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• Full report - Serious Fraud Office 2011-12 accounts

Amyas Morse, Comptroller and Auditor General, has qualified his audit opinion on the 2011-12 accounts of the Serious Fraud Office in respect of the voluntary redundancy costs for the former Chief Executive Officer.

The Chief Executive Officer (CEO) of the SFO, Phillippa Williamson, left the organization on 16 April 2012. However, there is no evidence that due process was followed in instigating this voluntary redundancy (for example, determining whether alternative positions within the Civil Service were sought).

The CEO’s severance agreement provided for payment of £407,000 to MyCSP (who administer the Principal Civil Service Pension Scheme for the UK Government) to cover all additional pension costs arising from the early departure. The SFO should have gained approval from the Cabinet Office for this payment, but there is no evidence that the approval was obtained and therefore the NAO has deemed the payment irregular.

In addition, a special severance payment of £15,000 was made. Departments are required to gain Treasury approval in advance of making payments which are in excess of contractual amounts. There is no evidence that approval was sought and therefore this payment is also deemed to be irregular.

The new SFO Director, David Green, assumed office on 21 April 2012, and was therefore not party to the severance arrangements. He has decided against seeking retrospective approval for the transactions because he believes they were inappropriate. On becoming aware of the issue, the Director sought legal advice which confirmed that the agreement was legally binding and the SFO was legally obliged to make the payments. He commissioned an independent review into the matter with the results being shared with the Attorney General’s Office and has taken steps to ensure that all future exit packages are appropriately reviewed.

Amyas Morse, head of the National Audit Office, said yesterday:

"By failing to seek approval from the Cabinet Office and the Treasury, the Serious Fraud Office entered into an agreement which forced it to make irregular payments. While positive steps have been taken by the incoming Director, I have qualified the organisation’s accounts."

Notes for Editors

1. A qualified regularity opinion is an opinion that transactions have been made which are not as prescribed by Parliament.
2. Press notices and reports are available from the date of publication on the NAO website, which is at www.nao.org.uk. Hard copies can be obtained from The Stationery Office on 0845 702 3474.
3. The Comptroller and Auditor General, Amyas Morse, is the head of the National Audit Office which employs some 880 staff. He and the NAO are totally independent of Government. He certifies the accounts of all Government departments and a wide range of other public sector bodies; and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources.