Page last updated at 05:13 GMT, Tuesday, 21 July 2009 06:13 UK

Complex fraud 'going unpunished'

Money
The SFO investigates suspected frauds that can be worth millions of pounds

The Serious Fraud Office is shying away from prosecuting complex cases, say lawyers and former SFO officials.

It is claimed a lack of resources and a change in policy are reducing the chances of convicting those guilty of serious financial crime.

"I think public confidence will be shaken by this approach," a former SFO director told BBC File on 4.

But SFO's current director, Richard Alderman, counters that it is targeting resources on serious cases.

Mr Alderman has made a number of policy speeches since he took over last year, saying that he wants to look at other ways of dealing with fraud cases.

He argues that the SFO's role needs a fundamental rethink and in some cases, a "consensual approach" is more appropriate.

Former SFO Director Ros Wright said public confidence in the SFO would be shaken by seeing cases of corruption and serious financial crime, committed by professional criminals, which were not resulting in prosecution.

"I think the director [of the SFO] would not be averse to bringing investigations and prosecution where a case demanded it and where there are no alternatives, but I think what he is doing is looking for any possibility of an alternative," she told File on 4.

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"I think it is a fairly worrying trend," added Ms Wright, who is chair of the Fraud Advisory Panel, the charity founded by the Institute of Chartered Accountants.

No resources

She said she was also concerned that there were lower numbers of experienced police officers trained in dealing with major fraud, with fewer resources from police to cope with cases, leaving the SFO tackling only the "tip of the iceberg" of fraud in the UK.

The former SFO director said more resources needed to be devoted to fraud.

"Otherwise you're giving criminals a huge degree of comfort if they know they are not going to be investigated, let alone convicted, they can commit crimes with impunity" and this would damage public confidence, she said.

Another senior official said the SFO had also been damaged by a shake-up which saw a large number of experienced staff leaving.

I think potentially a lot of frauds will not be prosecuted
John Benstead, former Assistant Director SFO

Helen Garlick, former assistant director of the office, said: "The concern that I and others have is that the shake-up has been too radical and left the SFO significantly underpowered."

And Richard Lissack QC, who led the prosecution of some of the SFO's biggest cases, warned: "I think our criminal system is dysfunctional when managing some types of particularly complicated serious fraud."

'Too complex'

He said he feared that some frauds might not be pursued because they were too complex and too technical for the criminal system to deal with.

Critics of the SFO cite the way it dealt with suspicions that bribes worth £5m were paid to a businessman linked to the Egyptian authorities by a subsidiary company of building giant Balfour Beatty, when it rebuilt the Alexandria library on a world heritage site.

The case ended last year with the firm, which had reported the suspected fraud to the SFO, paying a £2.25m fine and making a statement that "issues relating" to the library project saw "certain payment irregularities" and a failure to keep accurate records within a subsidiary.

Former assistant SFO Director John Benstead, who began the investigation when the company brought the case to him, told File on 4: "For Balfour Beatty, it was a great result, in the sense the amount they paid was relatively small compared to the amount of money involved.

"The concern I have about it is whether the settlement actually does justice to the case and in my view, it does not."

He added: "If Balfour Beatty is being used as a benchmark for the future, I think potentially a lot of frauds will not be prosecuted and they will be settled."

Public interest

The SFO's Director Richard Alderman said he was reaching out to corporate Britain to follow suit and report any frauds they uncovered.

"We will adopt the tool that is best suited to individual cases in the overall public interest," said Mr Alderman.

He added: "I'm really interested in how we bring about the right culture in an organisation so it is really committed, genuinely committed to fighting corruption."

But this approach was criticised by Ms Wright who said: "The idea is to get firms to come and spill the beans and say mea culpa, we are now prepared to pay a fine."

She said this was in danger of turning the SFO into a regulator, rather than tackling serious fraud in court. She said US authorities would fine the firm and still want to prosecute individuals.



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SEE ALSO
SFO's conviction rate improving
17 Jul 08 |  Business
Fraud office comes under scrutiny
10 Jun 08 |  Business


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