Serious Fraud Office Dodges Another Bullet
October 1, 2013 1:47 pm

By Jonathan Russell

The U.K.’s corporate crime lawyers, investigators and advisors can breathe a sigh of relief. Once again the Serious Fraud Office was facing the guillotine. Once again it has been given a last minute reprieve.

Jonathan Russell

A decision on Monday by Judge Nicholas Loraine-Smith to throw out a high stakes legal challenge to two SFO investigations could just have saved the agency from being broken up.

The challenge by two defendants linked to British sports retailer JJB Sports revolved around how the SFO’s former director Richard Alderman had delegated his powers to his then chief executive Phillippa Williamson. As Williamson was neither a lawyer nor had any experience running investigations (she was an accountant), she should not have decided who was to be investigated, argued the individuals under investigation. Not so, ruled Judge Loraine-Smith, but not without voicing some serious misgivings.

Had the decision gone the other way, in favour of SFO suspects Chris Ronnie and David Ball, it is thought a further 30 cases could have fallen apart – some case currently under investigation, others where the parties are already under the lock and key of British authorities.

To put the figure of 30 in context, the SFO has just 68 cases on its books at the moment. To see almost half its cases wiped out at a stroke because of a procedural pratfall would almost certainly have led to renewed calls for the SFO to be broken up.

Worryingly for the U.K. legal community, this time it could well have happened.

There is nothing surprising in the news that the SFO is treading on thin ice. The Home Secretary Theresa May made a concerted effort to sweep the agency – and its £30m budget – into the National Crime Agency in 2011. She failed, but only after determined lobbying from Alderman.

Since then the SFO’s future has been put in jeopardy more by internal than external forces.

The way the agency hands out contracts to third party suppliers, payoffs to senior staff and the botched investigation into the Tchenguiz brothers have all led to widespread and strident criticism.

Many of these issues have only come to light since Alderman was replaced by the new director of the SFO, David Green. It seems each time a new problem at the SFO is revealed it is hoped that it will be last. It seems each time those hopes are dashed.

For the U.K. legal community, concerned that there is a credible national force policing corruption and bribery, the continued existence of the SFO remains crucial. Its £30m budget is tiny when compared with the SFO’s American counterparts, but it is the only pot of money in the U.K. dedicated to tackling complex economic crime.

If the cash gets subsumed within a larger agency, so the argument goes, it will inevitably get side-tracked away from the tough cases towards the cheap wins. In other words suspected fraudsters could escape with impunity – something that thankfully did not happen on Monday.

About Alaco Limited and Jonathan Russell

Alaco Limited is a London-based business intelligence and corporate investigations firm. Jonathan Russell joined Alaco in 2013 after a 14-year career in journalism, the last six of which he worked for The Daily and Sunday Telegraph. As a City of London reporter he covered fraud, white collar crime, the work of the Serious Fraud Office and City regulators. He has also written about property, transport, pharmaceuticals and support services. He has lived in Brazil and France and speaks fluent Portuguese and French. He can be reached at Jrussell@Alaco.com.

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U.K. DPAs: Available next month for the Serious Fraud Office. Now comes the hard part of implementing them in practice.

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