§ 11 am
§ The Attorney-General (Sir Nicholas Lyell)
With permission, Madam Speaker, I wish to make a statement setting out the way ahead for the investigation and prosecution of serious and complex fraud.
This issue has now been the subject of two official reports: the Graham report, received in March 1994; and the report by a committee chaired by Mr. Rex Davie, formerly of the Cabinet Office, delivered to me at the beginning of February. The Graham report was published last year. I have today placed copies of the Davie report in the Library.
The key issue focused upon by the Davie Committee was whether to develop and build on the existing structures, or whether to merge them into one organisation and, if so, whether that organisation should be based upon the Serious Fraud Office or the fraud divisions of the Crown Prosecution Service. The clear advice of the Davie committee is that the existing structures should be retained and that the role of the police in SFO cases should be clarified. The Davie report makes that principal recommendation against a merger, and nine subsidiary recommendations. I accept them all.
The report emphasises the fact that fraud covers a wide spectrum, from the highly sophisticated banking and commercial frauds involved, for example, in the collapse of the Bank of Credit and Commerce International or the Guinness cases, to relatively straightforward deception. That broad range requires an effective, proportionate and flexible response. For the heaviest cases, the Davie report endorses the regime based upon Lord Roskill's report in 1986, which brings together the investigation and prosecution of fraud by a multi-disciplinary team of lawyers, accountants, both in-house and from the private sector, and the police, working at all stages under the aegis of a specialist prosecuting authority—the Serious Fraud Office. But intermediate cases can properly be handled by traditional police methods leading to prosecution by the less resource-intensive fraud divisions of the Crown Prosecution Service, and a substantial number of lesser cases should also continue to be prosecuted locally in each Crown Prosecution Service area.
I should emphasise that, despite the often misguided criticism to which the prosecuting agencies have been subject, the Serious Fraud Office and the fraud divisions of the CPS have made real advances since they were set up in the 1980s. In its seven years of existence to date, the Serious Fraud Office has brought to trial 141 major cases involving 309 defendants, of whom 191 have been convicted. More significantly, in over 75 per cent. of the cases brought to trial by the SFO, at least one person has been convicted, usually the principal defendant.
The Serious Fraud Office has a current case load of some 50 cases of which, on average, 20 have been brought to trial each year. At the intermediate level, the police in London and throughout England and Wales consult closely with the fraud divisions of the Crown Prosecution Service, London or provincial, in significant fraud cases prior to charge; and between them the two divisions have currently just under 100 cases being tried or awaiting trial in the Crown court. Each fraud division comprises a team of 15 lawyers, supported by in-house accountants, together with a very substantial input from independent 1310 counsel, usually brought in at an early stage of any case going forward to prosecution. This system is less resource-intensive than the Serious Fraud Office but nevertheless provides a specialised service on a multi-disciplinary basis. Each CPS area also handles a number of fraud cases locally, again working in close co-operation with the police and counsel.
At whichever level cases are handled, high levels of expertise, experience and attention to detail are essential. The primary conclusion of the Davie report was that the broad structure of each organisation should remain unaltered. Its subsidiary but nonetheless important recommendations are as follows. It provided a revised set of criteria for determining whether cases should be handled by the Serious Fraud Office or the Crown Prosecution Service. Those criteria, which the report concludes should lead to a heavier case load for, and some enlargement of, the Serious Fraud Office, should be published. The allocation of resources as between the two prosecuting authorities in relation to their case load should be kept under review and the Serious Fraud Office should continue to adopt a flexible approach when deciding precisely how their cases should be handled.
The role of the Joint Vetting Committee, established following the Graham report to consider the allocation of cases, which do not fall clearly to the Serious Fraud Office or the fraud divisions, should be strengthened to allow consideration of policy issues and the Association of Chief Police Officers should be fully represented on the Joint Vetting Committee when policy issues are discussed. The role of the police in Serious Fraud Office cases needs to be clarified, perhaps in a memorandum of understanding.
Finally, there should be closer co-ordination between the two prosecuting agencies to encourage a pooling of expertise, a common approach to policy issues, and improved arrangements for the interchange of staff to broaden their experience and provide for enhanced career development.
