Maxwell: unfair on the SFO and the jury

Everyone has heard of bad losers, but Kevin Maxwell has turned out to be a bad winner. Despite having been acquitted of all charges brought against him in connection with the collapse of his father's media empire he could not disguise his contempt for the Serious Fraud Office. It was "fixated with the desire to secure a conviction", Mr Maxwell is reported as complaining.

Perhaps I have got this wrong, but I have been working under the impression that this is exactly what the SFO is there to do. Mr Maxwell may contend that the SFO's job is merely to present the case to the jury, but that rather misses the point of an adversarial system which pitches the prosecution against the defence.

Mr Maxwell does not like this aspect of our legal system but he is, it seems, a firm advocate of another. He warned gravely that we must think very carefully before contemplating any change to the jury system. In particular he was dismissive of the suggestion that the jury should be replaced by a panel of independent experts.

Unfortunately, Mr Maxwell cannot have his cake and eat it. If he would prefer the SFO merely to present rather than to prosecute a case, then surely he would not object to allowing the SFO to present the case in its entirety. In which case a jury system is inappropriate for the biggest and most complex fraud cases.

Indeed the reason why Maxwell was faced with a second trial was because the judge in the first trial thought that to hear the entire prosecution case at one sitting would take too long and put too much strain on the jury. The SFO did not want two trials, but it was forced to adapt its case to the limitations of the jury system.

The idea of a panel of independent professional assessors to judge complex fraud cases is not new. But the suggestion should now be revisited with a new vigour.

It is essential that any legal system has the complete confidence of those who are ruled by it. Mr Maxwell does not appear to have that confidence - and he is an innocent man. The SFO, for its part, is disappointed because it was not given the chance to bring its case in the manner it wanted. First it was obliged to split its case in two and then it was prevented last week from bringing the second part.

When both sides seem so unhappy with the process it is time for a change. By all means make the SFO present rather than prosecute, but give it a system that allows it to make that presentation in the manner it feels is most appropriate to best serve the public interest.

That requires a number of potential changes. The most effective would be to have a professional panel rather than a jury to hear the most complex and lengthy cases. They would still be under strain during a long trial but we would at least have comfort that they were paid professionals. That would give us a system of trial by our peers, which we currently do not have.

Those who believe that trial by jury is sacrosanct must still accept that there have to be changes. The definition of fraud is too vague and must be re-defined. There is at the moment no such offence as fraud. It needs a clarity and simplicity, such as is afforded to theft, with which a jury can immediately equate. We would also need to tighten up the exemptions from jury service that appear to allow almost anyone who is neither retired nor unemployed to escape sitting through a lengthy case.

The Maxwell case has cost the taxpayer around pounds 30m. The public deserve something for their money. All they have so far are precedents that suggest the SFO cannot bring a single trial that will last too long nor can it bring multiple trials. In other words, the SFO can no longer prosecute or indeed present the biggest and most complex cases.

These are by definition the most high-profile cases and are the ones that will be used all around the world to judge the integrity of the legal process. The City's rival financial centres do not hesitate to exploit the merest hint of failure to argue that London is an unreliable place to do business. It is important then that cases are tried in the most appropriate fashion.

The very least that the taxpayers are entitled to from their pounds 30m are changes to a system that is manifestly inappropriate for big and complex fraud cases.

Waiting for the fall

I have a great deal of sympathy for Tony Dye, head of investment at PDFM, the fund manager. He has attracted a lot of attention because of the huge amount of cash his funds hold. Around 15 per cent of the pounds 50bn PDFM portfolio has been switched into cash for some time in anticipation of market crashes on both Wall Street and London. Unfortunately for Mr Dye, the crash has not happened. Worse, stock markets have gone from strength to strength and this month hit yet new peaks.

Like Mr Dye, I also happen to believe that Wall Street is heading for a fall. Unfortunately I do not have pounds 7bn tucked away in the building society to support my views. Mr Dye is overweight in cash. I am just overweight.

What is apparent is that while PDFM may have been too far ahead of events in reducing its exposure to equities, other fund managers are slowly coming around to its way of thinking. A number are already switching quietly out of US shares and into cash.

When the experts all agree it tends to suggest they are wrong. But the specialists are working on time horizons that do not demand precision. With the balance that a portfolio approach to their investments brings they can afford to leave a little bit of profit for the market.

My worry is that strong economies on both sides of the Atlantic suggest some tightening of interest rates is required. Unfortunately there is a political dimension. The US presidential election is in November and we will go to the polls in this country no later than next year. This releases a subtle pressure on politicians and central bankers alike to defer the requisite pre-emptive interest rate strikes. When they do come, as they must if central bankers are committed to fight inflation, then they will need to be of a magnitude that is more severe than an earlier and gentler bias to tightening.

A sharp rise in US interest rates later this year would surprise the market - and surprises, as we know, means points off the stock market indices.