Leading Article: What remains when the smoke clears

A SMOKESCREEN is a useful weapon when others fail. It allows a man to escape, leaving his adversaries floundering in confusion. So it is interesting to ask, who was the source of the dense smoke that billowed across the Polly Peck battlefield last week? The answer, it seems, is Asil Nadir.

Few of last week's allegations had not previously been made by Mr Nadir or by those working on his behalf. Back in 1991, for instance, Mr Nadir claimed that Greece, assisted by Britain and the United States, plotted his downfall in order to destabilise Turkish-occupied northern Cyprus. His financial ruin, he said, stemmed from this, not from any wrongdoing on his part.

Mr Nadir has declined to test this claim in court. He has fled his trial and resorted to smoke. This is a tactic common in countries with weak institutions and powerful individuals, where rumour and conspiracy are substituted for due process. In this country, it is less usual and more disconcerting.

What facts remain when the smoke clears? Of the matters Michael Mates raised in his resignation speech, some were simply wrong, others had been addressed in the Attorney-General's replies, others still could have been dealt with in the proper place - at Mr Nadir's trial. Mr Mates, so vocal in other respects, has not, regrettably, led the calls for Mr Nadir's return.

The conduct of the Serious Fraud Office has been called into question. Its staff have been rebuked for seeking publicity for their raids and doubts have rightly been cast on a working culture in which a police officer on secondment to the SFO could forge a letter, in a separate case, as an 'April Fool's joke'. The SFO is also suspected of leaking documents. What is the weight of these allegations?

The SFO was set up to investigate and prosecute serious fraud. Its existence shows, first, that Parliament wishes to see big white- collar criminals punished and, second, that this was perceived as such a difficult task that it required special powers and a looser approach to civil liberties than is customary.

Given that the SFO has these powers, it is the more incumbent on its officers to behave impeccably. Forging letters is not impeccable behaviour; nor is tipping off the press about raids. It may be tempting for the SFO to try to counter bad publicity with headline-grabbing raids, but it calls into question its judgement and maturity. It creates a risk of prejudice to the defendant, and for that reason alone the SFO should not do it.

But in the balance of this case, how serious is it? If Mr Nadir is concerned about the prejudicial effect of publicity, why has he been so diligent in generating more? And if it were true that a defendant who has been the victim of a television arrest can never convince a jury of his innocence, how do we explain the high level of acquittals - for which in turn the SFO has been criticised - in such cases as Guinness and Barlow Clowes.

Any prosecuting authority with special powers and under pressure to perform will tend, without proper scrutiny, to push those powers beyond the limit. But, last week's events notwithstanding, the legal profession has not chorused this charge at the SFO. In a report this year to the Royal Commission on Criminal Justice, Professor Michael Levi observed that defence lawyers did not have, with regard to the SFO, the 'same level of apprehension about oppression and the fabrication of cases that exists elsewhere in the crime control system.'

He also observed, however, that the SFO suffered from a lack of managerial control and that 'overstretched case controllers can become too closely involved in the investigative process to maintain the detachment for which . . . they strive.' George Staple, director of the SFO, has some housekeeping to do, and such excesses must be dealt with.

But the real lesson of last week's events is less that the SFO is out of control than that the expectations of it are contradictory and unrealistic. Both the SFO and the police Fraud Investigation Group operate against a backdrop of weak financial regulation that has permitted serious fraud to flourish. Critics of SFO excesses should support the creation of a body in Britain, equivalent to the US Securities and Exchange Commission, that would lessen the SFO's burden and reduce the temptation to bend the rules.