Cuts hamper fight against crime, warns SFO director

Outgoing boss says budget has already been slashed by 40% as he voices fears for the department's future

The outgoing director of the Serious Fraud Office (SFO) expressed "serious concerns" last night that Government cutbacks to the department's budget will hamper its efforts to tackle major white-collar crimes.

Richard Alderman, who is leaving his post in a fortnight after four years, to be replaced by David Green, said the SFO had suffered a budget cut of 40 per cent since he arrived. "It has been a big, big problem," he said. "My concern is, of course, that this trend of budget cuts will continue. I am very concerned about how much money David will have at his disposal."

The SFO handles the most serious and complex cases of fraud which, by their nature, are the hardest and costliest to prosecute, he said, adding: "Cases get bigger and bigger all the time and more and more complicated. I am seriously worried the SFO will have difficulty dealing with more cases with ever smaller amounts of money."

The SFO's budget for last year, revealed in its annual review published yesterday, was £36.8m. However, through its prosecutions, it recovered more than £50m of assets from the proceeds of crime, up from the £42.5m the previous year.

Among those were the £29.5m paid by BAE towards educational projects in Tanzania after it reached a controversial settlement with the SFO over a major contract there. The SFO faced severe criticism about the deal, with the judge condemning how BAE had "blanket immunity" for offences committed in the past.

However, Mr Alderman remained defiant about the case. In fact, it was cited as a highlight of the SFO's year in yesterday's review. "I think it was brilliant," he said. "My big regret is that BAE did not face up to all of this at a much earlier stage."

The SFO is also often criticised for not prosecuting enough fraudsters. Mr Alderman repeated his calls for a law that could successfully be used to prosecute the main players behind the banking crisis, where convictions have been practically non-existent.

"What we need is a new law that would cover 'recklessly running a financial institution'," he said. "It is not that I want to put people behind bars, but a new offence will improve corporate behaviour, just like the Bribery Act has improved corporate behaviour."

Companies campaigned vigorously against the Bribery Act, worrying that they could be prosecuted for such harmless business practices as taking a client out to lunch. "The alarm was very exaggerated," Mr Alderman said. "We were always at pains to say we would be applying the law sensibly. We weren't after low-hanging fruit. If we had been, we could have notched up 50 or more prosecutions by now."

However, he said several cases were under investigation where foreign companies appeared to have beaten British companies to contracts abroad by using corrupt means. "We are going hardest at those cases where the interests of clean British companies, and their workers, have been undermined," he added.

Next month's Queen's Speech could include a US-style law he has been calling for, offering a probationary period to companies who agree to pay fines.