01 Oct 2013

Corker Binning partner comments in Financial Times re SFO

Partner David Corker comments in the Financial Times about The Serious Fraud Office having headed off a high-stakes legal challenge that could have jeopardised 30 of its investigations.

SFO sees off legal challenge as case lays bare contentious reign

The Serious Fraud Office has headed off a high-stakes legal challenge that could have jeopardised 30 of its investigations in a case that cast fresh light on Richard Alderman’s contentious reign as director of the agency.

The SFO had been accused of acting unlawfully by two defendants: one was Chris Ronnie, the ex-chief executive of retailer JJB Sports, the other his co-defendant David Ball, an accountant and joint beneficial owner of a JJB supplier.

The men alleged the agency had made a procedural error when their cases were accepted for investigation. Both men face criminal charges in a trial next year prosecuted by the SFO.

A judge ruled on Monday that the agency had acted properly by allowing its ex-director Richard Alderman to delegate criminal cases for acceptance to Phillippa Williamson, former chief executive, who was neither a lawyer nor an investigator but an accountant.

The Criminal Justice Act 1987 stipulates that it must be the director of the SFO who accepts a case for criminal investigation. The defendants argued that the legislation only permitted the director to delegate the acceptance of cases to a qualified lawyer, which Ms Williamson was not.

The ruling had been eagerly anticipated by lawyers acting in other prosecutions, including 15 cases already in court and some involving people held in custody.

The SFO had fought to keep the hearings private but, following a legal challenge by the Financial Times and Guardian, details can now be reported for the first time. They shine a fascinating spotlight on Mr Alderman’s much-criticised tenure at the SFO and the role of Ms Williamson.

Jim Sturman QC, counsel for Mr Ronnie, said to the court that Ms Williamson’s emails showed “she had little or no experience at all to be making the decisions” and she was “a lady who appears to be blagging it as she goes along”.

Mr Alderman “demonstrated an incredibly laisser faire attitude to allow others to take decisions which he should have taken himself”, Mr Sturman said to the court.

He also read out an email from Ms Williamson to her secretary written “in an unguarded moment” just days after she started at the agency in June 2008. In the message, she talked about “splitting” or dividing up a case and added: “We don’t want to fall straight into the trap of expressing our lack of expertise in this area.”

“She was insufficiently experienced to take the decision and that email on June 24 frankly in our submission is chilling, demonstrating she did not have the experience you should have to take the decisions.” Mr Sturman said to the court.

He also told the court that Ms Williamson’s secretary had to email a fellow SFO executive about filling in boxes in a case template which had “quite a few questions unanswered”.

He also claimed that there is not a single contemporaneous note to back up Mr Alderman’s assertion that he was reviewing case acceptances by Ms Williamson which she started doing in July 2008.

“There is not one contemporaneous note produced by him to back that up . . . it was I’m afraid a shambles,” Mr Sturman said.

An email from Mr Alderman was also read to the court in which he told Ms Williamson: “Too much comes my way.”

Mr Alderman’s reply to a recent SFO letter was read out in court. In it the agency’s former director says: “It all seems a long time ago now. I took the decisions on the most important cases . . . there were other cases where the board, led by Phillippa Williamson, took the decision, Phillippa Williamson would discuss those cases and keep me informed.”

James Eadie QC, representing the SFO, argued the agency had acted lawfully in allowing Mr Alderman to delegate to Ms Williamson and told the court that the reality of government meant that many decisions are taken for good reason by officials rather than the office holders or ministers personally- known as the Carltona principle.

Mr Eadie also told the court that between 1991 and 1995, seven cases had been accepted by an SFO deputy director, rather than the director. He added that by law, the director of the SFO did not need to be a lawyer and so “it would be little short of bizarre” if his deputy had to be.

The Attorney-general’s office was also informed about the changes in the acceptance of cases in November 2008, the court heard.

Ruling in favour of the SFO, Judge Nicholas Loraine-Smith noted the matter had been brought to the attention of defence lawyers by the SFO in August. He ruled that the director of the agency has and at the relevant time had the power to delegate a decision and this was intended by the parliamentary legislation.

“If Parliament had considered that acceptance of a case was of such significance that only the director should make the decision they would have said so . . .” he ruled.

SFO rulebook proves difficult to follow

Questions over whether the previous director of the SFO, Richard Alderman, correctly followed the convention for accepting complex economic crime cases for investigation might seem arcane but instances of not following the rule book to the letter have tripped up the SFO before, write Caroline Binham and Jane Croft.

The judge ruled in favour of the agency but courtroom revelations have shone a light on the extent of  mismanagement under Mr Alderman. The current director, David Green, was quick to distance himself from the old regime.

Phillippa Williamson – chief executive when Mr Alderman was director – was neither a lawyer nor an investigator but a chartered accountant. She initially joined the SFO on secondment from HM Revenue & Customs, where she and Mr Alderman first worked together.

The relationship between Mr Alderman and Ms Williamson has already come under scrutiny after a parliamentary select committee heard that he approved a £460,000 pay-off for Ms Williamson. The public accounts committee also criticised Mr Alderman’s lack of record-keeping and circumvention of controls in a report published in July.

David Corker, partner at law firm Corker Binning, said the legal implications could have been very significant if the ruling had gone against the SFO.

“This case saw the SFO teetering on the edge of a precipice or come within a hair’s breadth of calamity. It would not have survived the ignominy of the loss of 30 cases and would quickly have been taken over by the NCA [National Crime Agency].” he said.

Failing to follow procedures in other cases has already proved expensive for the cash-strapped SFO.

The SFO is currently fighting a £300m damages claim from Vincent Tchenguiz after it admitted a series of missteps in its botched investigation of the property tycoon. The agency’s morale was sapped by threats to absorb it into a bigger crime-fighting agency. But Theresa May, the Home Secretary, stepped back from this plan two years ago.