SFO opens UK Madoff investigation

The Serious Fraud Office has said it is to open an inquiry into Bernard Madoff's business operations in the UK.

The investigation will focus on UK victims and any offences that may have been committed in the UK, the SFO said.

Mr Madoff is accused of running a fraudulent $50bn (£33.2bn) scheme that wiped out many investors.

The SFO has called for anyone who has had dealings with any of Mr Madoff's UK businesses - including ex-employees - to assist in the investigation.

"There were many UK and European investors in Madoff's funds and in funds under his management," said Lisa Osofsky, former Deputy General Counsel for the FBI, now working for consultants Control Risks.

"This will be an easy jurisdictional hook for the UK authorities. Not only are there UK victims, but likely UK contracts, promises made here, and losses here."

House arrest

The swift action follows revelations before Christmas in the US about Mr Madoff's operations, as well as concerns from UK investors - some of whom fear they have lost several million pounds.

"The public say they want us to take early action and this is what we are doing," said the SFO's director, Richard Alderman.

"We will work closely with other law enforcement agencies to discover the truth behind the collapse of these huge financial structures."

US prosecutors allege that a bogus business, run by the former Nasdaq stock market chairman, involved existing investors' returns being funded by cash from new investors - a fraud known as a Ponzi scheme.

Among the first to admit potential losses was the Royal Bank of Scotland - 58% owned by the taxpayer - which said £400m was at risk in hedge funds.

Meanwhile, Spanish bank Santander, which owns Abbey and the savings business of Bradford & Bingley, has said its potential exposure is more than £2bn.

Mr Madoff is currently under house arrest in his New York penthouse.

His $10m bail is covered by that home as well as his houses in Long Island and Florida.

A parallel civil case has also seen his assets frozen.

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