May 24, 2016 / 5:16 PM / a year ago

Serious Fraud Office re-examines funding model

A sign is displayed in an unmarked Serious Fraud Office vehicle parked outside a building, in Mayfair, central London March 9, 2011.Andrew Winning

LONDON (Reuters) - The Serious Fraud Office (SFO), Britain's leading fraud and corruption investigator and prosecutor, said on Tuesday it was re-examining a funding model that has been criticised for risking weakening investigations and delaying cases.

So-called "blockbuster funding", under which the agency can request extra cash for costly cases directly from the government, was criticised in a report published on Tuesday by the Crown Prosecution Service Inspectorate (CPSI), which reviews the effectiveness of the SFO's structures and governance.

The CPSI said such a model, which allows the SFO to shore up its staffing levels with external experts for big cases, could damage investigations, did not provide value for money and prevented the agency from building future expertise in-house.

It said that when it inspected the agency 21 percent of staff were not permanent employees.

"There is therefore an inherent lack of consistency in (SFO) teams, which becomes particularly problematic because of the lengthy nature of SFO investigations," the report said. "This disruption increases the risk of delay in cases and may weaken the investigative strategy going forward."

The CPSI report, which praised the SFO board for improving the reputation of the agency externally over the last four years, also suggested other reforms such as a smaller management board, appointing a chief executive, clearer reporting and delegation lines for committees and holistic risk management.

SFO head David Green said in an emailed statement that the agency was "giving new consideration" to a funding model he has said in the past is not perfect, but which "does the job".

He said the SFO was also carefully considering recommendations such as appointing a CEO or chief operating officer and changing the structure of the management board.

Legal experts have already criticised a funding model they argue could lead to political interference with cases that can concern influential blue-chip British companies. The SFO's current caseload includes investigations into Barclays, Rolls-Royce and GSK.

The SFO operates on a core annual budget of around 35 million pounds, although extra cash injections to pay for costly cases have pushed that up to around 50 million pounds a year over the last few years.

Its biggest and costliest cases have included the investigation into the alleged manipulation of financial benchmarks such as Libor (London interbank offered rate), which to date has yielded one conviction and one guilty plea.

Five former Barclays traders are on trial at Southwark Crown Court and further trials of individuals accused of manipulating Euribor (euro interbank offered rate) are expected to begin next year.

Reporting by Kirstin Ridley; Editing by Susan Fenton

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