SFO expected to be reprieved
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Your support makes all the difference.The Serious Fraud Office, the agency under fire for its patchy record in bringing suspected fraudsters to book, is expected to be given a reprieve when the Government announces its fate today.
The decision, nearly a year in the making, will have a big impact on London as a banking centre. Since this February the SFO has been allowed to use its controversial Section Two powers, which enable it to seize documents and deny individuals the right to silence, on behalf of foreign investigating authorities.
In recent weeks the SFO, which is headed by George Staple, has used its special powers on banks in three cases on behalf of the US and Argentinian authorities. It is poised to do the same for Singapore over the Barings collapse, if asked to do so.
The SFO admits this new policy may arouse opposition in the City. Foreign depositors may no longer feel their affairs are private, and take their money elsewhere.
The City is likely, however, to approve the other main finding by the Government today, that market manipulation cases such as Blue Arrow will henceforward be left to City regulators rather than criminal prosecution.
Sources close to the SFO expect the Attorney-General, Sir Nicholas Lyell, to announce the Government's verdict on a working party's findings in a statement to the House of Commons.
The working party, set up last year under Rex Davie, a retired cabinet official, handed its report in last February.
The report concluded that abolishing the SFO, or submerging it within the Crown Prosecution Service, would signal a climb-down by the Government in its war against multi-million-pound City fraud.
The Government is expected to announce that the SFO will work more closely with the CPS's own white-collar crime unit, the Fraud Investigation Group, and may take over some of the FIG's bigger cases.
The use of the Section Two powers under the Criminal Justice Act 1987 is expected to arouse opposition in the City if used on behalf of foreign powers.
Christopher Dickson, a barrister and an SFO assistant director, told the Lawyer magazine that there may be resistance.
"This is going to make banks feel uncomfortable. Bank secrecy doesn't exist in the UK, but bankers have told clients abroad that they can have total discretion in the City of London," he said.
On the Barings case, Mr Dickson said that the SFO had already compiled a "vast amount of information" from sources including liquidators and banks, and had had informal talks with the Singapore authorities about possible help.
The Section Two powers were extended in February by the Criminal Justice and Public Order Act 1994. Until then use of such powers was limited to the UK.
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