SFO’s false economy will cost taxpayer dear after Tchenguiz mess
Former SFO boss Richard Alderman’s attempt to do more, better, quicker – and all of that for less – was fool’s gold
It is not hard to imagine why Serious Fraud Office boss David Green QC chose to ditch the agency’s troubled probe into Mayfair financial engineer Vincent Tchenguiz. But how on earth did this sorry mess – likely to cost the taxpayer tens of millions of pounds in damages – come to pass?
Having only started in the job in April, Green will doubtless have asked this question many times over. Though with few clear answers. The unsatisfactory message that has reached the high court, where Tchenguiz has brought a judicial review of SFO actions, is a litany of circular buck-passing and deficient record-keeping.
The central error was that the SFO descended on Tchenguiz’s door at the crack of dawn 15 months ago claiming the tycoon had lied about the true value of his £2bn UK residential freehold empire. Specifically, investigators suggested he had hidden the fact these assets had been heavily borrowed against. In fact, he had not lied about the existence of senior lenders. All priority loans were fully declared in Kaupthing loan paperwork – papers which the SFO even had in their possession.
Though he professes to have thrown his hands up in despair at those operating beneath him, part of the answer must lie with Green’s predecessor Richard Alderman, under whom the probe into Tchenguiz, his brother Robert Tchenguiz and former Kaupthing bankers – all of whom deny wrongdoing – was started.
Having ruthlessly cleared out much of the old guard at the SFO, Alderman had insisted his newly streamlined agency could always find a way to cope with even the biggest cases, even in the face of swingeing budget cuts. And Whitehall loved him for it.
In decades past investigations such as Kaupthing would have immediately seen the SFO director pick up the phone to the attorney general and put the case of additional resources, known internally as “blockbuster case funding”. Proudly, Alderman has said he never felt the need to broach the subject with those holding the purse strings.
If only he had. Alderman’s alchemy – doing more, better, quicker, and all of that for less – was confirmed to be fool’s gold, a false economy likely to cost the taxpayer dear in the end. A fraud and corruption investigation into one of Europe’s largest banking failures is a huge undertaking. Arguably not since BCCI had the SFO taken on something so dizzying in scale and complexity.
And the activities of banks have certainly not got simpler since 1991, when BCCI failed. If only the government had delivered on their coalition agreement pledge to “take white collar crime as seriously as other crime”, merging, as promised, parts of the FSA, OFT and SFO into an Economic Crime Agency. That pledge was abandoned after interminable squabbling over departmental funding and budgets. On reflection, it looks an opportunity sorely missed.