KEY POINTS:
The Serious Fraud Office was given special coercive powers for a good reason. White-collar fraud is often a complex and sophisticated matter that is difficult to investigate and even harder to prove. The office's chequered career confirms as much. But its success rate would undoubtedly have been much lower if it had not been able to compel suspects to answer questions and also demand to see documents, regardless of client confidentiality. Those powers were deemed necessary two decades ago and are no less important now. Oddly, however, they will be denied to the police-organised crime unit that is to take the SFO's place.
Confirmation of the loss was delivered by the Government as it trumpeted the establishment of the Organised and Financial Crime Agency. This will absorb the SFO's 33 staff and merge them with the police's own organised crime team. The agency will tackle a grab-bag of tasks, ranging from gangs to international crime, in addition to fraud. It will do this without the SFO's powers for two stated reasons. The first is the Government's belief that substantial corporate fraud has diminished. That seems unlikely. In all probability, it has become even more refined and clever, partly in response to the SFO's presence.
The second reason, somewhat more cogent, is that the SFO's powers fall foul of the basic civil liberties enshrined in the Bill of Rights Act 1990, which was passed subsequent to the office's formation. The reduced powers will bring the new agency into line with the rights accorded everyone by the legislation. The agency's expanded bailiwick furnishes some justification for this. The SFO dealt with criminals who were well aware of the law and were ready and able to interpose a top-flight lawyer between themselves and investigators. The organised crime unit will, however, be much more involved with gang-related crime. While gang members are undoubtedly becoming more sophisticated, it is likely that many are ignorant of their basic rights and prone to self-incrimination.
There may also be a fear that the police may have co-opted some of the special coercion for activities bearing only slightly on the activities tackled by the SFO. But even so, the loss of the powers suggests the new agency will be toothless when it seeks to investigate complex cases of fraud. Sophisticated criminals, and their legal support teams, will be quick to take advantage of their right to remain mum and to surrender documents only after the agency has got a judge's permission. Stalling and silence will be their allies.
What all this suggests, more than anything, is that the SFO should not be abolished. The corporate fraud that it was established to combat remains, as does the need for special powers if this is to be tackled head-on. The case for retaining the office and its expertise does not end there. The Police Minister has confirmed that gangs will be "very much" the new agency's focus. Fraud is likely to receive scant attention as, indeed, has always been so with the police. The retiring SFO head, David Bradshaw, confirmed as much last October when, in his final annual report, he noted that several cases investigated by his office would not be regarded as a priority by the police.
Mr Bradshaw made two other points. The first was that serious and complex fraud remained an issue. The other was to ask whether the balance of the law was tipping too far in favour of the rights of defendants. Both represent strong arguments for retaining the SFO. Axing it is a serious mistake, whatever the other aspects of the Government's strategy to get tough on organised crime. Corporate fraud demands a strengthened specialist unit, not a defanged substitute.
