MPs ready to attack Bank and SFO

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The Independent Online

The Serious Fraud Office and the Bank of England are both expected to face criticism from the Treasury and Civil Service Committee report into City regulation that will be published next week. But it will stop short of proposing a radical reform of either.

Close observers say that while the report may appear to be a watered- down version of what some members wanted, the fact that there is cross- party criticism at all of both organisations reflects the general dissatisfaction at Westminster with their performance. One member said: "These two organisation will be awaiting this report with some trepidation."

Criticism of the Serious Fraud Office will focus on its handling of the Levitt affair, although there may be veiled criticism of its general performance in handling financial fraud. One member, who declined to be named, said yesterday there was a feeling "the SFO lacked confidence and had the look of an organisation shying away from taking on high-profile prosecutions".

The criticism will be measured. "I would like to have seen stronger concern expressed," a member said.

MPs on the committee feel that the SFO's director, George Staple, put up a weak performance before them earlier this year when he denied that he had personally misled the Attorney-General, Sir Nicholas Lyell, over Roger Levitt.

Sir Nicholas, taking advice from Mr Staple, told Parliament that no deal had been reached with Mr Levitt, the financier, in the run-up to his trial. It has since been alleged that this was a misleading statement. Mr Levitt was given 180 hours' community service after pleading guilty to a minor charge.

There is no call for Mr Staple's resignation in the report, in spite of the unease over the Levitt affair, partly because the MPs saw their duty to make observations about the City institutions themselves rather than the personalities that run them.

Criticism of the Bank of England will centre on its handling of the Barings affair. The MPs have considered taking responsibility for supervision away from the Bank but have stopped short of recommending that in the report.

The committee has said that it intends to reopen its inquiries into the Barings affair in the New Year and to a certain extent is reserving judgement until then.