With Barclays in its sights, can the SFO deliver?
Director David Green is clearly frustrated that he does not have prosecutions but only promises. Nick Kochan reports
Tuesday 13 May 2014
The news that the Serious Fraud Office is about to interview John Varley and Bob Diamond under caution about events that happened almost six years ago, when Barclays obtained a bail-out from Qatar, puts the spotlight on the competence of the SFO and its director, David Green.
His accident-prone agency lost a consignment of sensitive documents last year, paid massive sums to departing executives, and recently was forced to withdraw a case against a high-profile defendant when US lawyers refused to back up its case in London.
Barclays/Qatar is only one of a raft of SFO investigations crawling through the system without any sight of charges, let alone a trial. This is a state of affairs that has poured more ignominy on the country’s lead investigator and prosecutor of big-ticket white collar crime.
Another case stuck in the UK system is Libor, Mr Green’s trophy case for punishing bankers who failed the public in the financial crisis. The SFO has arrested 12 bankers and trumpeted its investigation, but nothing has yet come to trial.
Speaking to The Independent, Mr Green says: “The frustrating thing is that our investigations take time, as do any complex investigations. Once you have charged someone, it then goes into the court system. The first Libor trial will not be until January 2015. We have 12 cases awaiting trial with 36 individual defendants awaiting trial.”
Taxpayers’ money has been used to bring in 60 accountants, lawyers, investigators and other specialists to investigate Libor, but Mr Green hesitates over whether the SFO is really the fighting force to crack it.
“I am fairly confident that we have all the necessary building blocks in place,” he says. “Our intelligence, the quality of our staff, our funding … we have those in place to do the kind of cases we want to do. It doesn’t happen overnight. It is immensely frustrating but it does take time. This is a strategic effort not a tactical one. I well understand people’s impatience.”
Another scandal to have dogged the SFO occurred when its officers carried out an allegedly illegal dawn raid on the property developers Vincent and Robert Tchenguiz. Taxpayers have had to bail out the SFO to pay for its defence, using the blue-chip City law firm Slaughter and May.
Mr Green says that part of the £23m top-up from the Government (on top of its annual £36m) is accounted for by costs in the Tchenguiz litigation, but he doesn’t want to admit how much.
“We haven’t given a breakdown of the sum because it is not, in my view, in the public interest for people out there to know that they have this amount to spend on this investigation. To give a precise breakdown of how much is spent on each case is not appropriate because the people we investigate are well resourced.” Mr Green admits that the legacy from Tchenguiz “is something we have to live with. It doesn’t help the office’s standing”.
He is not complaining, incidentally, about the new offices the taxpayer has provided for him and his team, in the eaves of a government building around the corner from Trafalgar Square. It is a big step up from the pokey old Elm Street offices, by Holborn. But while his office space has greatly expanded, the performance of the SFO likely to be reported in the forthcoming annual report has shrunk. Indeed, one source close to Richard Alderman, the former director, said the number of successful convictions the SFO will have to report will be at a record low.
This comes in the wake of the unsuccessful prosecution of Victor Dahdaleh, the billionaire at the centre of a bribes-for-contracts scandal involving the government of Bahrain.
Mr Dahdaleh walked free after two American lawyers embarrassingly failed to answer a call from the SFO to come and vouch for documents the SFO planned to use in the case. Mr Green says he called up the firm’s senior partner in the US to ask her to put pressure on the lawyers, but she “wasn’t going to force them to attend. They didn’t attend so we were unable to put them before the court”.
Mr Green is highly defensive about some of the headlines that reported this latest SFO disaster. “We don’t accept that we had subcontracted our role to an American law firm, as some of the more lurid headlines suggested. We wanted documentation of certain types from Bahrain, and we were directed to the company’s American lawyers, who had the documentation.”
The failure to bring forward any large cases involving the UK Bribery Act, a draconian statute administered by the SFO that covers bribery throughout the world, is just more evidence of an organisation lacking direction, says one critic. Mr Green can only say: “We’ve got plenty of stuff in the pipeline. We have to work through cases that come under the older legislation, but we also have both under development in our intelligence section and under investigation.” Observers say his promise of cases tomorrow is starting to wear thin.
While the UK has failed to nail either individual fraudsters or corporates – the number of defendants charged with fraud but yet to face trial fell 14 per cent between 2011 and 2013 – hard-nosed US legislation targeted at corporates gets attacked by Mr Green. The US system of deferred prosecution agreements – effectively plea bargaining on an epic scale – is not right on this side of the Atlantic, he says, because the authorities do a deal out of court with the corporate and present it to the judge as a fait accompli with no trial. “It stinks, doesn’t it? It wouldn’t suit our system. The British system is certainly not ‘just a slap on the wrist’,” he insists.
Even so, the wheels of SFO justice are moving slowly and he doesn’t expect any deal with a major corporate to be agreed before the end of the year.
As one lawyer puts it: “The system sucks. People want corporate heads on sticks.”
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