View from City Road: Fraud, the price of democracy

Ernest Saunders always was a determined character. Having made a full recovery from Alzheimer's disease (the first recorded case) the former Guinness chairman has launched himself into the battle to clear his name with a commitment and sense of purpose that would have done credit to the most headstrong executive in the land.

Judged by this week's ruling from the European Commission on Human Rights that he was denied a fair trial, he seems to be making good progress.

By focusing on the admittedly questionable use of Department of Trade inspectors to collect evidence, Mr Saunders has found a chink in the prosecution's armour that looks increasingly likely to prove fatal.

But the idea that Mr Saunders is in some way innocent, in the sense that he didn't do or know about the things he was accused of, is laughable. You can argue about the criminality of what he did and about the justice of his treatment, but clearing your name usually means emerging without a stain or blemish on your character.

This Mr Saunders has no right to expect. Whatever his strengths as a chief executive, which were meant to be considerable, or the injustice of his trial, nobody will easily forget the evidence produced to show that he was also a liar, a cheat, and a bully.

With Ernest Saunders staring out at us from the front page of national newspapers once more, this time in his new guise as innocent victim of a cruel injustice, it is vital that this is not forgotten.

With the passage of time, memories fade. In the light of the much greater and more damaging frauds that followed (Maxwell and others), Guinness does not in any case look so bad. And there are undoubtedly large elements of truth in Mr Saunders' insistence that he was used as a scapegoat.

While hardly any evidence exists to back the contention that Guinness- style fraud was common practice in the City at the time, it seems indeed to be the case that he was led on by others and lulled into a false sense of security about the enormity of what he was doing.

In the political environment of the time, the Guinness case took on aspects of a show trial. The disclosure of secret support operations, multi- millionpound success fees, high level cover-ups and the like were shocking. The Government, the public, and large parts of the City wanted blood and were apparently willing to suspend accepted civil liberties to get it.

Most of us fully understood the implications of using evidence obtained during interviews by DTI inspectors - that in essence the Guinness defendants were being denied a suspect's usual right of silence. The issue was well aired in the run-up to the trial and barely a voice was raised in protest.

Such a cavalier attitude to traditional rights is easily explained; it was generally accepted at the time that in order to obtain convictions the authorities needed to exercise draconian powers. With protection of civil liberties now apparently a greater priority than the prosecution of complex fraud, the balance of the debate is swinging the other way.

Allowing fraudsters to go unpunished is perhaps part of the price that has to be paid for democracy. No disrespect to the European commissioners who reached this week's judgment, but it is doubtful they yet realise this. Outside Britain and the US, the pursuit of complex securities fraud is still in its infancy. Insider dealing has only recently become illegal throughout Europe. Most European countries have yet to confront these thorny issues.