City: SFO must be opened up for judgement

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The Independent Online
WHAT future for the Serious Fraud Office? By the end of last week, the ever-lengthening list of charges levelled against it had moved from the sensational to the bizarre and there was a growing sense of crisis at its Elm Street headquarters. If you thought what Michael Mates had to say about the SFO and Asil Nadir was disturbing in the extreme, there was worse to come with the revelation that the names of Sir David Steel, the former Liberal leader, and David Freeman, a prominent City solicitor, were used on forged SFO letters.

Whether you believe them or not, Mr Mates and Mr Nadir have managed to conjure up a powerful image of an essentially unaccountable and rogue organisation, a loose cannon charging around the country like a latterday Starsky and Hutch, undermining good and viable businesses and destroying careers and fortunes in total disregard for the fundamental principles of British justice and fair play. A sterling defence of the SFO by Sir Nicholas Lyell, the Attorney General, failed to convince.

The circumstances of Sir David Steel's letter bear repeating. They concern Nazmu Virani, the Ugandan- Asian businessman charged with fraud in relation to the BCCI affair. What happened to Mr Virani and his company, the property, hotels and pubs group Control Securities, is in some respects a mirror image of the Nadir case. Like Polly Peck, Control Securities was so badly damaged by an SFO raid and the resulting publicity that it virtually went bust (Polly Peck did). Mr Virani, like Mr Nadir, was drummed out of the business.

Sir David, who knew Mr Virani vaguely, took up his case (though not with quite the degree of enthusiasm with which Mr Mates backed Mr Nadir) and wrote to the Attorney General on a number of occasions. What then occurred almost defies belief. A senior police officer within the SFO forged a letter on House of Commons notepaper purporting to be from Sir David. In it he said that Sir David would be attending the next court hearing to ensure, apparently, that Mr Virani was justly treated.

Quite by chance, this astonishingly inept little piece of deceit came to light, though the letter no longer exists (it's been destroyed). The Attorney General looked into the matter and found it to be 'a thoroughly misguided April Fool's joke'. But what about the David Freeman letter? One April fool you can just about believe, but two?

Meanwhile, it must be a comment on the competence of the SFO that more than two years after the event, the only people to have been put behind bars in connection with the BCCI affair, the world's largest ever fraud, are a seconded SFO employee and his outside cohort, for trying to use stolen information on the case. No wonder morale at the SFO is so low; it has become a laughing stock, like something out of Alice in Wonderland.

So what's gone so horribly wrong? Is it just a question of incompetence and over-enthusiasm in the high-profile cases, or is there something more sinister at work? Are episodes like the Sir David Steel forgery examples of crass stupidity, or are we going to find, in a few years, that practices have not been too far removed from the excesses of the West Midlands Serious Crime Squad (which locked up the Birmingham Six), as Mr Mates and a large number of defendants in SFO cases would have us believe? In essence, the question is whether the SFO has been operating a no-holds barred, ends justifies means policy in an attempt to secure convictions in a notoriously difficult area of criminal law, fraud.

The SFO was set up in the late 1980s to answer growing concern about the apparent failure of the authorities to deal with large-scale fraud. Its track record hasn't actually been too bad in smaller cases. But since the initial success in the first Guinness trial, the hit rate on major fraud has been abysmal. Even the first Guinness trial, which was hailed as a masterpiece of investigation and prosecution, is now subject to allegations of abuse.

There seems little doubt that the SFO has, on occasions, been over-zealous, disingenuous and even a little naive in its pursuit of major cases. At least one - Blue Arrow - was wholly misconceived from the outset.

The mix of personnel at the SFO - seconded policemen (more used to arresting East End villains in their pyjamas than pursuing sophisticated businessmen), City lawyers and accountants - has proved a difficult one to manage. Often the police will spend weeks using the SFO's considerable powers to investigate something they regard as fishy, only to be told later by accountants that it is common and legal practice. A failure to understand the ways of the City and business has been a feature of most SFO cases.

Post-Maxwell and BCCI, the SFO has also almost certainly bitten off more than it can chew. But with the debate moving beyond the SFO's competence and ability to cope into abuse of power, there is now a serious danger of fraudsters gaining the upper hand.

If you are going to fight crime you have to do so by fair means. With major fraud, the authorities are usually up against rich and powerful men, able to buy and secure favours at will. But that doesn't make the use of unlawful practices justifiable. A discredited SFO is worse than useless. That is why the Attorney General is wrong to resist calls for an independent inquiry. If nothing else, it would clear the air. It becomes even more important if it is true that the Royal Commission on Criminal Justice is about to recommend the SFO's powers and responsibilities be widened and that some of its more contentious weapons, such as the right to compel evidence, be extended to other areas of criminal law.

Some of the more outrageous allegations being levelled at the SFO can be explained, but enough noise is being made for the Government to be pretty sure there must be at least something in it.

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