Serious Fraud Office reviews collapsed case with aim of ‘learning lessons’
Blow to SFO over aborted corruption trial of accused Blair associate Victor Dahdaleh adds to recent failures.
The Serious Fraud Office has launched a review of the circumstances that led to the collapse of a high-profile corruption trial which has further damaged its reputation as it attempts to restore public confidence.
It follows the abrupt decision on Tuesday to drop the prosecution of the British-Canadian businessman Victor Dahdaleh, following a six-year inquiry by SFO investigators.
In a statement released to Reuters, the organisation emphasised the high-risk nature of the complex, cross-border cases it pursues.
“As with all our casework, the SFO will undertake a full review of the circumstances of this case with a view to learning any lessons that can be applied to future cases,” the fraud-busting agency said.
Dahdaleh, an associate of Tony Blair and Peter Mandelson, was accused of paying about £40m in bribes to former managers of Aluminium Bahrain (Alba), including a member of Bahrain’s royal family, in return for a cut from contracts worth £2bn.
But after two witnesses from the US refused to attend the trial and face cross-examination and a key witness changed his evidence, the SFO said there was no longer a realistic prospect of a conviction.
The sudden collapse of the trial, which began on 5 November and had been expected to run into 2014, is the latest blow to the SFO which narrowly avoided being swallowed up by the National Crime Agency, a new FBI-style body set up by home secretary, Theresa May.
Notable SFO successes, such as last year’s conviction of the fraudster Asil Nadir, 19 years after he fled the UK, have been eclipsed by failures, such as a botched inquiry into the Tchenguiz property investors that has led to a £300m damages claim.
In August the SFO said it had lost 32,000 pages of data and 81 audio tapes linked to a bribery investigation into BAE’s al-Yamamah deal with Saudi Arabia.
The investigation into the huge arms deal was discontinued in 2006 after intervention from Blair, then prime minister.
In March, the former head of the SFO, Richard Alderman, issued an extraordinary apology to parliament for failing to get proper approval for nearly £1m of unauthorised payments to colleagues.
The current SFO head, David Green, who took over in April 2012, has been asked to restore confidence although he faces greater challenges than the aborted Dahdaleh case.
He has staked his reputation on the success of “top-tier” investigations, such as a global inquiry into the manipulation of interest rate benchmarks such as Libor, the London interbank offered rate benchmark rate used to price billions of financial instruments around the world. A key suspect in that case returns to court in London next Tuesday.
Tom Hayes, a former UBS and Citigroup trader, allegedly conspired with staff from at least 10 banks and brokerages to rig rates between 2006 and 2010.
Alistair Graham, a partner at the law firm Mayer Brown, said: “[The Dahdaleh case] obviously doesn’t help the SFO at all – but I don’t see it as the straw that breaks the camel’s back.
“The big test will be Libor and on the outcome of the Tchenguiz case – those are the real issues. This is a wound, but it is not a fatal wound,” he said.