Belfast Telegraph

Home News UK

MPs query SFO over £19m top-up plea

An emergency request from the Serious Fraud Office for a hike of more than 50% in its budget for this year has raised questions about the long-term viability of the white-collar crime-fighting agency's funding arrangements, an influential parliamentary committee has said.

The SFO asked Parliament for the £19 million top-up - which brings to £24 million the additional funds required over and above its planned £36.6 million budget for 2013/14 - at the end of January to fund the cost of a series of expensive "blockbuster" cases. Some £11 million of the extra money has already been drawn down as a contingency while the SFO awaits the approval of the House of Commons.

SFO director David Green told MPs that the additional money was needed to cover the exceptional costs of cases including the agency's defence against a £300 million claim from property tycoons Vincent and Robert Tchenguiz over their arrest in 2011, as well as complex investigations into the manipulation of the Libor inter-bank lending rate, alleged bribery by Rolls-Royce in Asia and Barclays' dealings with the Qatari government.

The SFO also faces historic legal liabilities relating to the payment of VAT dating back to the time of previous director Richard Alderman, he said.

The request sparked a swift inquiry by the House of Commons Justice Committee, which demanded a "full explanation" from the SFO before MPs are asked to vote through the money on March 4.

Releasing its report into the request, the committee revealed that it intends to open discussions with Attorney General Dominic Grieve over whether the agency's funding arrangements are "sustainable".

In a letter to the committee, Mr Green said he was "keen that an appropriate and more certain funding model can be agreed by all those with an interest".

The SFO was regularly faced with unexpected and significant demands on its finances as expensive cases blew up, requiring the immediate deployment of investigators and lawyers.

The current funding arrangement, under which the SFO is allocated a budget but can come back to Parliament to ask for more money during the course of that financial year in a process known as Supplementary Estimates, "reflects the arrangement through which `blockbuster' cases are supported", wrote Mr Green.

"It is in the nature of the SFO's work that significant additional funding can be required at short notice. In a very short space of time, it can become clear that an investigation, as wide as that into Libor, is required.

"At the same time, I consider it would be unacceptable to have expert investigators , lawyers and accountants as permanent employees waiting around in case such an investigation is required."

In its report, the cross-party committee made no recommendation on whether or not MPs should approve the cash request.

But the report stated: "The magnitude of the SFO's request for additional resources..., when considered against the size of the Office's budget, is a cause of considerable interest for us, and we consider that the Supplementary, and the funding arrangements for so-called blockbuster cases which underlie it, are matters which should be drawn to the attention of the House."

Committee chair Sir Alan Beith said: "When a public body lays a Supplementary Estimate amounting to more than half of its annual budget, that is a matter which requires full explanation, and it is the job of select committees like the Justice Committee to obtain that full explanation before Parliament votes through the money.

"In this case, the director of the Serious Fraud Office has provided us with further information in response to our request, and we have published that information, except where we agree with the SFO that its publication might prejudice litigations or criminal investigations. The committee will be exploring with the Attorney General the question of whether the SFO's funding model is viable in the longer term."

Publishing Mr Green's letter, the committee blacked out certain details - including the precise sums allocated to individual blockbuster cases - after the SFO argued that publication would risk compromising its position in litigations and investigations.

"Knowledge of the resources that the SFO is devoting to a particular case is operational material that would be of assistance to suspects, and to the claimants in the Tchenguiz litigation," Mr Green told the committee.

Shadow attorney general Emily Thornberry said: "The UK has the world's largest financial centre and yet its white-collar crime investigator is in a state of permanent crisis and recurring bankruptcy.

"This is nothing short of an emergency but ministers seem to be happy for this shambles to continue.

"David Green is right to call for a new funding model and there are other models out there. In the US, robust laws on corporate criminal liability and the re-investment into law enforcement of the proceeds of crime have combined to ensure that their fraud prosecutors are feared, respected and well-funded. Ministers need to stop the rot and learn from what works."

Ms Thornberry added: "Ministers need to come clean about how much VAT was wrongly claimed, how big the penalty was, who at the SFO knew about it, when the Attorney General found out about it and what he did about it.

"It's not just ministers' complete lack of grip over the SFO that concerns me, it's their lack of transparency. I have asked the Attorney General time and again to come clean about all the skeletons in the SFO closet and yet every few months a new and even grislier one comes tumbling out.

"As for Richard Alderman, I have called before for the man to be investigated by the Met. This appears to have gone nowhere so I will ask the City of London Police to take a look as well."


From Belfast Telegraph