Fraud office director to step down

JOHN EISENHAMMER

Financial Editor

George Staple is to step down as director of the Serious Fraud Office when his contract runs out next year, in an attempt to defuse the explosion of criticism prompted by the outcome of the Maxwell case.

The announcement came as the future of the SFO was yet again thrown into doubt, as senior politicians from both sides of the House called for an urgent review of the way big-time fraud is fought in Britain.

The Maxwell case, which resulted in Ian and Kevin Maxwell and Larry Trachtenberg, a former financial adviser to the Maxwell empire, being found not guilty of defrauding pension funds, has capped an increasingly unhappy period of tenure for Mr Staple, as rumblings of discontent have grown louder among senior SFO case directors. Mr Staple's five-year contract ends in April 1997.

He is resisting calls for his departure after the Maxwell case, which lasted four years and cost taxpayers pounds 25m. "I don't think there is anything in this case which should make me consider my position," he said. "Our record is a respectable one. I don't think we should be judged on the result of one case."

An SFO source said yesterday that it had always been Mr Staple's intention to step down next year.

Mr Staple came close to resigning last summer during the furore over new revelations which cast a poor light on his, and the SFO's, handling of the prosecution of Roger Levitt. Facing multiple charges of defrauding investors of pounds 34m, carrying a possible jail term of between seven and ten years, Levitt was eventually sentenced to 180 hours of community service.

The Government was embarrassed when it had to concede that earlier answers to Parliament on the affair had not been accurate, and Mr Staple had to apologise to the influential Treasury Select Committee for giving it incorrect evidence. His conduct was heavily censured by the committee and later last year its report on financial regulation criticised the SFO.

Conservatives on the committee have called loudly for a rethink on combating complex City fraud. Matthew Carrington, a Tory member of the committee, said: "This latest embarrassment over Maxwell forcefully raises questions about whether fraud prosecution might not be better handled by those bodies responsible for regulating financial services."

Although it made no formal recommendation, the committee is known to have leant towards an option which would see the chief regulator, the Securities and Investments Board, also given the power to take investigations through to prosecution. But the lack of any prospect of any change in the law this side of an election meant the option was not pushed.

Labour has committed a future government to a full review of the SFO's operations and is also considering giving the regulators power of prosecution. "It is now time urgently to examine the way in which we prosecute complicated City crimes and the role of the SFO," Alastair Darling, Labour's City spokesman, said.

The loss of the Maxwell case has exacerbated disenchantment among the SFO's upper ranks. Senior officers believe Mr Staple's defence of the SFO has been inadequate, exposing his inexperience in criminal legal matters. There is little support internally for him to carry on.

Mr Staple, and the SFO, received decisive backing from Sir Nicholas Lyell, the Attorney-General, however. "If it did not exist, I am sure we would have to invent it," he said of the SFO after the Maxwell verdict.

After a Cabinet review last year, the Government concluded there was no better alternative to the SFO and said it should be reinforced as the centre of expertise for all big fraud cases.