Why the SFO are not getting the convictions they should!

In a Reuters report on Monday 7th October 2013, the Serious Fraud Office (SFO) said that the law must be changed if critics want to see more companies in court for misconduct.

Serious Fraud Office Director David Green said he was constantly being compared unfavourably with U.S. enforcement agencies, which prosecute far more companies for fraud. 

Mr Green may feel not a little vexed at being compared with his US counterparts, but the US officers have powers that David Green can only dream about.

This is the seminal issue when we come to discuss prosecuting serious financial crime in the City - do we want to bring the fat-cats to justice, and I mean really bring the criminal bastards down to size - or are we merely going through the motions of the criminal justice process, and then standing down at the last minute and wringing our hands and saying how unfair it all is that we don't have all the powers we need?

Now I am not saying that David Green is a whinger, far from it, and I am really sure he wants to get some prosecutors and investigators around him who really want to take the fight to the enemy. This means finding men and women who are not going to do the usual, 'British' thing and be content to start the fight against the City criminals with one hand tied behind their backs.

No, what we need are some men and women with fire in their belly, who are sick and tired of the grave injustices being perpetrated in the name of criminal justice as far as the City fat cats are concerned, and who want to even up the score! We need young prosecutors who are hungry for promotion, who are not interested in playing by the conventional rules, and who are willing to start bringing some really unpleasant pressure on the organised criminals in suits who daily crowd into the City to commit financial crimes.

This is what happens in the United States, young prosecutors start off really wanting to stick the boot in, because in so doing, they make a name for themselves as good prosecutors, and this aids and assists their career prospects. In the UK, all too often young prosecutors see their role as a rather refined and gentlemanly one, where it is not considered  'good form' to go for the jugular, and where their role is a high-minded process!

The SFO (so it is claimed) faces a much higher burden of proof than U.S. agencies, having to show a company's board is complicit.

"The email trail has a habit of drying up at the middle management level," Green told an American Bar Association conference on white collar crime on Monday.

Of course it does, so what? There are other ways of obtaining evidence against those at the top of the organisation without worrying about email trails. Obviously the trail dries up at the middle management level, these people are not stupid. Senior management insulates itself against the every-day operations and decision methods, so as to be able to deny any association with any wrong-doing when it comes to light.

But, do we think they don't hear the gossip, when a trader in the dealing room suddenly pulls off a spectacular 'hit'. Do we think they aren't aware when some dope runs up an enormous loss. 

Sure, there are traders who can cover up for a while, but City dealing rooms and trading floors are hot-houses of gossip, rumour and innuendo, and everything is known at the end of the day. 

Does anyone seriously believe that Sgr Roberto Diamante and his capo-regimes didn't know about the LIBOR shenanigans?

The real trick about being a successful white-collar prosecutor is to treat every posh defendant as if he were the same as a Peckham drug-pusher - and expect him to behave in the same way - to hire the best shyster he can afford, to get the best brief; to splash his money around on pre-trial legal actions, trying to disrupt the prosecution's trial preparations; to find ways of buying false and perjured evidence; to interfere with witnesses; to make up false documents and to lie through his teeth in the witness box!

This means the prosecution must also find every nasty trick in the book to hit him with during the investigation, and adopt an outright refusal to 'play nice' with his solicitors.

David Green is adamant that; "If it is in the public interest for more corporate prosecutions, the test (of proof of complicity) must be lowered."

We shouldn't be worrying about this - it will take years and years to accomplish and the lawyers will fight tooth and nail to prevent it going through Parliament successfully!

There are other ways of dealing with these cases.

The British need to stop being so mealy-mouthed about investigating white-collar criminals, and begin to use other techniques.

We need to start learning again how to 'turn' potential defendants into witnesses. We did it back in the early 1980s, and it was hugely effective.

