Sir Christopher Evans in the clear as SFO gives up fraud inquiry

Four-year investigation into bioscience entrepreneur is closed

( )

The Serious Fraud Office has dropped a four-year investigation into the activities of an investment group run by the Sir Christopher Evans, the biotechnology multi-millionaire and Government adviser.

In a briefly worded statement issued yesterday, the SFO said it "will not be bringing any charges as a result of its investigation into the affairs of Merlin Biosciences. The Serious Fraud Office launched its enquiries in 2005 following a referral from the Financial Services Authority. Following a detailed review of the evidence gathered in the course of a thorough investigation, it has been concluded that there is insufficient evidence to provide a realistic prospect of conviction."

“The investigation dates back to 2005 when a former employee of Merlin, Andrew Greene, who had left the bioscience investment group, contacted the FSA alleging fraudulent activity relating to two investments made by the firm.”

Mr Greene accused Merlin of misappropiating £2m in relation to its backing of Energist and Miracle Light, two companies in which Merlin's third fund had stakes.

A spokesman for the SFO yesterday defended the time taken to conclude the inquiry, arguing that fraud allegations of this type are complex and involve several layers of legal consideration before deciding whether or not to proceed with a prosecution. He confirmed that the SFO had closed the case due to a lack of evidence, but declined to say how much the investigation had cost.

As part of the investigation the SFO looked into several of Merlin's financial arrangements, including the movement of money between Luxembourg, Switzerland and Guernsey. Almost 50 people were interviewed as witnesses.

Merlin, which is now known as Excalibur Fund Managers, was established by Sir Christopher in 1996. He has founded more than 20 bioscience firms, four of which were subsequently listed on the London Stock Exchange. His companies have a combined value of more than £1bn and employ more than 2,000 people.

"These allegations were malicious, totally unfounded and made by a disgruntled former employee who had been dismissed from our company. There was no wrongdoing. We knew that, and just as importantly our investors knew that. Now we have been completely vindicated," Sir Christopher said in a statement yesterday.

"The fact that these unwarranted allegations were made in the first place was hugely frustrating for all involved. We understand the authorities need to examine allegations put before them but, frankly, there ought to be some way of ensuring the process is completed in a reasonably short time frame."

Sir Christopher has never been far from controversy, especially concerning his links to the Government.

He was awarded an OBE in 1995 and was knighted in 2001. In 2005 he made a £1m loan to the Labour Party for its general election campaign that year, and was later appointed by the then Chancellor of the Exchequer, Gordon Brown, to run the UK Stem Cell Initiative.

The Prime Minister along with his predecessor, Tony Blair, were also named as backers of Sir Christopher's charity, the UK Stem Cell Foundation. Sir Christopher was the third person to be arrested by police as part of the cash-for-honours inquiry. He was not charged with any offence.

The case is the second in the space of just over a year in which the SFO has attracted the ire of the biotechnology industry. In July 2008 the authorities were acutely criticised after spending eight years and £40m of taxpayers' money on an ultimately fruitless inquiry into a number of firms that were accused of defrauding the NHS.

Greenshield, and four other privately owned generics pharmaceutical groups, were accused by the SFO of conspiracy to defraud in relation to fixing the prices of several drugs, including warfarin and penicillin.

In a hearing at Southwark Crown Court, Mr Justice Pitchford ruled that the SFO had got the law wrong in respect to the case.

New inquiry: Agency investigates hedge fund

The Serious Fraud Office (SFO) is to investigate a hedge fund that operated in London before falling into administration this year, after furious investors had called in the City regulator. The SFO announced the investigation into Dynamic Decisions Capital Management, led by Italian university professor Alberto Micalizzi, after the case was referred by the Financial Services Authority.

The two agencies received a series of complaints over the group's Growth Premium Master Fund. The complainants were not named. Dynamic Decisions, which had an office in Kensington but was based in the Cayman Islands, suffered an investor revolt, when Strathmore Capital and Cadogan Management called for its funds to be put into administration. Grant Thornton was named as official liquidator by the Cayman's Grand Court in May.

The administrator said at the time: "A number of allegations have been made as to the remaining asset value and the nature of the assets held, and the master fund has been unable to pay a number of large redemption requests." Dynamic Decisions was not contactable for comment yesterday.

Footnote 1 July 2022: The Serious Fraud Office discontinued its investigation into Dynamic Decisions Capital Management in July 2010 and took no further action.

Nick Clark