In the Media

Review to advise stiffer sentences for fraud

PUBLISHED July 18, 2006

A government-commissioned review of the way fraud is dealt with by the British courts is expected to recommend heavier sentencing, specialist fraud judges and dedicated fraud courts when it is published this week. It will also put forward proposals for tackling the explosive growth in "missing trader" VAT fraud.

Even before the report is formally passed to ministers, Robert Wardle, director of the Serious Fraud Office, has insisted that without additional resources such radical measures will not be enough for prosecutors to reduce what he called the "uncomfortably wide" justice gap.

In an open letter to the attorney general, accompanying the SFO's annual report, published today, he said: "There remains a gap between the incidence of fraud and the number of investigations, let alone prosecutions. Some way needs to be found to ensure that there is adequate resourcing for the investigation of crimes which unjustly enrich some while impoverishing others.

"I am not suggesting the justice gap can be closed - merely narrowed."

The review was commissioned last October by the attorney general, Lord Goldsmith, who cited research suggesting fraud was costing the economy at least ?14bn a year. Since then there has been rapid growth in so-called "missing trader" VAT fraud, which is believed to have cost the exchequer ?10bn.

Asked about the disparity between jail terms handed down for fraud offences in the US and in Britain, Mr Wardle said: "That is something I know the review has been looking at and I suspect some of its recommendations will look at the level of sentencing." The SFO director sits on the review steering committee.

His comments come days after three former NatWest bankers - David Bermingham, Gary Mulgrew and Giles Darby - were surrendered to FBI officers prosecuting Enron-related defendants in Houston. If convicted, they are expected to face sentences of between seven and nine years. Two years ago the three men, who have denied wrongdoing, wrote to Mr Wardle asking him to investigate their case and, if appropriate, bring charges in Britain. The request was turned down.

Recommendations for extra measures to tackle fraud come as the SFO's annual report reveals it is struggling to meet its target of a 70% conviction rate. In the year to April 4, during which fewer than usual cases reached court, convictions were secured in less than three in five SFO cases which came to trial. Over the past five years the conviction rate stands at 61%.

Mr Wardle said the performance was "not unreasonable", and pointed to a number of tough, high-profile cases progressing in the pipeline.

Michael Bright, the founder and executive chairman of collapsed firm Independent Insurance, was charged along with two other executives in relation to the concealment of hundreds of millions of pounds of liabilities. Nine bosses at six generic drug firms were also charged in relation to alleged price-fixing on medicines widely prescribed by the NHS.

In recent years Mr Wardle has been a leading proponent of the need to do away with juries in long and complex fraud trials. The measure was adopted by the government in its Criminal Justice Act 2003 but opposition in the House of Lords ensured implementation has remained blocked ever since.