In the US, they invite a putative defendant to become a 'cooperating' witness, and they spell out to him the consequences of failing to cooperate with the prosecutors. He is offered a deal he would be a complete idiot to refuse. In return for clemency, he is expected to work with the prosecutors, to give evidence against his co-defendants, to engage in taped conversations with them in an attempt to entrap them into making admissions of guilt, etc.

A short extract from 'Insider Out', the book written by Dennis Levine, a major Insider Dealer, demonstrates just how the US system can work.

"...Liman (his lawyer) spelled out the situation for me. This was America. I had freedom of choice. One, I could plead not guilty and stand trial. But, I had no chance of winning. The prosecutors would probably convict me under RICO (The Racketeer and Corrupt Organisations Act), and throw me into prison for a long time, and, quite literally, confiscate all of my possessions and throw my family on the street. Two, I could plead guilty and refuse to cooperate, but I would have to plead to RICO. The consequences of choice number two, Liman said, were similar to those of choice number one. Three, I could agree to forfeiture of the proceeds of my trading and plead guilty to lesser charges, which the government would allow me to do, if I agreed to cooperate; we could undoubtedly negotiate a similar settlement of the civil charges.

'...You're going to do some time...' Liman warned. But choice number three would result in a shorter sentence and - far more importantly - would allow my family to survive. He recommended that we enter into plea-agreement negotiations with the Government..."

This is how to deal with white-collar criminals, and the US authorities have refined their tactics over the years. Plea bargaining systems enable prosecutors to go after criminals who might otherwise be able to remain free from the impacts of the criminal justice process. The systems they have invented were originally designed to go after the 'Cosa Nostra', the Sicilian organised crime families who controlled major crime in most US cities. They quickly realised that financial criminals on Wall Street behave in exactly the same way as people whose names almost inevitably end in vowels, and they adopted the use of the organised crime investigation and prosecution tactics to deal with them.

The Americans have no qualm about likening Wall Street wise guys to Mulberry Street wise guys, and they make good use of the tactics. That is why I get so angry and depressed when I hear British regulators and prosecutors talking about 'light touch' regulation when it comes to dealing with the City filth! I get angry when I hear them insouciantly talking about how to handle City crime, and particularly when they ask me, in their condescending way, what do I know about this problem! I want to ask them why they are so sure that there are not other ways of dealing with the Square Mile robbers! I want to know why they are so unwilling to think outside the box and make a play for the biggest criminals on the patch!

I am afraid it all comes down to something the criminologist Edwin Sutherland once said about white collar criminals. In his seminal book 'White Collar Crime' published in 1949, Sutherland said;

"...‘There is a consistent bias involved in the administration of criminal justice under laws which apply to business and the professions and which therefore involve only the upper socio-economic group..."

In 'White Collar Crime', Sutherland argued that the behavior of persons of respectability, from the upper socio-economic class, frequently exhibits all the essential attributes of crime, but that it is only rarely dealt with as such. This situation arose, he said, from a tendency for systems of criminal justice in Western societies to favour certain economically and politically powerful groups and to disfavour others, notably the poor and unskilled who comprise the bulk of the visible criminal population.

But there is no reason why we cannot demand that our prosecutors start finding themselves some cojones, and get some new tactics to take on the bad guys! We have too many prosecutors hiding behind the process and not having the bottle to step out from behind the immense barriers that the Police and Criminal Evidence Act can pose, and start thinking laterally. You can take on the banksters without falling foul of PACE! You can operate effectively without failing to comply with the disclosure provisions.

What you need is good legal knowledge, an ability to outsmart the slimy City solicitors, all of whom have jumped on the bandwagon of the financial crime phenomenon, and the balls to take on the barristers in Court, and play them at their own game! At the end of the day, it is all about having the moral courage to stick to your determination to see these men behind bars, and that means finding all the reasons to charge these people with crimes, not finding reasons not to bring prosecutions. If you can't get them for specialist fraud charges, then think of something else!

