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UK fraud squad fends off court challenge that endangered cases

A sign is displayed in an unmarked Serious Fraud Office vehicle parked outside a building, in Mayfair, central London March 9, 2011. REUTERS
A sign is displayed in an unmarked Serious Fraud Office vehicle parked outside a building, in Mayfair, central London March 9, 2011. REUTERS

By Estelle Shirbon

LONDON (Reuters) - Britain's Serious Fraud Office on Monday beat back a court challenge that endangered cases against prominent defendants, a big relief for the country's prime financial crime-fighting agency after repeated blows to its reputation.

Britain has a huge financial sector, making for intense interest in SFO doings, but the agency's image has suffered from massive blunders in some high-profile cases including that of the property developer Tchenguiz brothers.

Monday's ruling averted disaster for the SFO although the defendants may appeal. They have two days to make a decision.

At stake for the SFO at the hearing was further embarrassment and also potential disruption to some 30 other cases that are affected by the same procedural issue that gave rise to the challenge.

The details of those 30 cases have not been disclosed but to have such a large number jeopardized would have been a huge headache for the taxpayer-funded SFO.

The SFO has also suffered a spate of bad headlines over large payoffs for former executives approved by ex-director Richard Alderman, who was accused in parliament in March of having run a "sloppy and slovenly" operation.

The legal challenge rejected on Monday was brought by Christopher Ronnie, former chief executive of failed retailer JJB Sports who faces charges of fraud and money-laundering, and co-defendant David Ball, an accountant, who faces charges of furnishing false information.

Their forthcoming trial will be an important one for the SFO as JJB Sports was a household name in Britain and has been the subject of years of complex investigations.

The trial was due to start earlier this month but has been put back for a year, a setback for the SFO, because of doubts that were raised by the agency itself in August about whether the JJB investigation had been properly initiated.

"LACK OF EXPERTISE"

At issue was the fact that the decision in 2009 to start the inquiry had been made not by Alderman, the then-director, but by Phillippa Williamson, the then-chief operating officer who later became chief executive. Both left the SFO in 2012.

Lawyers for Ronnie and Ball argued that under the 1987 law giving the SFO its powers, it was for Alderman alone to make such decisions and he had no power to delegate.

"I have concluded, as a matter of law, that he did have that authority," Judge Nicholas Loraine-Smith said on Monday, lifting restrictions that had previously stopped reporting of the issue.

The case was argued during a two-day hearing last week in which internal emails dating back to Alderman's 2008-2012 tenure were read out. They showed that within weeks of taking up his post, Alderman had been keen to delegate some of his responsibilities because "too much crosses my desk already".

For her part, Williamson had within two days of joining the SFO started looking at whether she could take over responsibility for approving the start of investigations, even though she was aware she may not have the right experience.

"We don't want to fall straight into the trap of exposing our lack of expertise in this area," she wrote to her secretary in an email described by Ronnie's lawyer as "chilling".

It is not known how significant the 30 other cases are because their details have not been released.

The SFO is fighting a claim for hundreds of millions of pounds (dollars) in damages brought by the Tchenguiz brothers after mistakes by the agency forced it to halt an investigation into their finances.

($1 = 0.6203 British pounds)

(Editing by Mark Heinrich)

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