16 March 2012
In the second in a series of guest posts, Rowan Bosworth-Davies, a financial crime consultant and former Scotland Yard detective, provides a historical perspective on the UK authorities’ lack of appetite for prosecuting high level financial crime
Edwin Sutherland, the American sociologist and criminologist, is perhaps best known for his 1949 book ‘White Collar Crime’. But it was ten years earlier that he coined the phrase ‘white collar crime’. Back in the late 1930s, this was fairly radical.
At the time, the assumption among politicians and judges was that the “respectable” upper echelons of society — professionals, bankers, financiers etc — were incapable of criminal behaviour. Despite Sutherland’s best efforts, I sometimes wonder how much has changed.
There was a brief interlude in UK history when the authorities had no qualms about prosecuting white collar crime. In the 1980s, the Serious Fraud Office prosecuted the mainstream bank, County NatWest, a division of NatWest. The main players were convicted of the criminal offence of covering up a failed issue of £873m of new stock (intended to finance the takeover of Manpower).
The scandal became known as the ‘Blue Arrow’ affair. The jury had no difficulty in convicting all the leading defendants, who included some of the ‘great and the good’ of the City at the time. However, for reasons that are almost beyond comprehension, the Court of Appeal overturned the guilty verdicts.
Normally, the Court of Appeal is loathe to overturn a conviction reached in a jury trial. It will consider an appeal against the sentence, and consider an appeal if it can be shown that the judge erred in law. But to overturn a sensibly-arrived at jury conviction is very rare, partly because such an appeal can be so damaging to public policy. Those who remember the ‘Guildford Four’ will recall how long it took to get their convictions challenged.
In the ‘Blue Arrow’ case, the Court of Appeal sat within a few months of the convictions and came to the conclusion that, since the case had taken so long to prosecute, it would have been impossible for any reasonable jury to have reached a sensible verdict, and the convictions were quashed. This was the most egregious example of people from the upper socioeconomic classes being given a “get-out-of-jail card” that I can think of, although I have witnessed other equally appalling efforts to help their kind.
Soon after the Blue Arrow sentences were quashed, a friend of mine in the Serious Fraud Office told me that “the message has come down from on high that there will never again be any similar kind of prosecution of any City institution or its senior executives.” One reason the Blue Arrow affair proved so terrifying for the managerial classes and senior financiers was that it demonstrated that ordinary juries could understand the ramifications of complex fraud cases, and that they could convict.
The lawyers in the trial had spent hundreds of hours of court time trying to cloud the issue and obfuscate, but the jury saw through all that and potted all the defendants that mattered. The question is, in the wake of a disastrous decade of “light touch” regulation, will we see it’s like again?