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SFO back in the spotlight07 March 2013
Richard Alderman’s tenure as director of the Serious Fraud Office will be subjected to further scrutiny today when he appears before the Public Accounts Committee. In preparation for Mr Alderman’s questioning, Attorney General Dominic Grieve MP has published two reports examining alleged misconduct at the SFO during the period of Mr Alderman’s directorship. It is no little irony that the reports hoist Mr Alderman on the petard of two of the main policies he advocated at the SFO: whistle-blowing and self-reporting.
The first report, commissioned by the Cabinet Secretary, is a response to internal whistle-blowing allegations that senior SFO executives received gifts and hospitality, including a skiing holiday and spa break, in relation to consultancy contracts awarded by the SFO to Corven Consulting and PA Consulting. The report concludes, reassuringly for a prosecuting agency responsible for combating bribery, that there was “no evidence of improper conduct” in relation to these allegations. Whilst the report detects no evidence of corruption, it does criticise the adequacy of the SFO’s procedures for appointing external consultants, in particular the inability of the SFO to produce a single piece of documentation explaining how the consultancy contracts were awarded, or why the awarding decision was made by the SFO’s Chief Capability Officer personally rather than the SFO’s Procurement Team. The report also questions why large payments to these two firms were split into multiple transfers of just under £20,000 and whether this was a deliberate attempt to avoid exceeding the £20,000 threshold which would have necessitated approval by the Cabinet Office and Treasury. These suspected defects in the SFO’s tendering processes prompt the report to recommend a very Aldermanesque proposal: an internal investigation to be carried out by the SFO’s Audit and Risk Committee.
The second report is in fact a self-report. It was commissioned by Mr Alderman’s successor, David Green QC, who wanted to know why the SFO’s former Chief Executive, former Chief Capability Officer (this being the same individual who personally decided to award the contracts to Corven Consulting and PA Consulting) and former Technology Officer were awarded severance payments totalling more than £1m. Last year the National Audit Office ruled that the payments were “irregular” and qualified the SFO’s accounts. Noting that Cabinet Office and Treasury consent for the payments was again circumvented, the report notes drily that: “it is difficult to conclude from the evidence currently available that Richard Alderman, in his role of SFO Accounting Officer, took sufficient steps to ensure that his chosen course of action represented good value for money. It is also likely that his apparent desire for secrecy on these matters will have substantially reduced his ability to assess alternative courses of action.” The covering letter to the report notes Mr Alderman’s stated belief that Mr Green QC fully supported these redundancies at the time, something which Mr Green QC now apparently disputes. This contradiction in their accounts will be played out before the Public Accounts Committee.
To some extent the reports can be interpreted as the aftershocks of a period of convulsion at the SFO, one in which budget cuts, low staff morale and a meandering sense of purpose have been well-documented. Although the reports do not make any findings of criminality, they portray the SFO as an organisation adrift from the principles of corporate transparency and accountability that it seeks to promote. Coming so soon after the botched investigation into the Tchenguiz brothers, the reports will inevitably lead to new accusations that the SFO is not fit for purpose. It is therefore important that the SFO’s new director, Mr Green QC, will also appear before the Public Accounts Committee. Like a self-reporting company seeking to avoid prosecution, he now has the opportunity to explain to Parliament and to the public why the SFO deserves another chance and why the apparent failures of his predecessor will not be repeated.
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