challenges in the future, given his surprising admission that the SFO has granted complete immunity from prosecution to an individual, after their assistance in apprehending other offenders.
He divulges the fact while outlining his plans to speed up the SFO’s notoriously slow handling of cases, via what his US counterparts colloquially call “flipping” individuals, so that offenders assist the state – often described as turning king’s evidence, in the UK system. This means, as Ephgrave explains it, using covert means to gather evidence on someone and then offering them a lesser charge or even immunity from prosecution in return for their assistance gathering evidence that can help secure other convictions.
“I mean, if you look at the legislation, I can actually, as director, in really extreme cases, authorise immunity from prosecution. Now, of course, that would be a very, very significant step to take and it’s hard to imagine how that would work,” he says.
Asked if it has even been used before, he adds: “I believe it has, once. You might need to factcheck me on that but I think it’s been used once by the SFO. So I can do that, but rarely, rarely, rarely do we ever do it.”
It is a startling admission. The SFO has previously rejected freedom of information requests on whether it has granted immunity related to some specific time periods, saying that to do so would undermine its operations.
People familiar with operations at the SFO confirmed that this power has been exercised.
A former director of the SFO said they are “deeply shocked” that Ephgrave confirmed, this and that in doing so he has “set an entirely new and unhelpful precedent which is irresponsible at best”. They said: “It should always be neither confirm nor deny.”
Then there is its budget, a source of constant tension. As a rare prosecuting authority, the SFO takes on some of the world’s best-resourced companies and individuals, who hire armies of lawyers to fend off the fraud-busters. Some of its recent high-profile cases include a corruption and bribery case involving Rolls-Royce that resulted in an almost £500m deferred prosecution agreement. Its investigation into the activities of the steel and trading magnate Sanjeev Gupta is in its fourth year.
The SFO’s annual running cost of £95m is dwarfed by the money that flows through the UK and its financial capital. It is minuscule compared with just one slice of the City’s industry, for example: £4.2tn of assets are under management by its financial professionals for overseas clients. Its annual budget is formed from a complex mixture of fixed funding and bids for so-called blockbuster funding for individual cases that exceed 5% of its annual budget.
But it has also been known for some own goals, making it harder to win greater resources. It is going cap in hand in the spending review after already upsetting the Treasury: it was forced to set aside £250m for potential damages as the cost of cleaning up a failed prosecution of the mining company ENRC, according to its parliamentary budget submissions.
Ephgrave suggests that he is confident about future funding for the SFO. A move from applying for extra funds towards upfront money is a new “exciting possibility that now presents itself in this current spending review period”, he says.
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“That is an arrangement [blockbuster funding] that has been in place for some time. And it works. I mean, it provided us with quite a significant amount of money every year on the average to fund those big cases. So it wasn’t broken,” Ephgrave says.
But that uncertain income makes it hard to recruit permanent staff.
“So one of the things that’s changed in this spending review is that a certain chunk of the money that we would normally expect to get through blockbuster case applications has actually been provided upfront. So that provides us with a degree of certainty on funding, which allows us then to make some bolder decisions around permanent recruitment, because we’ve always had to have the ability to flex.”
This is far from a done deal, however, sources familiar with the financial negotiations and broader examination of the regulation and law enforcement of the City said.
Ephgrave is also trying to improve incentives for individuals who help the SFO. He wants to be able to pay whistleblowers, adopting a US-style approach whereby informants can receive 10-30% of the money the government manages to win back from a case. If they provide “smoking gun”-type evidence, the SFO director wants to have powers to do likewise, and believes that it will speed up investigations and improve the quality of evidence.
The SFO has faced a string of big failures in some of its prominent cases. One of its current prosecutions, which could pose an existential threat if unsuccessful, is against individuals linked to the mining company Glencore.
“The team that worked here worked extremely hard to put together the evidence that’s allowed us to go ahead and now charge six senior characters that were in that organisation at the time. So, you know, that’s now going to trial. It will, of course, be a really significant moment for us, whatever happens at that trial,” he says.
“My job as a prosecutor is to bring that prosecution and put it in the court and ideally to get past half-time. So what happens thereafter, I think, is in the hands of the jury, isn’t it? It doesn’t mean I say I’m not confident. Of course I’m confident, but the point is … I think we have done a fantastic job to get these charges brought.”
Ephgrave’s time in the Met spanned some of the biggest challenges that organisation has faced in the past few decades. Early in his career, he worked in the East End of London in the Met’s special branch, when it was facing repeated bomb threats from the IRA. He went back into uniform to serve as a sergeant in Brixton before transferring to Peckham and eventually becoming a detective chief inspector.
Reinvestigating the killers of Damilola Taylor thrust Ephgrave in the spotlight, as did a stint as staff officer in the office of Sir Ian Blair – whose leadership of the Met was the source of much criticism. He then returned to work on counter-terrorism before becoming borough commander for Lambeth. He left the force after a spell as assistant commissioner for the Met.
He wants to apply policing techniques and the professionalisation of areas such as disclosure – handing over all relevant information and documents to the defence in a court process – at the SFO. He is also hiring more investigators, rather than lawyers.
“We are definitely investing in our investigative capacity. But it’s not just investigators.” There are also more hires with a background in technology who now work “in the dungeon, trying to extract data from encrypted devices, process it, package it”, he says.
Most of its staff are excited to move from its headquarters to new office space “with a canteen” in Canary Wharf. A few dread a longer commute across London. Whether they end up there for a shorter period of time before a move to the NCA’s new offices in Stratford, in a building shared with the Financial Conduct Authority, remains to be seen.
Ephgrave will get some relief from Trafalgar Square’s buskers, at least.