I know that there are many young prosecutors who, reading this, would say, '...who the hell is this guy to say this to us...' I know this may sound like a tall order, but my Fraud Squad colleagues and I who did it in the past, and who laughed in the faces of the pompous lawyers as the Old Bailey judges sentenced their cringing whining clients to periods of imprisonment for their crimes, know how it's done, and if they are interested we can show them how to do it.

There was a time when we were required to seek the approval of a Government Minister before we could bring certain charges under the Companies' Acts, and the approval was almost always refused! So we started to bring charges under the Theft Act and other criminal statutes which didn't need civil servants to crawl all over our evidence, and we got convictions.

Charges could have been brought against any number of financial practitioners who had engaged in the defrauding of clients under the PPI frauds. Then, when they were charged, they could have been invited to consider giving evidence against their managers, in return for lenient treatment for a guilty plea! The same tactic could have been used against the managers and when charged, invited to give evidence against their directors, in return for leniency and a guilty plea. This is a fairly aggressive tactic, but it works, and prosecutors must consider its use.

The real truth is that prosecutors have got to stop wanting to have lily-white hands, and be prepared to get down into the street and start mixing it up with the defence lawyers. You may rest assured that the defence will pull out every stunt in the book to get their clients acquitted. We used to have barristers who would work with us on the preparation of the cases and who would advise and guide on the evidence they needed for the charges they wanted to bring. 

They did not prejudice their professional status in giving of their very best skills to help us win our cases.

Next year, Britain introduces what are mistakenly referred to as U.S.-style plea bargaining deals, otherwise known as deferred prosecution agreements (DPAs), whereby a company is charged but the prosecution is suspended in return for a fine, compensation or other sanctions.

David Green realises, as I have done for a long time that DPA's are a waste of time.

"If the prosecution of a corporate is so difficult as it is at the present without the change I propose, why should a corporate agree to enter a DPA at all?" Green said.

This is precisely the point. Prosecutions have got to be made more certain, and lengthy prison sentences a certainty upon conviction. Any man facing the likelihood of 15 years inside for a white-collar crime, will certainly think twice if he is offered a 'get out of jail free' card! We have got to start treating City crime as serious organised crime, which is what it is, and stop pussy-footing around with these men who are making millions of pounds and walking away scot free.

David Green has said the SFO would not hesitate to prosecute even difficult cases, and that "blockbuster" funding reserves were on tap to pursue big cases such as the rigging of Libor, the benchmark London interbank offered rate, and others.

This is good news indeed, strong budgets are needed to go after the big City players. The irony is that after a couple of really good convictions, there would be an wholesale change of attitude among those chancers in the Square Mile who might be persuaded to give it a run, in the mistaken belief that they would not be prosecuted.

Once the message got home that the SFO would come down on City fraud like a ton of avenging angels, there would be a big change of attitude towards City crime. That is because everyone who works in the City is a 'percentages' man, every deal is looked at with the primary enquiry, 'what's in this for me', and if the chances of an extended stay inside outweigh the promise of a financial profit, they will not do it!

It is simply because there has been no likelihood (and I mean absolutely none, nada, zilch, zero chance) of any of these people even being invited in to Elm House for a little chat about their conduct, that they have been committing these crimes with the degree of impunity they have demonstrated and getting away with it for so long.

So, we need new powers for the SFO, we have got to make City financial crime an organised crime that doesn't pay; we have to get a team of experienced detectives into the SFO to help the staff there get the evidence they need; we need to see aggressive, angry young lawyers with fire in their souls who can reflect Oliver Cromwell's aphorism '... I had rather have a plain, russet-coated Captain, that knows what he fights for, and loves what he knows, than that which you call a Gentle-man and is nothing else...' and we need to find a new attitude of moral certainty among those who will regulate this marketplace.

At present, the City of London is a criminal sink, and it has been getting away with too much for too long. It has been allowed to because the politicians and civil servants, and their satraps have pulled the claws and blunted the teeth of the SFO to such an extent, that it has become a laughing stock.

Enough!.