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SFO scarred by BAE Systems, Al-Yamamah, Saudi Arabia corruption scandal (in which Shell played a key role)

Daily Telegraph

SFO director Richard Alderman has new strategy to catch a thief

Richard Alderman, director of the Serious Fraud Office (SFO), talks about new initiatives to get the public to help in the battle against fraud. 

Richard Alderman, director of the Serious Fraud Office (SFO), is keen to  

Richard Alderman, director of the Serious Fraud Office (SFO), is keen to “engage” with the public in the battle to prevent fraud. Photo: Paul Grover

PSST. Know about a City fraud? Then ring 020 7239 7272. That’s a hotline to the Serious Fraud Office (SFO). The hotline has attracted the crank as well as serious call but for Richard Alderman, SFO director, the opportunity to “engage” with the public is an important element in the “new SFO”.

Alderman, recruited nine months ago to give the organisation a fresh lease of life after a series of legal blunders and high-profile prosecution failures, has introduced a series of much-needed reforms aimed at changing old habits.

The size of his task was thrown into sharper focus over the weekend by the leaking of a highly critical Government-commissioned report on the organisation. A first, secret draft of the independent review, launched in the wake of Tony Blair’s decision to drop the corruption inquiry into defence group BAE Systems, concluded that the SFO was “a demoralised and underperforming agency” where the work of competent staff was “blocked by inadequate management and leadership”. The final, more sanitised draft, published last June, stated that SFO prosecutions were poorly structured, under-resourced and could take up to seven years to get to court.

Alderman has been working from the hard-hitting report rather than the toned-down version to shake up the organisation and streamline it with a series of cuts in the 300-strong staff.

He is trying to give the SFO a sharper edge. Decisions on whether or not to start case investigations are now made in days rather than years, the prosecution success rate has risen to 80pc and defendants have the opportunity to “bargain” over penalties.

The avuncular barrister has been pushing through the reorganisation with missionary zeal, losing some key legal eagles in the process, replacing others and attempting to rebuild internal and external confidence in an organisation scarred by the enforced withdrawal, on Government instructions, of its investigation into bribery allegations swirling around BAE Systems and its Al-Yamamah contract with Saudi Arabia.

There were question marks over the future of the SFO when Alderman was brought in from HM Revenue and Customs where he had established a reputation as a shrewd and skilful criminal investigator and tax specialist. The question was asked whether he was hatchet man or saviour.

He says: “I don’t mind if I’m described as a hatchet man or saviour, well I do a bit I suppose. I prefer to judge myself against the impact on that £14bn lost in fraud every year.”

The impact so far has been modest. The website clip above the reception desk in SFO headquarters in Elm Street, just outside the City, shows 66 cases involving more than £4bn are under investigation. How many reach the prosecution stage is difficult to forecast, but Alderman has set his sights on taking action in 100 cases a year.

He is promising to keep the courts busy over the next year. “I am looking to this year as being the year of delivery on lots of things but in particular on corruption.” By summer about four significant cases involving British and foreign companies as well as individuals should be at the trial stage. Alderman is anticipating a number of guilty pleas.

Last year Alderman boosted the anti-corruption investigation team from 65 to 100 and brought in Kevin McCarthy, to head the unit and accelerate investigations.

He has yet to reach a decision on whether to bring a prosecution against BAE Systems involving allegations of bribery on defence and aviation contracts with South Africa, Tanzania, Romania and the Czech Republic.

Alderman was stung by criticism last summer from the OECD, the rich nation’s club in the wake of the BAE and Saudi decision about Britain’s failure to prosecute a single foreign bribery case and while he has since broken the ‘duck’ he is conscious that the SFO’s track record does not stack up well against the US and other leading industrialised countries.

What Alderman describes as a new, flexible model for the SFO has involved improving the flow of intelligence and anticipating the financial crisis will produce more business. He has strengthened links with the City directly, sending in SFO lawyers to talk to accountants and lawyers as well as bankers to try and pinpoint where fraud maybe festering to be prepared for the fallout.

He has not been afraid to extend the SFO’s reach. “Previously the SFO would only have looked at cases referred to us by police and liquidators many years after the relevant events but that’s not the model society wants, so we got out into the City, talked to people about their perspective on what was happening.”

The City initiative was coupled with a Podcast by Alderman inviting City whistle-blowers, whether employees or ex-employees, to ring the hotline and the decision to launch an investigation into the British operations of Bernard Madoff, the Wall Street tycoon facing allegations of embezzling up to $50bn (£35bn).

The SFO, under Alderman, certainly appears more interventionist and while he insists he will be working with the police and others in the criminal field he is anxious to demonstrate to the public and politicians that the organisation has changed its spots.

He points to the decision to mount an investigation into alleged ticket scams involving the Beijing Olympics as an example of the change in priorities and greater interest in consumer protection.

Alderman says he has implemented most of the recommendations made in the critical report by Jessica de Grazia, a former New York city prosecutor, on the ponderous way the SFO operated.

The creation of a National Fraud Strategy Authority should provide the forum for identifying priorities and strategies and communications but some lawyers are questioning whether the anti-fraud ‘industry’ is now too top heavy and lacks direction.

Alderman maintains he is focused with an ambitious agenda.

“We are not doing as much as I’d like us to do but it’s very important if we can stop people being defrauded then to me that’s a much better result than seeing a fraud committed,” he said.

SOURCE ARTICLE

Website article headline by John Donovan

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