The Director of Public Prosecutions, the Director of the Serious Fraud Office and I all welcome the constructive measures suggested in the two reports. They bring to an end what has been a period of uncertainty for both organisations and provide a sound blueprint for future improvements. There can be no room for complacency, but it can be said with confidence that, without the present structures and organisation, many of the heaviest cases successfully brought to trial and conviction would never have been tried at all. Once the constructive recommendations of these two reports are in place, the ability of both organisations to perform their heavy tasks will be significantly enhanced. The Government are wholly committed to the effective and efficient prosecution of fraud at all levels. I commend the proposals to the House.
§ Mr. John Morris (Aberavon)
I welcome the Davie report and the Attorney-General's conclusions. While I would not necessarily have devised the Serious Fraud Office and maintained a fraud division of the Crown Prosecution Service at the same time, a shotgun marriage now is not the best way to proceed.
There is no single measure of the effectiveness of a prosecuting authority and we are not in the business of knocking either the SFO or the CPS for knocking's sake. Does the Attorney-General accept from my experience 1311 that both the SFO and the fraud division of the CPS handle complex and difficult cases, and that the number of convictions is not necessarily a yardstick by which to judge their effectiveness?
As regards the Attorney-General's responsibility, will he satisfy himself that both authorities make the widest use of counsel of experience, including those usually defending, and instruct them to consider the further lightening of indictments, what can be done to limit the breadth of evidence, and concentrate on prosecuting the prime wrongdoers rather than trying to catch every tiddler, thereby simplifying the difficult and onerous task of jurors?
As enormous costs are frequently at stake, will the Attorney-General convey to the Lord Chancellor the need to ensure the strongest pool of competent judges to try those cases, and perhaps to signify their qualities properly? That perhaps is often the heart of the matter.
Will the Attorney-General reconsider his remarks about the need to clarify the role of the police in the SFO—a masterly understatement, if ever there was one? I have read the Davie report, which speaks of a much more serious position. It refers to "confusion and uncertainty" in direction of investigations, says thatrelations work in the majority of casesend mentionsthe need to resolve current tensions.It is a masterly understatement to speak of clarifying.
Does the Attorney-General share the anxiety of some commentators that for a time there were few, if any, references from the London police forces to the SFO? The Graham report notes:The recent trend of provincial forces collectively to refer more cases than the two London forces is contrary to the expectation that the more likely place of incidence of serious fraud is in London.Has that now changed? Will he personally ensure the greatest participation by the police in the SFO? Is it good use of scarce talent for the police to serve in the SFO at a very high level for a relatively short time and transfer to more mundane duties, including traffic, very soon after?
Will the Attorney-General make a further report to Parliament on what will be achieved by better co-ordination between the SFO and the fraud division in allocating cases? The report refers to "confusing overlap". Perhaps we might know, as a significant increase in the work of the SFO appears to be intended, what proportion that is likely to be. Will he also ensure that the alarming finding that there is little contact on professional questions between the CPS and the SFO becomes a matter of history?
The use of new methods of recording evidence and new technology has helped juries in their difficult task in some recent complex cases. Will the Attorney-General ensure that resources are not denied to the SFO to make the task of juries easier?
§ The Attorney-General
First, may I thank the right hon. and learned Gentlemen warmly for his welcome, and his recognition of the value of the Serious Fraud Office and the fraud divisions of the Crown Prosecution Service? He and I are in entire agreement about that important matter and we share the opinion that Davie has correctly identified the way ahead.
1312 I accept that both organisations have a complex and difficult role. No one should underestimate the strain on everyone involved—the investigating police and accountants, counsel who presents the case and, indeed, the judge—of those heavy cases.
The right hon. and learned Member for Aberavon (Mr. Morris) is right that one must seek experienced counsel to present those cases, that the indictments should not be overweighted by an excessive number of charges, that they should be well focused on the principal suspects and the principal aspects of the case, and that they should not be diverted on to minor and subsidiary matters.
I agree that the selection of the judge is of huge importance. The House should pay respect to the enormous burden on the judge in trying a long case of that nature. There are two key factors in those cases; clear, comprehensive and comprehensible presentation by the prosecution and a clear absorption by the judge, who must keep the case steady, prevent it from being unduly interrupted by unnecessary technicality and then present the case clearly and fairly to the jury in his summing-up. It is a heavy task, for which we owe a deep debt of gratitude to the judges who work so hard to carry it out.
An important argument in the Davie report is that the role of the police needs to be clarified in the SFO, so that the police who work there, who have an immensely important role to play—I say that with great emphasis—have a line of accountability that they fully understand and which enables the Director of the Serious Fraud Office, with his heavy duties, to have clear control and direction of cases under his command.
