LONDON (Reuters) - Richard Alderman, the former head of Britain’s leading fraud prosecution authority, oversaw a chaotic agency that was unable to keep records and documents in order, a London court heard on Thursday.
Alderman gave evidence at Southwark Court in a hearing to consider whether there had been an abuse of process by the Serious Fraud Office (SFO) when it issued fraud charges against the founder of Weavering Capital, a $600 million hedge fund that collapsed in the wake of the credit crisis in 2009.
The SFO could be forced to drop the high-profile case, which is scheduled to go to trial in October, if Judge Andrew Smith decides that Alderman acted unlawfully when he delegated the power to launch the investigation to Phillippa Williamson, his former chief operating officer, in 2008.
The hearing was initiated by Weavering’s Swedish founder Magnus Peterson, who has been charged with 16 fraud-related offences between 2003 and 2009, ranging from false representation to false accounting, forgery, obtaining a money transfer by deception, fraud by abuse of position and fraudulent trading. He has pleaded not guilty.
Alderman said he had wanted only to make the government agency more efficient and had asked Williamson, who joined the SFO on secondment in mid-2008, to review and speed up the process of launching investigations.
Though Williamson had started taking decisions about which cases the SFO should investigate shortly after her appointment, Alderman told the court that he had frequent meetings and communication with her, was aware of her decisions and was “heavily involved” in Weavering.
“Ms Williamson would not have taken these decisions had I not given her the authority to do so,” he said. But he conceded that he did not have any document detailing the delegation of authority.
The case hinges in part on whether Alderman had the power to delegate decisions to launch investigations, whether delegation was to the right person and made with appropriate care and whether there was serious misconduct.
Peter Lodder, a senior lawyer for Peterson, said he found Alderman’s answers “deeply disturbing”.
“In essence ... we are saying there is an element of almost chaos in the way the office is run ... You cannot rely on this evidence. There is no actual firm evidence of this delegation having taken place - just the assumption it must have happened.”
The judge will make his decision over the next few weeks.
However, the argument that Alderman had no right to delegate the authority to launch investigations has already been discussed at a separate criminal case decided in the SFO’s favor.
Alderman, who left the SFO in 2012, has already been reprimanded by parliamentarians, who accused him last March of running a “sloppy and slovenly” operation and agreeing to exotic senior staff packages and payoffs with scant regard to the public purse or proper procedure.
The SFO initially dropped its 2-1/2 year investigation into Weavering in 2011 but reopened the case under new SFO director David Green
The decision to reopen the investigation marked one of several U-turns under Green, who joined a demoralized and under-funded SFO in April 2012, vowing to prosecute more high-level fraud and restore faith in the agency.
Editing by David Goodman