View from City Road: The SFO has not worked

With yesterday's failure to secure any kind of meaningful conviction in the Brent Walker fraud case, the Serious Fraud Office must surely have signed its own death warrant. Whether the Government makes up its mind before or after the Maxwell trial, due to start early next year, is neither here nor there. The case for subsuming the SFO within the Crown Prosecution Service now seems irresistible. This is an experiment that has not worked.

Nearly all the high-profile cases attempted by the SFO have turned out to be monumental wastes of public money. In run-of-the-mill fraud, the SFO's record appears little better than what went before. Nor has the SFO made any headway in the area of complex securities fraud involving market deception and the like.

In one of the few big cases where the SFO did secure convictions, Guinness, it did so by what the European Commission of Human Rights has found to be unfair means. Without powers to compel a confession and use it in evidence, the SFO appears no better than the old Director of Public Prosecutions in prosecuting fraud. Why bother with it, then?

Even by the SFO's standards, the latest foray into complex corporate and City fraud seems to have been lamentably ill-conceived and badly executed.

Inevitably, there will be fresh calls for the abolition of jury trials in such cases but that is really beside the point. No one would have convicted Mr Walker on the evidence as presented. The assertion that Mr Walker must have known what was going on is no substitute for evidence that he did. The impression is of an authority that seems to launch prosecutions more on hope, the need to be seen to be doing something, than hard evidence.

Whenever a fraud case fails in this way, the tendency is for history to be rewritten. Nothing happened after all, is what an acquittal would appear to indicate. As far as Mr Walker is concerned, that is what the law requires us to say. None the less, some kind of deliberate attempt was clearly made artificially to inflate Brent Walker's profits, and if Mr Walker was not to blame for what happened, who was?

Brent Walker would no doubt have collapsed under the weight of its debts anyway, but the creation of fictitious profits was certainly a part of the story. Whoever was responsible - Mr Walker's lawyers suggested it may have been the two men who ran the films division (see opposite) - has a lot to answer for.

Brent Walker went down with pounds 1.5bn of debt outstanding. Its equity, once valued at more than pounds 500m, is now worth virtually nothing. Though Mr Walker emerges from the trial without a blemish on his character, the City will not easily forget what has happened. Nor will it easily forgive the failure of the likes of KPMG Peat Marwick, despite the warnings, to spot the deception going on under their noses. The professional advisers, it appears, were as easily duped as the chief executive. A proper post mortem on this shabby episode has still to be conducted. The SFO was never the organisation to do it.