Fraud office to escape the axe

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 later this week.

Since February, ministers have been considering a report by a Government working party that recommends retaining the SFO as an independent body.

The working party rejected proposals to merge the SFO with the Crown Prosecution Service or to abolish it.

Sources close to the SFO, which has come in for heavy criticism over its handling of a number of high-profile financial fraud cases, expect the Attorney-General, Sir Nicholas Lyell, to announce the Government's verdict on the working party's findings on Friday in a statement to the House of Commons.

The working party, set up last year under the chairmanship of Rex Davie, a retired Cabinet official, handed its report to the Attorney-General's office for further consultation at the begining of February. One factor the Davie team appears to have taken into account is the likely public reaction to downgrading or abolishing the SFO. "If we had downgraded or abolished the SFO, it would have looked as if the Government was lessening its commitment to the conviction of complex fraud," said one source.

But the Government is bound to be criticised for not coming up with a radical solution after considering the SFO's future for nearly two years.

One problem with merging the SFO with the CPS is that this would involve the extension of the SFO's special Section 2 powers to the police. These allow the agency's lawyers and accountants to require suspects to provide information or documents with no right of silence.

An extension of these powers to an outside body such as the police would require legislative change that the commitee feels would not command much public sympathy after high-profile cases such as those of the Guildford Four and the Birmingham Six, where the police were criticised for the way in which they extracted confessions.

George Staple, the SFO director who was quoted earlier this year as saying: "These days, it's almost impossible to commit a fraud," is likely to be relieved by any decision to retain the SFO in its current form. "Of course we are living on the brink; I'd be silly to deny that," Mr Staple said in the same interview.

An earlier assessment by a Treasury official, John Graham, was far from complimentary. In its defence, the SFO reminds critics that it has secured convictions against 191 of the 304 defendants it has brought to court.

The Davie report is expected to recommend closer links between the Fraud Investigation Group of the CPS, including the flow of more information from the FIG to the SFO. Recently, the FIG has tended not to pass cases on to the SFO, and police have passed more cases on to the FIG because of disillusionment with the SFO.

The Davie report is likely to accept that the SFO should not get involved in cases of market manipulation, such as the Blue Arrow affair, but should concentrate more on cases involving theft. The Blue Arrow case lasted a year, cost around £35m, and resulted in no convictions. Earlier this year, the convictions of four defendants in the first Guinness trial were referred to the Court of Appeal on the grounds that the SFO withheld documents from the defence.

The SFO is currently trying to bring the case against Kevin and Ian Maxwell, the sons of the late publisher, to court. This was expected to begin next month but there are fears that it may be delayed because of the defendants' wish to see documents currently held by the SFO.

Michael Levy, professor of criminology at the University of South Wales, said: "Most of the criticism of the SFO seems to centre on the execution of its function. If it's a management issue rather than a conceptual objection, then it's perfectly appropriate that a reformist position should be adopted by the Davie report."