For a time, there was a reduction in the number of cases coming forward in London. There has been a pick-up. The exact reasons for it are difficult to deduce, although it may be something to do with the recession.
It has been suggested that the police should spend longer periods in the Serious Fraud Office. I have taken a close interest in that matter for about 14 years, since I was first parliamentary private secretary to Sir Michael Havers, long before those offices were set up.
It is specialisation, it is the fact that one knows the game of fraud as well as or better than the fraudsters, that makes an excellent investigator and prosecutor. That applies to the police, and they must be given an opportunity to build up that long-term expertise.
In answer to the final questions of the right hon. and learned Member for Aberavon, yes, we shall maintain a close watch on the way in which those matters develop. I am sure that the subject will come up in questions, rightly, from time to time. The shift to the Serious Fraud Office must be considered case by case. We are not dealing with supermarket products here; we are dealing with decisions carefully tailored to heavy cases.
The lack of contact in the past between the SFO and the fraud divisions of the CPS is something that I wish to be changed. Before the report was produced, I had the opportunity to visit and talk personally to the great majority of the lawyers and accountants who deal with those prosecutions. They are anxious for closer contact. They seek an enhanced career structure. I am determined that we shall give it to them.
1313 Technology is of great importance. In a recent case, the judge praised the way in which 17,000 documents were kept on computer and might be brought instantly to the attention of the jury, greatly enhancing the management of the case.
§ Mr. John Greenway (Ryedale)
I warmly welcome my right hon. Friend's statement. Does he agree that, with the increased prevalence of technology, especially throughout the banking and financial services world, the opportunities for fraud are greatly increased? Does not that demonstrate that the only effective way to discourage those people is to create the certainty that they will be detected and successfully prosecuted? He is right to draw attention to the importance of skills.
I make a plea that the skills in the police are not undervalued by the police themselves, and that there is a proper career structure for police officers working in the Serious Fraud Office, so that their expertise and experience is not wasted by their being returned to other duties.
§ The Attorney-General
I agree strongly with what my hon. Friend has said. He is a former police officer, and I know, from my several visits to the SFO and the CPS fraud divisions, the huge role that the police do and should play in those matters. They deserve clear lines of accountability and a proper career structure, so that they can play a maximum part in those heavy and important cases and thereby help to show the fraudster that crime does not pay and that it does lead to the condign punishment that it deserves.
§ Mr. Archy Kirkwood (Roxburgh and Berwickshire)
I am willing to give a cautious welcome to the statement that has been made. I think that the decision to build on the existing structures is the right one, but does the Attorney-General accept that there remains a good deal of uncertainty and disquiet in the public's mind about the process? Can he confirm that the existing structures must be built on and developed, as he said, so that the public confidence that we need can be established? The jury is still out on the SFO. Although today's announcement will go a long way to dispelling public disquiet, work still needs to be done.
Do any of the Davie recommendations deal with the Attorney-General's role in monitoring the process in future? That was mentioned earlier and it is an essential part of building the confidence in the system which the public are entitled to feel about it. The right hon. and learned Gentleman is right that we owe a debt of gratitude to judges who conduct such cases. Are they sufficiently trained, however, to digest and break down the evidence that is put before lay members of the jury, so that those juries can make sensible decisions? Will the right hon. and learned Gentleman have urgent discussions with the Lord Chancellor to satisfy himself that judges receive the training that is adequate for the task?
§ The Attorney-General
The hon. Gentleman makes a number of good points with which I agree. I am grateful for his welcome of the conclusions of the Davie report. He is right to agree that we should build on the existing structures.
The hon. Gentleman may say that the jury is out on the SFO or the fraud divisions of the CPS, but they deal with heavy cases. If any of them go wrong it generates a huge amount of publicity. I am sure that the hon. Gentleman 1314 would agree that to achieve a conviction in 75 per cent. of SFO cases, usually of the principal defendant, is no mean achievement. A certain number of interested people like to run down the prosecuting authorities, perhaps in the hope that they will be less effective in turning their gaze in certain directions.
As for my role, I can tell the House that I and my hon. and learned Friend the Solicitor-General, who has 30 years of prosecuting experience, including such heavy cases, take a close interest in the operation of both organisations, with the assistance of the Directors of the SFO and of Public Prosecutions and we will continue to do so.
