Fears grow that SFO defections could hit Tchenguiz inquiry

The investigation into the billionaire Tchenguiz brothers and other major fraud cases could be jeopardised by the scrapping of the Serious Fraud Office, insiders fear.

Staff morale has hit rock-bottom as the Government prepares to break up the agency, the insiders said, prompting concerns that a wave of defections could undermine the progress of about 100 fraud and corruption cases on the SFO’s books.

A document seen by The Times reveals that the Government is pushing ahead with plans to abolish the SFO and transfer responsibility for pursuing serious frauds to the Crown Prosecution Service, despite fears among fraud experts that the reshuffle will thwart attempts to tackle economic crime at a time of heightened concern about corporate wrongdoing.

The SFO’s inquiry into the collapse of Kaupthing, the Icelandic bank, which led to the arrests of Robert and Vincent Tchenguiz in a series of dawn raids last month, is only the most visible of the agency’s continuing investigations. It has several other large cases under way, including an inquiry into suspected corruption involving senior British executives at Alstom, the French engineering group.

With the axe hanging over the agency, several senior figures have left for high-paying jobs at American law firms, including Robert Amaee, head of its anti-corruption unit, Kathleen Harris, head of the fraud division, and Charlie Monteith, head of policy.

Insiders are concerned that further departures will lead to a shortage of expertise and delay investigations. David McCluskey, a partner at Peters & Peters, a law firm that specialises in white-collar crime, said: “If people are leaving there’s no question it will have an impact on cases.”

City lawyers and accountants said that they had received numerous approaches from SFO employees eager to move into private practice. “Anybody who is anybody is thinking of leaving,” one accountant said. “A lot of CVs are on the market, from the top down.”

Senior lawyers at the SFO earn between £50,000 and £60,000 a year, insiders said, rising to around £70,000 for case controllers, and they couldmore than double their salaries by taking jobs with City law firms.

Richard Alderman, SFO director, has been lobbying fiercely to keep the agency together. However, Whitehallinsiders said that it was a fight he was likely to lose. According to the document, the Home Office plans to separate the prosecution of serious fraud cases from investigations, with the initial evidence-gathering to be transferred to the new National Crime Agency, an FBI-style specialist police force.

The break-up is at odds with the Government’s pledge to create an agency to tackle financial crime, comprised of the SFO and the enforcement divisions of the Financial Services Authority and Office of Fair Trading.