Lyell gives fraud office another chance

BY JOHN EISENHAMMER

Financial Editor

The Serious Fraud Office won a new lease of life yesterday as the Government announced it will be given more power in its fight against white collar crime.

The SFO is to get more staff and resources, reinforcing its position as the centre of expertise for handling all big fraud cases, Sir Nicholas Lyell, the Attorney General, told the Commons.

Rejecting suggestions that the SFO should be merged into the Crown Prosecution Service (CPS), Sir Nicholas said the cause of fighting fraud will be better served by an independent body dedicated specifically to that task.

Set up in 1987, the SFO has come in for fierce criticism over its handling of several high-profile cases. Its investigative techniques, using wide- ranging powers, have been questioned, and its failure to secure prominent prosecutions after lengthy and costly trials provoked widespread controversy.

George Walker, the ex-boxer and former head of the Brent Walker leisure group, was acquitted last October of charges of conspiring to falsify accounts in a case which cost more than £5m.

Two months later, the Home Office asked the Court of Appeal to review the original Guinness convictions - the SFO's biggest success to date.

The Government spent two years assessing the role and effectiveness of the SFO. Sir Nicholas accepted in full the recommendations of Rex Davie, formerly of the Cabinet Office, whose report urged keeping the SFO as an independent force, giving it better focus and more resources. Emphasising that the Government is "wholly committed to the effective and efficient prosecution of fraud at all levels", Sir Nicholas said past criticism of the SFO was often misguided. "In its seven years of existence to date, the SFO has brought to trial 141 major cases involving 309 defendants of whom 191 have been convicted," he said.

George Staple, SFO director,welcomed the Attorney General's support, saying it ended a period of uncertainty. Sir Nicholas' announcement "points the way towards more effective investigation and prosecution of serious and complex fraud in the future," he said.

Barbara Mills, the Director of Public Prosecutions, also welcomed the decision to maintain the present system of two independent bodies."The Davie report recognises that both we and the SFO have important roles to fulfil in combating serious fraud," she said.

The Davie report recommended a revised set of criteria. designed to clarify which cases should be handled by the SFO and which by the CPS. This should lead to a heavier case load and some enlargement of the Serious Fraud Office, said Sir Nicholas.

The criteria include the size, complexity and prominence of cases, the need for specialised knowledge, and international significance. "The SFO has developed a specialism which needs to be preserved and not diluted," the report said.

It focused on the need to minimise confusion and overlap between the SFO, the CPS and the police. The report said it had found evidence of significant stresses and uncertainties in investigations because of the uncertain relations between these bodies. "They need to be resolved," the report said.

An earlier, far more critical, report on the SFO by John Graham, a Treasury official, had raised fears that the SFO might be merged with the CPS.

The Davie report ruled this out as a serious option. "Abolition of the SFO would mean that there would no longer be an organisation whose raison d'etre was the investigation and prosecution of serious and complex fraud," it said.

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