I accuse the SFO gunslingers: There is deep anxiety about the methods and objectives of the Serious Fraud Office, says Patrick Spens. He calls for reform of the organisation that tried to jail him

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The Independent Online
Six weeks ago, after the High Court directed my acquittal, I described the Serious Fraud Office (SFO) as 'no better than a cowboy outfit with a gunslinger mentality'. That was no rhetorical flourish uttered in the euphoria of victory. It was a considered view. Since then, I have had a postbag of sympathetic letters, some from people who have themselves been interviewed by the SFO, others from professional people, including Queen's Counsel, who have to deal with the SFO on a daily basis. Overall there is deep and widespread anxiety about the SFO's methods and objectives.

The genesis of the SFO lies in the Roskill Report of the Committee on Fraud Trials and the Criminal Justice Act, 1987. The SFO started on a piecemeal basis in 1988, taking over the Guinness prosecutions. Indeed, the second director, in the autumn of 1990, was Barbara Mills QC, flush with her prosecuting success in the first Guinness trial in which Ernest Saunders was convicted. She became Director of Public Prosecutions in 1992 and her successor is a solicitor, George Staple.

The SFO is a hybrid, bringing together police, lawyers and accountants - all with different backgrounds and ethical standards and most without any history of prosecuting offences. Unlike its supposed counterpart in the United States - the Securities Exchange Commission - it has not had time to develop its own standards and career structure. Indeed, there appears to be a feeling that this will never happen. Lawyers and accountants are seconded to the SFO, together with police officers, and they form teams to deal with serious fraud of particular public interest. One result has been to raise the profile of the SFO dramatically, with early-morning arrests and swoops on companies often accompanied by video cameras.

There are two types of fraud. First and simplest are cases where the till has been raided and money is missing - such as Barlow Clowes, where pounds 113m of small investors' money was lost. The second is where City practices have allegedly been abused - such as in the Guinness and Blue Arrow cases. The latter are by definition more difficult, as there is no missing money and the SFO therefore has the unenviable task of establishing what was in the defendants' minds. It is this aspect of the SFO's activities that is the most borderline and dubious.

Because of the lack of career structure within the SFO, teams have sprung up, headed by case controllers, whose job it is to investigate and then prosecute using retained counsel. There is, inevitably, a lack of consistency between teams, and the make-up of each team will vary from task to task. Formerly the police were in charge. Now they appear to have been reduced to arresting officers and sundry bag-carriers.

Hitherto prosecutions have not begun until the police were satisfied that they could make a case stand up in court, and the decision to prosecute has been taken by a separate, independent service - the Crown Prosecution Service. Hence checks and balances existed. Within the SFO there is no evidence of any balancing system, as each team both investigates and prosecutes, doubtless with some overview from the director and his deputy. The result is a lack of consistent standards which has led to the problems which I believe riddle the office today.

One of these is the SFO's approach to the burden of proof. The physical evidence is often hard to establish in alleged fraud cases, so the SFO has fallen back on the McCarthyite technique of evidence by inference. A motive, which supports the SFO case, is imputed to the defendant and presented in court, regrettably without hindrance from the judiciary. The defence is left trying to prove a negative - that the defendant did not have the motive attributed.

Proving a negative is much more difficult to achieve than people imagine. Indeed, in many situations it is impossible. Suddenly the inference becomes fact and juries are told by a barrister that this indeed is the case. For the defence barristers, who present their evidence much later, this is a huge hurdle and one of the main causes of big delays in trials.

This could all be rectified if both judges and prosecuting counsel recognised that the job of the prosecution is not to win at all costs but to establish the truth. Indeed, this is reflected in the Code for Crown Prosecutors, but it is all too often forgotten.

A further criticism has been the sometimes deliberate failure of the SFO to give the defence all its documents. Hitherto, the SFO has relied on the maxim that, unless it - the SFO - deems it to be relevant, the defence will not receive information unless and until it requests it. This practice is plainly open to abuse as only the defence lawyers can decide whether evidence is relevant to the defence; if they are unaware of its existence they it can hardly request it. Section 2 of the Criminal Justice Act 1987 gives the SFO draconian investigative powers, including the supply of all documents it requests. This is also fraught with difficulties. The SFO is reputed to have invoked notices under Section 2 more than two thousand times in the past year or so. As a result huge volumes of evidence are collected.

Eventually the SFO will make available to the defence copies of this evidence - if it deems it relevant. The defence team is then overwhelmed by the volume of paperwork, all of which has to be examined in detail, with little or no time to complete the exercise before appearing in court. The defence teams, most certainly if legally aided and probably if not, simply will not have the manpower and financial resources to perform the task adequately.

The hourly rate, paid monthly, for the junior prosecuting barrister in the Guinness trials was several times that of his defence counterpart, who will be paid by legal aid maybe 18 months in arrears. This differential is a disgrace and may not facilitate the course of justice.

Another danger is the use of Section 2 requests to recover information and documents from other investigations, which may have nothing to do with the current brief. Recently the SFO has requested all documents unearthed by the liquidators of the Maxwell private companies. It is hard to see how these documents can have any bearing on its investigation.

Above all, the dual role of the SFO in investigation and prosecution must be questioned. Unlike the Customs & Excise, which has a similar dual function, the SFO has no history, no training ground and no consistency. There is an urgent need to reform and restructure the SFO so that it occupies a logical place in our adversarial system, where it is open to examination and is properly accountable.

Lord Spens, the former managing director of corporate finance at the Henry Ansbacher merchant bank, was charged with conspiracy to defraud and false accounting in connection with the Guinness affair. The High Court directed his acquittal on 28 November, 1992.

(Photographs omitted)

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