Britain’s shrinking fraud watchdog

LONDON — On an arid plain in the south of the Democratic Republic of Congo sits the town of Kolwezi.

Layer upon layer of red rock leads to a pool of eerily bright turquoise water, copper-enriched from running off mines.

Even here, nearly 7,000 miles from London, reaches the long arm of Britain’s Serious Fraud Office (SFO), the agency tasked with investigating the worst of corporate corruption.

The mine was part of the reason the SFO launched an ill-fated 2013 investigation into Eurasian Natural Resources Company (ENRC), a Kazakh company previously listed in London.

A 10-year investigation followed. It led to no criminal charges against the company — but did lead to the company filing its own legal action against the regulator.

The damages, to be announced any time now, could total over £200 million, multiples of the watchdog’s annual budget of £90 million.

But financial woes are not the only obstacle the SFO now faces. 

Political forces mean the space for an enforcement agency to kick down the doors of companies operating in Britain appears to be shrinking.

Over in the United States, Donald Trump’s administration has torn down rules designed to police international corporate bribery. And, closer to home, the SFO is about to find out whether catching crooks is really compatible with the Labour government’s single-minded pursuit of economic growth.

It’s an important time for anti-bribery: The agency is preparing to host an international economic crime event in the next couple of years, and planning is underway for Britain’s next evaluation by the Financial Action Task Force, the world’s financial crime watchdog.

Yet fraud in Britain has soared: In 2023, £2.3 billion was reported, a 104 percent increase on the year before.

At a time when the mission of the agency has never been more relevant, it faces immense challenges.

Over in the United States, Donald Trump’s administration has torn down rules designed to police international corporate bribery. | Ken Cedeno/EPA

“I think, frankly, it’s never really had the funding it needs,” said one former solicitor general, granted anonymity, like others in this article, to discuss the issue candidly. 

“[British Foreign Secretary] David Lammy has made a lot of gestures toward an anti-kleptocracy program. But that directly contrasts with Rachel Reeves’ idea that every regulator and department has to focus on growth, because if you’re fixated on growth, the last thing you do is have a really strict policing regime for corruption,” said an economic crime lawyer.

A unique mission 

The SFO was set up in 1987 after a series of high-profile crimes in the City of London, Britain’s banking powerhouse, led members of the House of Lords to call fraud a “growth industry” in the U.K.

The watchdog was given the responsibility of policing corporate bribery and corruption in the United Kingdom. Cases involve high-level, complex, often international frauds. 

Its work is varied and unique: From a case against a former Ministry of Defence official convicted for taking bribes, to hundreds of millions of pounds paid by mining giant Glencore for bribery in South Sudan, to investigating Barclays bank executives (later found not guilty) for alleged impropriety in deals with Qatari investors. 

“There’s no other agency that has the skill set the SFO has to tackle international bribery,” said Helen Taylor, a senior legal officer at campaign group Spotlight on Corruption.

Yet international and domestic politics are working against it, and numerous interviewees POLITICO spoke with questioned whether the British government had a serious interest in the mission of the SFO, given its intense focus on boosting the economy and slashing perceived barriers to business.

“There is definitely a duality, and an inherent contradiction, between the understandable desire for growth and for the success of British companies on the one hand, and on the other hand enforcing the Bribery Act,” said one former senior official at the SFO.

The government has been clear that it wants life to be easier for big companies in the U.K. In January, Reeves called on regulators to “tear down” red tape.

“There’s a political environment at the moment of wanting to keep the City happy. There is a risk that the new government is less than wholehearted in its support for the SFO as a result,” said Taylor.

In February, the Trump administration made the unprecedented decision to no longer enforce the U.S. Foreign Corrupt Practices Act (FCPA). The act, in place since 1977, forbids American companies from bribing foreign countries to gain contracts — a blow to British efforts, which lean on the fearless approach from U.S. agencies to fight global corruption.

“The fight against corruption only has real teeth if there is a likelihood that those involved in corruption may be prosecuted, and that requires prosecutorial authorities around the world. The big guns have always been the United States,” said Anneke Van Woudenberg, executive director of RAID, a charity which fights for the victims of corruption.

“[British Foreign Secretary] David Lammy has made a lot of gestures toward an anti-kleptocracy program. | Anrej Cuckic/EFE

“In the past, we’ve enjoyed really close cooperation with the Department of Justice and our Canadian colleagues. It’s part of the really close relationship we have on crime and security, and anything that undermines that is just really deeply regrettable and should be reversed immediately,” said the former solicitor general.