The hon. Gentleman is right to emphasise not only the burden on judges, but the importance of training. I shall keep in close touch with my noble Friend the Lord Chancellor on such matters.
§ Mr. Oliver Heald (Hertfordshire, North)
Does my right hon. and learned Friend agree that the SFO has now acquired unique specialist skills and experience? Many cases, such BCCI, Barlow Clowes and Guinness, would not have come to trial without that knowledge and its ability to get behind the defences of some of the most sophisticated criminals in the country.
Does my right hon. and learned Friend also agree that the other area in which the SFO has scored recently is in the presentation of cases? At Oxford recently, Judge May stressed that the way in which 17,000 court documents could be presented by the SFO using computer screens was a fantastic aid to the jury and saved a lot of court time. Does my right hon. and learned Friend agree that, having achieved all those improvements and having that knowledge, it is more likely in the future that criminals will be detected and successfully prosecuted by the SFO than before? Is not that a tribute to its work?
§ The Attorney-General
My hon. Friend makes a number of good points. It is typical of us in Britain that we often run ourselves down when the rest of the world is praising us. The members of the SFO and the CPS are in great demand overseas, as are their directors, because the rest of the world wants to know how to organise its serious fraud prosecution and prosecution processes generally. My hon. Friend is absolutely correct that, going back to the early 1980s, fraud cases took enormously longer to prosecute. I remember one of the Lloyd's cases, known as the Gang of Four case, which took about seven years to come to trial and which did not lead to a conviction. The speed and efficiency with which that sort of matter is now investigated, in tandem with the Department of Trade and Industry, is a sea change from those days. It is a remarkable thing to be able to draw up any one of 17,000 documents, as required, with proper indexing, word recognition and so on. That is the way ahead; my hon. Friend is right to point to it.
§ Mr. Dennis Skinner (Bolsover)
Is the Attorney-General aware that, by making a narrow statement on the Davie committee report, he has missed a great opportunity to remove from the public's mind the idea that there are two standards of justice in Britain? It seems extremely odd that he has not used this opportunity to explain why some of those millionaire crooks, like Levitt, the Maxwell brothers and others, can get legal aid while they hand around at court. Some of those cases take a month of Sundays, but the people involved manage to live off the public purse and finish up with a few hours' community service.
1315 Why has the right hon. and learned Gentleman not used today as a chance to explain how the prosecution of such cases will be sped up even more? He should have said that the SFO will explain how the treatment of those in the City, who are making money hand over fist at Baring Brothers and the like, and who have not been brought to justice, will compare to the justice meted out to the little old lady who takes a tin of pilchards from Marks and Spencer and gets locked up within a month?
§ The Attorney-General
I am not going down the road of commenting on individual cases, particularly any that may be currently before the courts. I invite the hon. Gentleman to take an unusual course and to praise what everyone else in the House has been right to see merit in. The steps that we are taking and the steps that we have taken through the SFO and the fraud divisions of the CPS have done and are doing exactly what he wants. It is ensuring that a high standard of justice will bring the spotlight, indeed the searchlight, to bear on the activities of fraudsters and will bring them to justice far more effectively than before.
§ Mr. Jacques Arnold (Gravesham)
The public could be forgiven if they thought that all fraud cases are either handled according to a conspiracy theory, which seems to be the theory of the hon. Member for Bolsover (Mr. Skinner), or the cock-up theory, which is often presented to the public by the press. Does my right hon. and learned Friend agree that it is rather encouraging that, of the cases that the SFO brings to court, it gains convictions in three quarters of them, frequently of the principal fraudsters? That is particularly meritorious in the light of the complexities of the matter. Does my right hon. and learned Friend consider that what he has announced today will further strengthen the idea in the public mind that fraudsters will be caught up with and properly dealt with by the competent authorities?
§ The Attorney-General
I agree with my hon. Friend. One can make all sorts of interesting stories in the press. The really interesting story today is that one does not lightly get away with serious fraud. If a case does not lead to prosecution for any reason, even a humanitarian one, where the case is stopped because the defendant is thought to be at danger of his life, as happened in one important case, that is described by some newspapers as a fiasco. That is simply not true. I am not so complacent as to say that there are not lessons to be learned from some past cases—there are—but my hon. Friend is right to draw attention to the high conviction rate that has rightly been achieved as a result of attention to detail and the focusing of expertise.
