The end of a chapter? 18 April 2011

Citation

Rider, B.A.K. (2011), "The end of a chapter? 18 April 2011", Journal of Financial Crime, Vol. 18 No. 3. https://doi.org/10.1108/jfc.2011.30918caa.001

The end of a chapter? 18 April 2011

Article Type: Editorial From: Journal of Financial Crime, Volume 18, Issue 3

At this point in time opinion is pretty well equally divided as to whether the Serious Fraud Office (SFO) has done a sufficiently good job to remain more or less as it is. While most would agree that it has never been able to attain the results that those who set it up back in 1986 anticipated, but then in fighting fraud and related issues, the story tends to reflect the triumph of hope over experience! On reflection it is perhaps surprising that the character of the SFO has been so responsive to the attitudes and agendas of successive directors. There is general agreement that the present director has attempted to achieve more by what his predecessors would characterize as unconventional and perhaps controversial tactics than may, with the benefit of hindsight, have been wise. Having said this Richard Alderman inherited a state of affairs which almost dictated that he attempt to achieve results as quickly as possible and thereby reinforce the dented credibility of his Office, but within the confines of the recommendations of a report written by a former New York prosecutor, who perhaps had not quite understood the differences – at least in texture between Manhattan and the city!

In fairness the SFO’s attempt to introduce a system of negotiated penalties, some of which were essentially civil in character, based on a system of self-accusation, was not entirely novel. Previous directors, who had worked in the city, had extolled the virtues of pragmatic enforcement along the lines of traditional city bodies such as the Takeover panel (albeit in a previous life). Indeed, some had publicly advocated the practical advantages of civil enforcement, admittedly before the FSA’s mixed experience in relation to the market abuse provisions. Some had even attempted to come to terms with other prosecutorial authorities to better manage international cases and ensure a degree of proportionality and fairness for defendants. Perhaps the SFO’s mistake was to adopt these radical devices in the context of corruption, which was already a hot potato which had all but undermined the previous “administration” and to embark on this crusade without the committed support of the judiciary. Perhaps relying too much on the zeal of new blood from the bar and the advice of consultants – the experiment was almost bound to fail, given the political issues surrounding the Bribery Act 2010 and in particular the concern of business and the city.

Of course, the reality is that special prosecutorial agencies have had a bad time in most jurisdictions. Indeed, many have themselves gone bad and ended up on the wrong end of corruption inquiries. Given that few, if any, ever meet the political and popular expectations at the time they are established or successfully resolve turf and other issues with competitor agencies, the history of our SFO is commendable. Of course, the government has the difficult task of plotting a course for the future. Morale has sapped within the SFO given the criticisms – many of which are in reality unfair and ill-informed. For what it is worth, in my opinion successive directors have done about the best that anyone could have in the circumstances and Mr Alderman is no exception. The reality that perhaps it is right that we now come to terms with is that in many areas within the criminal justice system a variety of factors have rendered the traditional approach to investigation and prosecution almost unattainable. The shift of emphasis to disruption as an end in itself while not in many respects welcome has a certain inevitability.

Perhaps the time has come for an even more radical approach – at least in institutional terms. Writing in 1979 (“The promotion and development of international co-operation to combat commercial and economic crime”, Commonwealth Law Ministers/ICPO Interpol), albeit largely in the context of transnational financial crime, I suggested a much greater use of tasking and in particular the convening for separate investigations and perhaps areas of criminal activity, ad hoc specialized teams under a senior prosecutor serviced by a permanent secretariat. Such teams while enjoying the sum total of their participants’ statutory powers might also invoke special powers along the lines of those enjoyed by inspectors under the companies acts. Thus, while to some degree resembling fraud investigation groups, this approach would allow the flexibility and specialization which is both costly and difficult to retain within traditional governmental structures. Those governments that adopted such an approach, while certainly not discovering a panacea, achieved no less than those who went for one stop solutions such as our SFO.

Barry A.K. Rider