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SFO boss wishes for better crime definitions
The work of the Serious Fraud Office in reducing financial crime could be improved if ‘recklessness’ was introduced as an offence, the investigator’s outgoing director has said.
Richard Alderman said a crime of recklessness would have to show an individual had the necessary knowledge and intent of pursuing a course of action, despite knowing the risks attached to this.
He said: “The public does not understand why it is that enforcement authorities such as the SFO have been unable to take action against senior financial people. They contrast the SFO with the US system.”
Mr Alderman highlighted comments from FSA chairman Lord (Adair) Turner who, in the regulator’s report in December into the collapse of RBS, called for more regulatory powers to take action against individuals.
While Lord Turner said the FSA had little power under existing rules to take action against individuals associated with failures at banks, the Securities and Exchange Commission in the US has a stronger hand, having charged individuals at banks in the past for misleading investors.
Such action by the SEC included a charge in 2010 against Citigroup as well as executives Gary Crittenden, chief financial officer, and Arthur Tildesley, head of investor relations, for misleading investors about exposure to sub-prime mortgage assets.
Citigroup paid $75m (£48.7m) to settle the charges, while Mr Crittenden paid $100,000 (£65,000) and Mr Tildesley paid $80,000 (£52,000).
Mr Alderman added: “It is not that I want to see more people locked up, but I want recognition things have got to change. As we have seen in the bribery area, this is an opportunity to bring about a better way of doing business.”
The comments come after a year in which the SFO avoided being broken up and placed into an Economic Crime Agency – instead it will contribute to the National Crime Agency.
The SFO presided over several high-profile cases during 2011 including the start of an investigation into the collapse of the Kaupthing Banking Group and a £50m mortgage fraud where only two of eight defendants were convicted.
Neil Mumford, principal of Surrey-based Milestone Wealth Management, said: “I can understand where the SFO is coming from. The financial crisis has massively destroyed shareholder value at banks. Directors have to take more moral responsibility.”
