SFO landmark successes may not silence critics

The much-derided Serious Fraud Office (SFO) won two landmark court room cases this week, sending hotelier Robert Feld to jail for eight years and convicting Abbas Gokal in the world's biggest fraud case. But will this be enough to silence the SFO's legion of critics?

Ever since its founding in the 1980s as the agency to clean up big business frauds, the SFO has rocked from one failure to the next.

There were howls of outrage when Roger Levitt was convicted of fraud and sentenced to just 180 hours' community service. And there was even greater public disillusionment when Kevin and Ian Maxwell were acquitted after an eight-month trial that cost the taxpayer more than pounds 20m.

There was no disguising the delight at the SFO's Elm Street offices this week following the double win. "It's been a great week for the SFO," declared Chris Dickson, case controller for the prosecution of Gokal for $1.2bn of fraud.

The SFO's line is that its future was already assured before this week's successes. They point to the Davy Report two years ago which was accepted by both the Government and the Opposition, which backed the SFO in its present form.

But then came Maxwell, and the old criticisms were aired once again. Was the SFO's structure, using teams of accountants, solicitors and police the right one? Was the evidence produced at trials too complicated for juries to understand? Were the SFO's special powers to require people to produce documents and answer questions too draconian? Would it not be best to just accept that the SFO had failed, and merge into another body such as the Crown Prosecution service or a new financial regulator?

George Staple, the litigation lawyer from Clifford Chance who retires this month as head of the SFO to make way for Rosalinde Wright (previously of the Securities and Futures Authority), admits that Maxwell was a big set-back. But he points out that the SFO has a duty to prosecute all cases of serious fraud where there is even a reasonable chance of success. He points to press criticism of the Crown Prosecution Service's failure to prosecute certain cases where the evidence is not water-tight.

Losing a case does not necessarily mean it was wrong to bring it, he insists. He is delighted at the two successes this week, particularly in terms of the large numbers of victims involved. "But I think the SFO has already shown that it is prosecuting big cases. It's a very effective organisation."

The public's despair at the SFO's fumbling of previous cases like Maxwell, which led some fellow-investigators to dub it "the Serious Farce Office", is surprisingly at odds with perceptions inside many financial regulators.

One regulator commented yesterday: "Inside the regulatory system the SFO is seen as quite successful, and that this success is largely unsung. Obviously the Maxwell and Levitt cases were seen as unsuccessful. But I think on the whole George Staple deserves credit for what he has achieved."