Today the director of the government’s Serious Fraud Office (SFO), David Green QC, announced that he will be investigating the Libor rate-rigging scandal.
However, considering the investigation will run alongside similar action in the US, the impact of recent SFO budget cuts could be brought into the spotlight.
The US are notoriously tougher on fraud investigations, so could the contrast between Libor investigations at home and across the pond highlight injustice caused by budget cuts?
Reuters reports on the announcement:
Britain’s fraud-busting agency on Friday said it had agreed to investigate the Libor interest rate-rigging scandal, which on Tuesday led to the departure of Barclays chief executive Bob Diamond.
The SFO said Monday it would decide within a month whether to press criminal charges over the Libor affair, amid concerns banks understated their borrowing costs to make it appear they were in better financial health than they were.
Last year, the Financial Times reported that the SFO’s budget was slashed by 26 per cent after the Coalition came to power, with another expected drop of 25% by 2014.
The report said:
The newly aggressive fraud watchdog… is under threat from falling budgets, staff losses and a planned government reorganisation, people inside and outside the agency have warned.
The Serious Fraud Office’s budget has fallen 26 per cent since the 2008-9 fiscal year to £39.5m in 2010-11 and it is due to drop another 25 per cent to £30.5m by 2014-15. Six prominent staff members, including the heads of policy and anti-corruption, as well as the officer in charge of the Tchenguiz case, have all resigned in the past few months.
A similar story was reported on Left Foot Forward recently – following revelations of prolific tax avoidance, the government pledged to tackle the issue while failing to mention 10,000 job cuts at HMRC.
This example, and the fact that the SFO is being attacked by budget cuts, suggest that the government has no conviction in its plans to tackle wealthy wrong doers.