A difficult past

Away from the politics, past failures also cast a shadow on the SFO.

It has made some distinctly high-profile mistakes. And some — including even former SFO employees — believe that has led the agency to become more cautious. 

“The challenge will be whether the SFO moves from cases of the kind which are presently in the public domain, to the bolder cases opened by previous leaders,” said a former senior lawyer at the SFO.

The greatest failure of all, in the eyes of both critics and supporters, is the ENRC case. The SFO opened a criminal investigation into the Kazakh-owned mining firm in April 2013, based on its dealings in Kazakhstan and Africa, including how ENRC had acquired mining assets in the DRC. The agency alleged “payment of bribes by the company and individuals connected to it to secure access to lucrative mining contracts” in the DRC.

ENRC launched a series of lawsuits against the SFO for damages, and alleged that the agency had leaked parts of the case to the media. In 2023, the U.K.’s High Court ruled that the SFO was “in serious breach of its own duties” in its handling of the case. No criminal charges were ever brought against ENRC. 

The ENRC, now known as the Eurasian Resources Group, did not respond to requests for comment. It has always denied wrongdoing.

Given the historic nature of the case — and that the SFO has changed its previous leader who became mired in controversy — it has avoided recent significant political fallout, despite potentially having to pay hundreds of millions of pounds in damages.

But those close to the agency warn the case crushes its tough image. 

“I learned things in that trial that made my hair stand on end,” said the former senior official at the SFO. The agency was criticized by a judge in the High Court for accepting information from an ENRC lawyer that was “plainly unauthorised” and “against his client’s interests.”

“On the one hand, it was a terrible failure for the SFO,” said Van Woudenberg. “On the other hand, it set out a playbook of what works when a company wants to tackle a corruption investigation by the SFO. The SFO closing that investigation without charges is one of its major challenges going forward,” she said. 

The final figure for damages that the agency must pay ENRC is not yet public. Although it was estimated to be $250 million, many multiples of the agency’s budget, the SFO told POLITICO this amount had been reduced.

And it adds to the issues for an agency that has, even in the eyes of those in the Attorney General’s Office, never been funded properly.  “Look at how the SFO is funded compared to the resources of the defendants? I mean, there’s no comparison,” said the former solicitor general. 

Still, some argue that the agency’s critics misunderstand its purpose: “You can’t have an organization that takes on really challenging cases and wins every one. That’s not the way it works,” said Jonathan Fisher KC, a barrister and visiting professor at the London School of Economics who specializes in financial crime. He added, however, that “the optics are not good, when you see the SFO take on a case and lose it badly.”

The SFO, in its own words, takes on “a small number of large economic crime cases.” And this means the window for success is small, according to the former solicitor general: “They only do a couple of cases a year. They’re very exposed as an agency. I’d like to see them do more cases, and sometimes a bit of volume actually improves the performance.” 

But finance minister Reeves’ announcement that U.K. civil service costs will be cut 15 percent puts extra pressure on the SFO’s workforce. “It is madness,” said an economic crime expert at an NGO. “The government should, at the very least, exclude the enforcement bodies from cuts.”

“It’s an untenable situation where your enforcement capacity depends on civil service headcount numbers.”

Taking on more cases would require more funding. Although the government provided additional cash to the agency late last year, it is “peanuts” compared to what the agency needs, according to the economic crime expert. 

The agency’s budget in 2025/6 was £88.9 million, which pales in comparison to the £1.8 billion it contributed to the Treasury over the last decade through the fines and penalties it has gathered. And even internally, there is a push for radical change to the tools in its armory.

In the U.S., the Securities and Exchange Commission — America’s main finance watchdog — offers whistleblowers a portion of the fines it collects from their information. In 2023, the agency issued its largest-ever award to a whistleblower, nearly $279 million. There’s no comparable offering for blowing the whistle on fraud and bribery in the U.K.

“Whistleblowers take us to the answers more quickly. The problem with whistleblowing in this country is that there is no benefit to the whistleblowing,” said Nick Ephgrave, the director of the SFO, in an interview with POLITICO. 

Ephgrave disagreed that individuals should come forward with information simply because it is the right thing to do, and not be paid for doing so. “Do we live in the real world or not? These are people that have got status, they’ve got a mortgage to pay, they’ve got kids probably at private school, they’ve got membership of clubs.”

“The solution is inside information,” he said.