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Could Nadir Prove To Be The SFO’S Salvation?

15 October 2012

After many years, the SFO finally put Asil Nadir behind bars. Here, Aziz Rahman of Rahman Ravelli considers the SFO’s standing in the wake of the trial.

So Asil Nadir has been found guilty. The tycoon who made good during the Thatcher years before fleeing to northern Cyprus finally came home to clear his name. Only to be found guilty of ten out of 13 sample charges of theft.

The saga has spanned three decades, involved a multi-million pound investigation and sealed the fate of the UK’s most famous white-collar fugitive. We now have an answer to whether he was the innocent man he always claimed to be. The role of the Serious Fraud Office (SFO) also came under scrutiny before and during the case. Perhaps now, with Nadir behind bars, the SFO can breathe a little easier.

Responding to the verdicts, Director of the SFO David Green said: “The conviction of Asil Nadir of theft on a grand scale from a public company 19 years after he fled the jurisdiction is a remarkable achievement. It reflects the resolute commitment and determination of the prosecution teams and counsel who have worked on this case…It confirms that the proper role of the SFO is to investigate and, where appropriate, to prosecute the most difficult cases of fraud and corruption. These cases are high profile and carry high risk; they can only be addressed with clarity, expertise and resilience.’’

Mr Green is entitled to his moment of glory. The SFO’s longstanding target has been convicted of stealing £28.8M. But even now, when the verdicts have been returned and the sentences passed, the true measure of the SFO’s success in this case has still to be ascertained.

Yes, the case was high profile. And the SFO got their man and the verdicts they wanted. But even the strongest supporters of the SFO would never argue that the jailing of Asil Nadir is a firm endorsement of its effectiveness and strength. Any quick look at the history of the case shows us that.

When the SFO and Metropolitan Police became involved in 1990, as Nadir’s huge Polly Peck empire collapsed, it led to him being charged with theft. But his escape to northern Cyprus – a state not recognised by the international community - prior to his scheduled trial in 1993 meant the authorities could not extradite him back to the UK. It was only two years ago, when Nadir returned to the UK voluntarily, that the authorities were able to pick up the threads of the 1993 case and restart the prosecution. Even that was made easier than it could have been for the authorities. Nadir freely admitted that he had moved huge amounts of money out of the company. He argued that arrangements had been made for these withdrawals to be balanced by payments in Turkish lira into banks in northern Cyprus and that a lack of official paperwork was not unusual in that part of the world. So it could be argued that the SFO was effectively kicking at an open goal, as much of what he was accused of he admitted.

 Much has been made of Nadir’s escape to northern Cyprus while supposedly on £3.5M bail. But the SFO cannot be totally blamed for that. The SFO always opposed bail and it was a judge that granted it to Nadir – a privilege that he abused so he could spend 17 years in the sun. However, he had not actually breached bail as, due to a technicality, he had never surrendered to bail, so an arrest warrant for breach of bail conditions (as was sought by the SFO) was completely invalid. Which means that the SFO was not exactly covered in glory before the trial started. A trial, lest we forget, that only ever came to be because the defendant, for whatever reason, decided to return to the UK and fight his corner. It was Nadir and Nadir only who made sure the trial went ahead. And if he had emerged victorious from it there can be little doubt that the SFO would have been facing serious questions about its future. With the Nadir trial verdict coming so hot on the heels of the official lambasting the SFO took over its mishandling of its raids on the Tchenguiz brothers, the stakes were high. The trial had the potential to put the SFO on the chopping block if the prosecution had been unsuccessful. But it was successful. And so it is perhaps the time to salute the SFO for some of the good work it does.

There have been many high-profile cases were the SFO has been outwitted and defeated. At Rahman Ravelli, we have been involved in more than our share. But the Nadir case shows that the SFO does have the skills to carry out its tasks. In fact, perhaps the only thing it may be lacking is real financial and institutional support. Prosecuting the Nadir case cost the SFO £3M – 10% of its annual budget. Its budget for the last financial year was 30% lower than it was three years earlier. If it had more finances, the chances are it could become far more effective. And it is worth remembering that this is an organisation that has never enjoyed the most fruitful working relationships with either the police or the Financial Services Authority, who are arguably the two organisations it should be most in tandem with. Many of the organisations the SFO has to either investigate or work alongside have budgets that make its own look miniscule. Maybe this most maligned organisation can become much better at being fit for purpose if it is given a financial boost and a little more respect from those it rubs shoulders with. After all, can it be wise to pare back the SFO’s budget if this allows cities such as New York to promote themselves - at London’s expense - as better-regulated financial hubs at a time when the risk of financial crime is perhaps higher than ever?

An under-resourced SFO has only two options: chase only certain cases (leaving many never to be investigated) or investigate everything and risk making Tchenguiz-style mistakes due to lack of resources. Neither is ideal at a time when the awareness and public perception of financial crime appears to be at an all-time high. Yet with deferred prosecution agreements (DPA’s) being talked about as a plea bargaining-style way of encouraging corporations to flag up and eliminate illegal behaviour, it could be that the SFO may be able to do more with what it has.

Nobody has ever said that the SFO was perfect. The Nadir case has again proved that. Yet it has shown that the SFO can get their man if it has the resources – and, arguably, a little outside help. And at a time when an era of new openness is being ushered into the corporate world, it could well be that the SFO shows that it has the teeth to still carry sufficient bite.

More resources would let the SFO prove that it really does know how to bring the guilty to book, without them having to return voluntarily to face the music, as Nadir did. And if the UK is serious about upholding its reputation as a world financial centre, it would be wrong to let the SFO waste away. There is much that needs investigating. And a fully-resourced SFO - with the full cooperation of its partners - is the only organisation fit for the job.


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