Serious Fraud Office's workload is on the rise, thanks to the recession
The recession means economic crime squad's workload is on the rise.
It is one year since US prosecutor Jessica de Grazia delivered her verdict on the Serious Fraud Office as an old boys' network rife with "passing the buck" and "low morale" after its lengthy inquiry into BAE was called off by the Government.
Since the report, Richard Alderman, new director of Britain's economic crime squad, has been on the case.
The result has been a bloody cull. More than 90pc of the SFO's senior management have quit or been moved on from its Holborn headquarters during the course of the year.
But the overhaul has achieved headline results. Its successful prosecution rate of individuals has bounced up to 80pc, with 17 out of 18 cases won in court, following a five-year slump of rates around the 60pc mark.
Mr Alderman, a straight-talking former tax investigator and barrister, admits some of now departed staff were not keen on the new regime. A focus on helping victims, warning potential targets and being pro-active about new cases were among the controversial new measures.
"Many people felt they had been here long enough and were ready for a change," he says, sitting in a bare meeting room in the SFO's greying, gloomy headquarters. "Others didn't like the direction we needed to go in."
It is the afternoon that the Government passed its file on Rover MG to the SFO, asking them to investigate the car company's 2005 collapse. So if we're talking pro-activity, why wait for a four-year £15m assessment to be completed by independent advisers before getting in forensic crime-fighters from the SFO?
"It was up to the inspectors to refer it," Mr Alderman insists. "They acted perfectly properly and I don't think it's too late for a proper investigation."
I am poised to ask why the SFO's top investigator is not racing through a file of Rover's magnitude – with all its attendant political pressures – at this very moment, but he pre-empts me. "We have a team of four looking at it," he smiles. "I haven't looked at the quality of the evidence myself yet."
Ramping up the SFO's success rate is partly a result of looking realistically at which cases will get through court. Last year, Mr Alderman set up a "challenge panel" of senior staff regularly asking whether its current 88 cases – up from 65 last year – merit the time spent on them. They also look at why past cases failed.
"The Holbein case is the one that got away," he says, referring to the costly inquiry into alleged price fixing by medical companies. "Clearly lessons have to be learned."
Face-to-face meetings with financial bosses has been another way of coaxing suspicions of crime out of the City's venerable woodwork.
"We thought about 10pc of those we asked for meetings would get back to us. Actually 100pc wanted to see us and said I don't know where you were before."
So Mr Alderman and his new team have started turning the invisible City guardian into more of a friendly financial bobby-on-the-beat, ready to listen to seemingly crank complaints to find the one useful whistleblower. A tip-off hotline was introduced before Christmas sparking 1,000 calls – of which there were six "very strong leads with good evidence".
This is part of the SFO's mission to adopt a US approach, where about 50pc of cases come from whistleblowers. Mr Alderman, whose pet hate is the description of fraud as a "victimless" crime, would also like to see more US-style legislation allowing prosecution for corporate negligence as a deterrent to those who turn a blind eye to fraud. As for current cases, the workload is getting heavier as the budget tightens. The SFO spent £50.9m last year, and must now get by on £44.3m.
He lists a string of cases – AIG, Keydata, boiler-room scams – that come from people asking hard questions as cash begins to dry up. Not everything is yet in the open.
"We were looking into Madoff in the UK within five hours of requests from the US government after his arrest," he admits. "Only when he was in court could we talk. There are other difficult cases not in the public domain."
This sounds intriguing. A revival of BAE? A close look at the collapsed Icelandic banks? He will not say more, other than to hint that the recession is creating more work.
"I'm sure the economic crisis means we will see more cases," Mr Alderman says. "Many will have been made sharper by Madoff; started to ask 'where's my money?' and are not reassured by the answers." He likens it to "a pack of cards collapsing in slow motion".
Even after a year of turmoil, changes at the SFO may not be over. If a Tory government merges the FSA into the Bank of England, the regulator's criminal investigation role could go to the SFO,
"The relationship with the FSA works well as it is," he says. "They have a lot of people and we're happy to let them deal with cases. There's going to be more than enough crime to go round."
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