After bungling a search of Tchenguiz’s home, the ailing SFO is likely to suffer a stinging rebuke in court – and perhaps lose its biggest case altogether
Lord Goldsmith, the former attorney general who pressurised the Serious Fraud Office into abandoning its probe into BAE, has now suggested that the embattled agency is clinging on to its largest case in a decade “like Mr Micawber, in the hope that something will turn up”, even though it has fatal flaws.
Goldsmith’s incendiary remarks come as he represents Mayfair property tycoon Vincent Tchenguiz in hearings with the agency before a full judicial review next month. Tchenguiz is challenging the SFO’s probe into suspected corrupt relationships between him, his brother Robert, and former bosses at the Icelandic bank Kaupthing, which collapsed in October 2008. The allegations are denied by all concerned.
The SFO is already braced for savage criticism next month from Lord Justice Thomas, one of Britain’s most senior appeal court judges. The agency was given a taste of what is to come at a preparatory hearing this month: Thomas described the SFO’s inability to fully explain glaring and fundamental errors on search warrants used more than a year ago for raids on Vincent Tchenguiz’s home and London offices as “sheer incompetence”.
Vincent Tchenguiz is seeking damages of considerably more than £100m, over three times the SFO’s annual budget. His brother too has won a judicial review.
Both brothers, together with a handful of former Kaupthing bankers, were targeted in dawn raids involving more than 130 police officers in March last year as part of co-ordinated searches in London and Reykjavik.
In February the SFO conceded that the warrant used in the search of Vincent Tchenguiz’s home and Park Lane office was hopelessly flawed. The agency’s director, Richard Alderman, was forced to issue a humiliating apology. SFO lawyers told the court of “very regrettable errors” that had led to the search warrant being “inadvertently miscast”.
Alderman, who officially stepped down last week as his contract came to an end, told the court that he was aware of the “utmost seriousness” of the mistakes, which he conceded “involve a wholesale challenge to the SFO’s competence and the good faith of its staff”.
The case controller left the agency less than a month after the raids, and his successor has also since departed, as has the lead lawyer on the case. Two weeks ago, Alderman’s number two, chief executive Phillippa Williamson, abruptly announced that she would be following her boss out of the door.
A full explanation of how investigators had got the warrant so wrong has been demanded by Thomas before next month’s judicial review, but a reeling SFO – which has, separately, seen suggestions about its dissolution resurface – has repeatedly pleaded for more time.
This month, Thomas lost patience after being told once again that the prosecutors wanted an extension, in part because Alderman had chosen to take a trip to Tanzania on other matters rather than focus on the crisis at hand. “In my whole experience of litigation, I simply don’t understand it. If the director has gone off, and he has unavoidable commitments, I’m afraid I’m not now, to the remotest degree, sympathetic,” the judge fumed earlier this month. “Why wasn’t I told the truth, that there was a major problem? There is only one explanation for this: sheer incompetence.”
Appearing for Tchenguiz, Goldsmith suggested that the whole investigation be brought to a halt: “What is it that’s going on? Are they [the SFO], just like Mr Micawber, hoping that something will turn up if they continue their work long enough?”
Outside the court, Tchenguiz said: “When I was a schoolboy I used to claim the dog had eaten my homework. It’s fine for a schoolboy, but pretty feeble for a publicly funded regulator.”
The episode marks an embarrassing end for Alderman, whose time in charge has been dominated by budget cuts of more than 30% and a ruthless purge of almost all of the SFO’s most senior and experienced prosecutors. There is little to suggest the SFO boss had been eager to clear up the matter of the search warrant before he departed.
The only large investigation launched during Alderman’s tenure has been the probe into Kaupthing. It remains to be seen whether incoming boss David Green QC will share Alderman’s determination to press ahead with the Tchenguiz case. For now, the evidence seized remains in effective quarantine with a law firm – technically returned to Tchenguiz but still held in limbo pending resolution of the review.
Even if Thomas rules that the integrity of the investigation has not been fatally compromised, Green may yet choose to draw the troublesome case to a close, as Alderman did with a number of cases shortly after his appointment. An appropriate opportunity to close a sorry chapter in SFO history might present itself when Thomas next month delivers what is expected to be a harsh final verdict on the conduct of the agency.
Such a move is unlikely to risk upsetting anyone at Conservative Central Office. Vincent Tchenguiz and his Vincos investment vehicle donated £123,820 to the Tories between 2006 and 2010. Meanwhile his brother Robert and sister Lisa have given £70,820 and £100,000 respectively.