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Gupta and Greensill inquiries are not enough

The British love an inquiry. Consider the number launched into the Gupta-Greensill farrago and the related lobbying fallout that has tainted the heart of the British establishment. So it is all the more puzzling that there is no actual investigation by UK authorities into this very British of scandals.

So far, a lawyer-led inquiry is examining supply-chain finance, and lobbying; a select committee is scrutinising how the Treasury responded to David Cameron, the former prime minister on the board of Greensill, which provided financing to Sanjeev Gupta’s empire. The business department will study the impact of Greensill’s collapse on Liberty Steel, which sits within Gupta’s GFG Alliance.

The Serious Fraud Office, meanwhile, is silent in the face of growing indications that a probe is merited into the business practices of GFG and Greensill. To state the obvious, an investigation is to probe the facts, not an indictment of criminality in itself. 

Questions need answers, particularly when Gupta seeks government support for Liberty, with 3,000 UK employees. The Financial Times has raised concerning issues, from suspected fake invoices provided by Gupta’s business to Greensill in exchange for cash, to domain names mimicking well known trading groups being registered to a Gupta employee. Gupta has denied any wrongdoing. Greensill had no obligation to check invoices. 

The Bank of England has forced Gupta’s Wyelands Bank to return customer deposits. The rest of the Gupta-Greensill architecture sits on the periphery of UK financial regulation. With more sweeping powers, the SFO is the UK’s dedicated fighter of any big-ticket economic crime — frauds below £100m do not get investigated much in Britain, a scandal in itself.

There may be a probe in train. There are good reasons why not every SFO probe is public, such as concern over destruction of evidence. Germany’s financial watchdog was not coy, however, and filed a criminal complaint against management at Greensill’s bank.

Even if the SFO does kick itself into gear, there is no guarantee much will come of any probe: this week its prosecution against former Serco executives collapsed at trial. SFO mismanagement of disclosure meant the judge directed jurors to acquit. Such unforced errors are unacceptable in an SFO headline case, eight years after it started investigating prisoner-tagging contracts.

There are wider problems with the UK’s ability to prosecute corporate crime. The SFO is yet to successfully prosecute an individual from any company that has signed a deferred prosecution agreement — where it admits wrongdoing and is fined in exchange for deferring charges — over the same allegations. Nine companies, including Tesco and Rolls-Royce, have signed such deals.

In the only recent example of the SFO prosecuting a big company for alleged fraud, when it pursued Barclays over crisis-era Qatari deals, its case also collapsed and individuals were acquitted. A commission is reviewing whether century-old corporate-criminal liability rules need to be changed. Currently, in cases that go beyond bribery and tax evasion, prosecutors must prove a company’s “directing mind” was in on the alleged crime. That is almost impossible in businesses with layers of control. It means that perversely the law more easily captures small rather than big companies.

If the UK is to tackle the mountain of fraud forecast as a result of the pandemic and government support, the SFO needs to raise its game and the government should give it the legal tools it needs to get past the foothills. 

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