§ Mr. Harry Barnes (Derbyshire, North-East)
There is a clear need to be tough on serious fraud, but it is not clear whether the cautious Davie report goes far towards doing that. There is also a need to be tough on the causes of serious fraud. Does the Davie report touch those areas by starting to deal with the problems of our rip-off society? Does it offer any suggestions that other Ministers should be involved because of concerns about the way in which the Government have led society in the past 15 years?
§ The Attorney-General
I would not describe this as a cautious report. A report that has the courage to say, in 1316 the face of often immoderate criticism, that it is not necessary to pull everything up by the roots, is a brave report and right.
As for standards in society, the message that I am delivering loudly and clearly is, "If you think you can get away with fraud, you are wrong. We will not put up with it in today's society." We are putting in place highly effective measures to bring wrongdoers to justice.
§ Mr. James Clappison (Hertsmere)
I join in the general welcome given to my right hon. and learned Friend's statement. Does he agree that the cause of crime is criminals and the cause of fraud is fraudsters, whatever the Opposition may think? Does not bringing fraudsters to justice in serious fraud cases usually involve a difficult and complex undertaking, which must be supported by a prosecuting team with the right level of specialist skills and experience?
Should not we view the performance of the SFO against that background? Does my right hon. and learned Friend agree that convictions at a strike rate of 75 per cent. of cases suggests that some worthwhile progress has been made? There is also good value for money because the SFO's budget is only about £20 million, which must be seen against the much greater cost of loss and damage caused by fraud. Should not we now give the SFO wide-ranging public support in the important task that it is undertaking?
§ The Attorney-General
My hon. Friend is right. He mentioned the cost of investigating and prosecuting serious fraud cases through the SFO as being just under £20 million a year. Professor Levi of Cardiff university, in a recent study, pointed out that that cost should be viewed against the direct loss involved in the SFO's current case load of some £6 billion. It is money properly focused on the worthwhile target of bringing guilty suspects to justice.
§ Mr. Alan Duncan (Rutland and Melton)
My right hon. and learned Friend is right to point out the relative success record of the SFO in its prosecutions. However, are not many of the cases so complex and complicated that it is increasingly unrealistic to expect the jury system and the individual members of a jury sufficiently to understand the details of the issues involved to have the confidence to convict? Will my right hon. and learned Friend consider introducing legislation that would allow many of those uniquely complicated cases to be transferred to decisions by judges, rather than by jury, and so enhance the SFO's future success rate?
§ The Attorney-General
My hon. Friend rightly makes an important point. It is one on which we focus careful attention from time to time. The point about serious fraud cases and, indeed, most fraud cases, is that while they are complex in execution, they tend to be quite simple in concept—really just hands in the till. The big task is to present the case clearly so that something that the fraudster hopes is buried in tonnes of paper or lost in the interstices of a computer is actually laid clearly before the court. The main burden falls on the prosecution and the judge, and if they can do an effective job juries seldom fail to understand the case in the end. I do not close my mind to my hon. Friend's point, but I think that I have put my finger on the key issue.
§ Mr. Piers Merchant (Beckenham)
Does my right hon. and learned Friend agree with the Davie report that the 1317 key task for the SFO is consultation with senior police officers to ensure that the essential role of the police in large cases is properly defined?
§ The Attorney-General
Yes, I do. It is right that the report should not funk that important question. As the right hon. and learned Member for Aberavon (Mr. Morris) pointed out, in most cases the police work effectively with the SFO. However, there are tensions. It is difficult to work for one organisation when, in a sense, one's loyalty is owed to another. I look forward to tackling the problem with the SFO and CPS Directors and with the police commissioners, to help them to find a satisfactory resolution from the highest level downwards.
§ Lady Olga Maitland (Sutton and Cheam)
Does my right hon. and learned Friend agree that it would be helpful to the public if they could understand more of the workings of the SFO, bearing in mind the fact that it employs highly skilled, highly efficient people to tackle very organised crime?
§ The Attorney-General
Yes, I agree. Indeed, the SFO holds an open invitation to any hon. Member to go and see how it carries out its work. It is fairly impressive to go through its floors, to meet the people who spend a major part of their careers focusing on such an important area and to see how computers can bring the documentation under control so that cases can be marshalled to ensure that something that is immensely complex to start with can be shown in its true light and, if it be the case, its true criminality.