SFO boss calls for shake-up after BAE Systems case

By DAN ATKINSON
Updated: 17:11 EST, 25 December 2010

A legal shake-up ought to involve judges in the plea-bargaining process from the very start, Britain's top fraudbuster has said.

'That way, the public would have more confidence in the results of such plea negotiations,' said Richard Alderman, director of the Serious Fraud Office.

He was speaking to Financial Mail immediately after Tuesday's verdict in the agency's long-running case against defence and aerospace giant BAE Systems over allegations of improper payments made in pursuit of foreign sales.

Verdict: BAE Systems was fined a paltry £500,000 for 'accounting errors', plus £225,000 towards the SFO's costs

While the judge, Mr Justice Bean, essentially accepted the SFO-BAE plea bargain, he made it clear he was unhappy at being presented with what amounted to a done deal between the Crown and BAE. The deal, he said, had been drafted 'loosely and perhaps hastily'.

This is the second such grudging verdict from the bench. In March, Lord Justice Thomas was presented with a pre-packaged guilty plea by Innospec, an Anglo-American chemical firm, which admitted paying bribes abroad.

The judge reluctantly approved a 'global' plea bargain between the SFO and the US authorities, under which Innospec would pay fines totalling £26.3 million, two-thirds going to the Americans.

But he said the fine was 'wholly inadequate' and added that in this particular case Alderman did not have the legal power to agree to the plea bargain.

Given plea-bargaining is spearheading Alderman's new approach at the SFO as his alternative to lengthy and sometimes fruitless fraud trials, the judges' response to both deals suggests the director will face gruelling court hearings every time he presents such a case, with the ever-present threat that a judge will throw it out.

'We have got to do better than this, collectively,' he said. 'I would like to see judges involved from the start, either taking part in the plea bargain or supervising the bargaining process.'

In contrast to the position in America, there is little tradition of plea bargaining in Britain and judges seem to resent any apparent interference in their exclusive right to pass sentence.

While the SFO would not be drawn on the subject, it is widely accepted that a change in the law will be needed to clarify beyond doubt the right of Crown prosecutors to cut deals with defendants.

Such a change could form part of what is expected to be a new Fraud Bill, to set up the Coalition's planned Economic Crime Agency.

BAE pleaded guilty to having failed to account properly for payments made in Tanzania and was fined £500,000, with £225,000 costs to the SFO. It will pay a further £29.28 million to Tanzania and a £250 million penalty in the US.