Case for the fraud prosecutors

The dismantling of the Serious Fraud Office appears to have become an idea whose time has finally come.

Public commentators have questioned the effectiveness of the SFO, while at the same time, a chorus of uninformed opinion has suggested that the way in which the City conducts its affairs should be realistically left to the regulatory authorities. Those who promote these views either do not understand our system of criminal justice, or significantly fail to understand the corrosive nature of City fraud.

Fraud, whether committed in Threadneedle Street or the Old Kent Road, is a crime, and should be dealt with accordingly, by properly trained investigators and prosecutors.

The SFO is a suitable agency to undertake these functions, provided it is staffed with the right personnel; given adequate funding for its investigative role, and permitted to develop as an 'agency of excellence'.

Behind the recent ballyhoo of the Guinness case lies an alternative interpretation of the currently accepted wisdom. The existence of the report of a tribunal of enquiry, set up under the old Prevention of Fraud Investments Act 1958, to establish whether a small licensed dealer in securities should have its licence revoked, is not new information.

It is reasonable to suppose that the evidence given to the tribunal would almost certainly have been known to those business interests involved with the company concerned, as they would have had a vested interest in the outcome of the appeal, particularly if that company, or persons associated with it, were in the process of seeking to become authorised in the conduct of investment business by one of the new financial regulatory bodies.

If the tribunal's findings did pave the way for a successful application for regulated status, then it is perhaps not surprising that some practitioners might have been less than anxious to give evidence of City behaviour which the tribunal concerned had nevertheless criticised in the most severe terms, at some later date and in another forum.

Whether or not the Court of Appeal will find that the Guinness defendants' case was prejudiced by failure to hand over the physical report of the finding of the tribunal, is a matter for the future, but it would be as well to await those findings before damning the SFO.