Showing signs of weakness

The collapse of the criminal prosecution against four British Airways executives by the OFT reveals an inherent weakness in the department’s ability to pursue criminal charges.

The OFT directly instructed 7 Bedford Row barrister Richard Latham QC to bring charges against four BA executives who, it alleged, dishonestly conspired with Virgin Atlantic between July 2004 and April 2006 to fix the price of fuel surcharges.

On Monday, just three weeks into a six month trial, the OFT halted proceedings citing  “the discovery of a substantial volume of electronic material, which neither the OFT nor the defence had previously been able to review”.

That material was in fact 70,000 documents, including 12,000 to and from key prosecution witness Paul Moore, Virgin Atlantic’s former corporate affairs chief.

The OFT, which had handled the case in-house, did not adequately review the documentation of the case before heading to Southwark Court.

In a statement it accepted the error stating: “The OFT acknowledges responsibility for its part in this oversight, which occurred at a time when the UK criminal cartel regime was still relatively new.”

The airline’s former commercial director Martin George, former head of UK and Ireland sales Alan Burnett, ex-communications head Iain Burns and current sales and marketing director Andrew Crawley were all acquitted of charges.

The case raises serious questions about whether the OFT should be pursuing criminal charges against cartels.

In June 2001, ahead of the implementation of the Enterprise Act, the OFT commissioned a report by Sir Anthony Hammond QC, the former Treasury Solicitor, and Roy Penrose, the former director general of the National Crime Squad. The report looked specifically at how best the OFT should introduce criminal sanctions for cartel perpetrators, ultimately advising against the move.

In the report, published in November 2001 Hammond and Penrose wrote:  “We believe that there are powerful arguments against a system whereby the prosecutions are conducted ‘in-house’ by the OFT, on the basis of each of the four criteria of fairness, openness, accountability and efficiency.

“There’s a further argument against creating relatively small prosecution teams; that of a tendency for the prosecutors in these teams to become isolated from general developments in criminal law and practice, albeit that they have the opportunity of building up specialised expertise in their field.”

One lawyer close to the BA case says the report “sums up what went wrong with this case”.

The source says: “There’s a risk that lawyers working for government become too closely aligned with government policy. What’s right for the case may not be right for the department . They become overly obsessed with getting the big names when really they should be concentrating on the cases that can be won.”

Indeed the Hammond Penrose report warned of this risk: “Perhaps the most potent risk is that there may be a temptation for such lawyers to become too close to the policy demands of the organisation which they serve and to develop a solicitor – client relationship rather than a relationship of a prosecuting lawyer executing an independent judgement.”

These are serious questions and with the cost of the case expected to run to several million pounds the new coalition government will be looking for some smart ways to save cash.

The OFT, like the Serious Fraud Office (SFO), could be looking down the barrel of a gun.

Lawyers in the case:

7 Bedford Row’s Richard Latham QC for the OFT; Kingsley Napley criminal partner Stephen Pollard instructed Matrix Chambers’ Clare Montgomery QC for George;

Peters & Peters head of fraud Michael O’Kane instructed Queen Elizabeth Building’s William Boyce QC for Burnett;

Peters & Peters head of fraud Michael O’Kane instructed Matrix Chambers’ Ben Emmerson QC for Burns; Irwin Mitchell partner Kevin Robinson instructed 2 Hare Court’s Andrew Radcliffe for Crawley.